Portugal renovation VAT: 6% or 23% in an ARU? (Lei 48/2026)

Before August 2026, the Portuguese tax authority (Autoridade Tributária) enforced a cumulative requirement: rehabilitation works needed to be in an ARU and part of an approved ORU to qualify for the reduced rate. Owners and developers who applied the reduced rate in an ARU without an ORU were subject to retroactive VAT assessments at the standard rate.

Lei n.º 48/2026, de 17 de agosto, enacted an interpretação autêntica (authentic interpretation) of verba 2.23 of Lista I annexed to the Portuguese IVA Code, in the wording given by Lei n.º 64-A/2008, de 31 de dezembro. Article 2 of Lei 48/2026 states that, for the purposes of the reduced rate, empreitadas de reabilitação urbana (urban rehabilitation works) means:

All works carried out on buildings or public spaces located in an Área de Reabilitação Urbana (ARU) delimited under the law — regardless of whether an Operação de Reabilitação Urbana (ORU) has been approved.

This removed the ORU requirement. The ARU delimitation alone is sufficient.

Lei 48/2026 has two effective dates — do not conflate them:

• Entry into force: 18 August 2026 (article 4 — the day after publication in Diário da República).
• Produces effects from: 1 January 2009 (article 3 — the date Lei n.º 64-A/2008 introduced the current wording of verba 2.23).

Because Lei 48/2026 is an authentic interpretation, it is legally integrated into the interpreted rule under Portuguese Civil Code article 13. This means it governs past situations, subject to the limits of caso julgado (final court judgments) and administrative deadlines for claims or appeals.

Press coverage frames the covered window as 1 January 2009 to 7 October 2023 — the latter being the date Lei n.º 56/2023 changed the wording of verba 2.23 prospectively (a separate change outside the scope of Lei 48/2026).

For buyers planning renovation works: If your property is in an ARU, check with your contractor and accountant that the reduced rate is being applied. The ARU status is a municipal geographic parameter — confirm it with the local câmara municipal, not from memory.

For owners previously assessed at the standard rate: Lei 48/2026 provides a statutory basis to claim the reduced rate should have applied. Whether an individual claim succeeds depends on your specific case — including whether the assessment is final (caso julgado), whether administrative deadlines for claims (reclamação graciosa) or appeals have expired, and the exact grounds of the original assessment. This page provides orientation only under the general law. Confirm with an Ordem dos Advogados lawyer or Ordem dos Contabilistas Certificados accountant for your situation.

What Lei 48/2026 does NOT change:The other conditions of verba 2.23 still apply. The law only removes the ORU requirement — it does not broaden the scope of qualifying works, and the reduced rate does not apply to all works in an ARU. Only rehabilitation works meeting verba 2.23's other requirements qualify.