Construction VAT cut; VAT Groups; e-invoicing and SAF-T delays
The Portuguese government has presented its 2026 State Budget, which includes several significant reforms in the area of indirect taxation.
The proposals are particularly relevant for businesses operating in the construction, real estate, and financial sectors, as well as for corporate groups managing multiple VAT registrations.
1. Reduced VAT Rate for Housing at Moderate Prices
The Budget provides for a reduced VAT rate applicable to Construction services relating to housing intended for sale or rental at moderate prices; and
This measure is targeted at lowering the fiscal burden on housing projects designed for affordability. The scope of “moderate prices” and “moderate rents” will require further clarification, likely through implementing regulations or tax authority guidance. Businesses engaged in housing development should review eligibility criteria closely to determine which projects may benefit.
2. Implementation of the VAT Group Regime
From 2026, Portugal will introduce a VAT group regime. This allows companies within the same group to be treated as a single taxable person for VAT purposes, enabling:
-
Consolidation of VAT payable and recoverable balances across group entities;
-
Potential reduction of cash-flow inefficiencies where one entity is in a recovery position while another owes VAT.
3. Delays to SAF-T and QES e-invoicing
The separate SAF-T Accounting and obligation for digital QES signatures on e-invoicing have both been delayed for a further year into 2027.
