As highlighted by Henrique Bacelar Barbosa, Tax Partner at Forvis Mazars, predictability is not typically a hallmark of Portuguese tax legislation. “At first glance, the measures suggest encouraging outcomes – but the reality is far more complex,” he noted.

Indeed, while the package introduces relevant incentives, not all construction will qualify for the reduced 6% VAT rate, and several stringent conditions apply to access tax incentives in other areas. A notable example concerns the taxation of capital gains for private investors: full exemption depends on reinvestment in properties specifically intended for moderate rental housing.

Following this session, on March 27, the Government approved the decree-laws regulating the housing tax package, including measures related to reductions in personal and corporate income tax, VAT, and amendments to the urban ‘Simplex’ framework.

In reality, many otherwise viable investments fail to move forward, whether due to regulatory complexity or administrative constraints. Early tax planning and close monitoring are critical, making the difference between a project that stalls and one that succeeds. With the right tax support, these measures can effectively incentivise investment and help mitigate future disputes.

Forvis Mazars Portugal, particularly our Real Estate Tax team, stands ready to support investors and market players in navigating these developments and addressing broader tax challenges.

Website Forvis Mazars em Portugal: https://www.forvismazars.com/pt

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