Construction works for certain types of properties may be entitled to a reduction in tax rate (6% in mainland Portugal, 4% in the Azores and Madeira).
This rate applies to the improvement, remodelling, renovation, restoration, repair and conservation of properties or individual parts of these allocated to residential purposes. Cleaning work, maintenance of green spaces and work on swimming pools, saunas, tennis courts, golf/minigolf courses, etc. are not included.
Normally, the rate only applies to labour, excluding materials. However, if the value of these materials does not exceed 20% of the overall service cost, the total cost of works may be subject to the reduced rate.
The reduced rate also applies to the following types of works:
— urban renewal (defined by specific law) on properties or public spaces within urban renewal zones (critical urban reconversion and recovery areas, work areas of urban renewal companies, etc.) delineated under legal terms, or within the scope of renewal and requalification operations of recognized national public interest;
— renewal of property which, regardless of its location, is contracted directly by the Urban Renewal and Housing Institute (IHRU), or done under special financial or tax aid schemes involving property renewal, or under programs backed by the IHRU;
— real estate construction and related services promoted by housing and construction co-ops whose residences fall within the scope of social housing policy, certified by the National Housing Institute, and whose construction follows the concept and parameters of cost-controlled housing (20% maximum);
— conservation, repair and improvement of residential urban properties (or individual parts) owned by housing and construction co-ops and granted to their members under a collective ownership regime, regardless of the respective type;
— improvement, remodelling, renovation, restoration, repair or conservation of properties (or individual parts) allocated to residential purposes, excluding cleaning, maintenance of green areas and works on the property involving, partially or in whole, the constituent elements of swimming pools, saunas, tennis courts, golf/minigolf courses, etc. (the reduced rate does not apply to the materials employed, unless their value does not exceed 20% of the overall service cost).