IHRU contracts guarantee 6% VAT

Contracts signed with Portugal’s Institute for Housing and Urban Regeneration (IHRU) have guaranteed that properties done up under the regime will be eligible for a lower VAT rate of 6%

It means that building firms outside of urban regeneration areas can benefit from the reduced tax provided they have signed contracts with the IHRU or are signed up to projects eligible for special grants.
The Portuguese government had set up designated area of towns and cities eligible for special grants and tax breaks to renovate and refurbish buildings through the institute providing they fall within these Urban Regeneration Areas (ARU) defined by local municipal councils.
The authorities have made clear that building firms, regardless of where they are headquartered in Portugal, can sign up to the IHRU and benefit from these tax incentives and grants.
The information from the tax authorities (AT) has been issued after a request for clarification from a building firm that said it was unclear.
In order to benefit from the incentives, the application must be from a builder involved in urban regeneration projects; the building firm must be directly contacted by the IHRU or the National Fund for Building Renovation (Fundo Nacional de Reabilitação do Edificado – FNRE) or for projects carried out be carried out under special grant or tax regimes to refurbish buildings, or on the back of programmes financially supported by the IHRU.
Certain entities and institutions are beneficiaries of the FNRE and these are municipal councils, social security institutions and properties that are administered directly and indirectly by the State, and public institutions”, according to the tax authorities.
Other public entities can also sign up to FNRE through a protocol signed by the managing entity of the patrimony in question and public capital companies, public companies, and public universities (Fundiestamo).
In a second phase private entities can also apply for their buildings to be renovated under the favourable grant and tax regime according to the AT tax authorities headed by Helena Borges.