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6% VAT on Self-Build Homes in Portugal: What Changes in 2025 and How to Benefit

  • Writer: Karolline Dutra
    Karolline Dutra
  • Sep 29
  • 4 min read

Updated: Sep 30

Learn all about the new measure that applies a reduced VAT of 6% to self-construction in Portugal in 2025. Discover the rules, benefits, limitations, and how Guedu Atelier can support your project.


Render of a modern single-family house in Portugal, an example of self-construction benefiting from the reduced VAT of 6% in 2025.

In September 2025, the Portuguese Government announced a significant fiscal change: the application of the reduced 6% VAT rate on self-build homes for permanent residence.


Until now, this benefit was almost exclusively limited to urban rehabilitation works within ARU areas. With the new law, families building their own house on land they already own will be able to benefit from the reduced VAT rate — provided they comply with the legal requirements.



What is a self-build home?


A self-build home occurs when an owner constructs their residence on land they already own, without purchasing a completed property or contracting a turnkey developer. This model is increasingly common in Portugal, especially in rural and suburban areas where property prices are higher.



What changes with the 6% VAT?


The new fiscal framework, designed to stimulate self-build projects and housing access, introduces key changes:


Self-build homes with reduced VAT


Self-build housing now benefits from the super-reduced 6% VAT rate, instead of the standard 23%.This represents substantial savings and makes building a home more financially accessible.


Only for primary and permanent residences


The benefit applies exclusively to primary and permanent residences, excluding investment properties, rentals, or speculative projects.


Introduction of a maximum threshold


The Ministry of Finance will set a maximum eligible value for the application of the 6% VAT rate.This threshold, yet to be defined, is intended to ensure that the measure primarily benefits middle- and lower-income families.


Scaled VAT application

If construction costs exceed the established threshold, the excess will be taxed at the standard 23% rate.This creates a balance between supporting affordable housing and preserving fairness within the tax system.



What are the benefits for homeowners?


  • Lower construction cost: With the reduced VAT, a project that would cost €200,000 plus 23% VAT would rise from €246,000 to €212,000 with 6% VAT. This represents €34,000 in direct savings, an amount that can be reinvested in better finishes, energy efficiency, or furniture.


  • More accessible projects: Families who previously could not move forward with self-build construction due to lack of budget margin now have an opportunity. For example: a couple with a maximum budget of €210,000 to build their first home would see that limit become unfeasible with 23% VAT. With the benefit of 6% VAT, the same project becomes viable.


  • Greater dynamism in the sector: The measure may boost construction in rural and suburban areas, where the acquisition of ready-built properties is limited or too expensive. Imagine a plot inherited in Montemor-o-Novo or Évora, in the Alentejo: with the VAT reduction, self-build construction becomes more competitive than buying an existing house on the market. This attracts investment and creates activity in the local economy.


Montemor-o-Novo: An attraction for investors with 6% VAT construction.


3 key considerations before applying the 6% VAT


  1. Maximum threshold defined by law


    The maximum threshold established by tax legislation is a crucial element for determining the VAT regime applicable to construction and renovation works. Works that exceed this stipulated value do not benefit from the reduced VAT rate, thus remaining subject to the standard VAT regime, which is significantly higher. This means that owners must take special care when planning and budgeting their works, ensuring that the total cost does not exceed this threshold. Understanding this limit is fundamental to avoid financial surprises, as the difference in tax burden can substantially impact the project’s overall budget.


  2. Proof of primary and permanent residence


    It will be necessary to prove that the dwelling in question is indeed primary and permanent. This means that the owner must present documentation that validates their habitual residence in the property, such as proof of address or other legal documents that attest to permanence at the location. This proof is an essential requirement to ensure that the works can be eligible for the more favorable tax treatment, reflecting the legislator’s intention to support owners of primary and permanent homes. Without this verification, the taxpayer may face challenges and possible penalties related to non-compliance with tax requirements.


  3. Prior consultation with the Tax Authority


    Finally, it is absolutely essential to always consult the Tax Authority before signing contracts or budgets for construction or renovation works. Prior consultation allows owners to obtain updated information on tax rules, possible changes in legislation, and clarifications on the application of VAT in their specific situations. In addition, this practice helps to avoid misunderstandings and future problems, ensuring that all legal and tax aspects are considered and respected. The Tax Authority can provide valuable guidance that may influence the decision on how to proceed with the works, ensuring that owners are fully informed and prepared to move forward with their projects appropriately and in compliance with current legislation.


How Guedu Atelier can help


At Guedu Atelier we support clients who wish to build their own home in all stages of the process, with a complete and transparent approach:


  • Cost Consulting: We carry out budget simulations with different VAT scenarios, helping to anticipate tax impacts and keep the investment within the limits defined by legislation.


  • Project Management and Site Supervision: We ensure technical, legal, and fiscal compliance throughout the entire process, making sure that each stage of construction runs in an organized and efficient way.


  • Personalized Guidance: We provide continuous support, from the initial planning to the completion of the work, so that each client has confidence and clarity in every decision.


Building your own home is one of the greatest investments in life. With the new possibility of applying the 6% VAT rate to self-build housing, this opportunity may now be even closer to you.


Contact us and discover how to transform your land into the home of your dreams.




Karolline Dutra - Engenheira Civil e Ambiental | Interior Designer Especialista em Conservação e Reabilitação de Construções Cost Consultant e Project Manager Co-founder & CEO da Guedu Atelier

Written by Karolline Dutra

Civil e Environmental Engineer | Interior Designer

Building Conservation and Rehabilitation Specialist

Cost Consultant & Project Manager

Founder & CEO at Guedu Atelier



Do you have questions about your project?


Guedu Atelier is a consultancy company specialized in project management, cost consultancy, construction supervision, and interior design. We are ready to support strategic decisions and transform ideas into feasible projects, balancing quality, functionality, and investment.



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