2026 Budget selective VAT rate adjustments to agriculture, culture and welfare
Portugal’s State Budget for 2026 contains a series of targeted VAT measures scheduled to apply from early next year, following parliamentary approval in late November. The changes prioritise sectors viewed as economically or socially significant, including agricultural production, the commercial art market, and animal welfare.
See more in our Portugal VAT guide. Many of these tweaks to reduced VAT rates were enabled by the 2025 EU VAT rate freedoms reforms.
1. Agricultural Measures: Production Relief and Input Support
Two adjustments address pressures in the farming sector.
The first equalises VAT treatment in the olive oil value chain by applying a 6 percent rate to the processing of olives, replacing the current 23 percent. The reduced rate already applies to the sale of olive oil as a final product; the new rule closes a long-standing gap in cost treatment at the production stage.
Additionally, the VAT exemption for fertilisers, seeds, soil enhancers and allied inputs has been prolonged through the end of 2026. The exemption continues to confer full input-tax deduction rights, preserving neutrality for producers. Initially introduced during the sharp rise in energy prices in 2022, the relief will now span more than four years.
2. Cultural Incentive: Lower VAT in the Art Gallery Market
The government has opted to extend the 6 percent VAT rate to artwork sold in galleries, replacing the standard rate of 23 percent. Although EU law permits reduced rates for art-related goods, Portuguese rules historically restricted the concession to sales by artists or rights holders.
By widening eligibility, lawmakers aim to stimulate trade, improve liquidity in the art market, and align Portugal more closely with European practice.
3. Food Supply Chain: Lower VAT on Game Meat
From January 2026, game meat will be reclassified for VAT purposes and taxed at 6 percent, in line with the treatment applied to other fresh meats. Proponents of the change highlighted the current incentive structure, which has encouraged the export of raw game to Spain for processing, resulting in value-added economic activity and tax revenue accruing abroad.
The reduced rate is intended to strengthen domestic processing capacity and expand consumer demand.
4. Social Policy: Continued Support for Animal Welfare Organisations
Animal welfare associations will continue to benefit from a VAT exemption on the purchase of pet food through the end of 2026. The relief was introduced in response to inflationary pressures and is designed to enable organisations to redirect resources toward veterinary care, sterilisation programmes, and population management.
Policy Direction: Focused Adjustments Rather Than Structural Reform
Taken together, the measures reflect an incremental policy philosophy. The government has prioritised interventions that:
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Target specific sectors rather than overall consumption
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Encourage domestic value creation within supply chains
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Extend temporary relief during periods of sustained cost pressure
