Portugal’s President promulgated one of the most significant housing tax packages in recent years last week. It goes by the name “fiscal shock for housing” and came into force under Law No. 9-A/2026 of 6 March. If you’re a freelancer who owns property, rents out a flat, or simply pays rent, there are measures here that affect you directly.
The bad news: the implementing decree with operational details has not yet been published in the Official Gazette. The good news: you already know what’s coming and can prepare.
What “moderate price” means — and why it matters
Before getting into the numbers, you need to understand one key concept: moderate price (preço moderado). This is the threshold the government created to ensure that tax benefits apply to affordable housing, not luxury villas.
In 2026, a property qualifies as “moderate price” if:
- The sale price does not exceed €660,982
- The monthly rent does not exceed €2,300 (equivalent to 2.5 times the minimum wage of €920)
If the property you own — or are building — respects these limits, you can access the benefits. If not, the standard regime applies.
Measure 1: Construction VAT drops from 23% to 6%
This is the most talked-about measure and it’s genuinely significant if you’re planning to build or renovate your home.
Until now, if you hired a company to build or carry out significant works on your home, you paid 23% VAT on the work. Under the new regime, you pay only 6% — provided the property is for permanent personal residence and the final price respects the €660,982 threshold.
What changes in practice:
- Renovation works of €20,000: previously you paid €4,600 in VAT, now you pay €1,200
- New construction of €100,000: previously you paid €23,000 in VAT, now you pay €6,000
There is an important rule you need to know: the 20% materials rule. If the materials incorporated in the works cost more than 20% of the total contract value, those materials continue to be taxed at 23% — only the labour benefits from the 6% rate.
Important: If you built your home yourself (self-construction), you can claim a refund of the difference between 23% and 6% from the tax authority. The request must be submitted within 12 months of the occupancy licence, and the government has 150 days to process the refund. Keep all construction invoices with your NIF.
Measure 2: IRS on rental income drops from 25% to 10%
If you’re a freelancer who owns a flat you rent out, this measure changes your calculations significantly.
Rental income (Category F in IRS) was taxed at the autonomous rate of 25%. Under the new package, that rate falls to 10% — but only if the monthly rent is equal to or below €2,300 and the contract has a minimum duration of 3 years.
What changes in practice:
- You receive €800/month in rent (€9,600/year)
- Previously: you paid €2,400 in IRS on that income
- Now: you pay €960 — a saving of €1,440 per year
This reduction is valid until 2029.
Miguel, a freelance designer in Lisbon, has an inherited flat he rents out for €900/month. Under the previous regime he paid €2,700/year in IRS on the rent. With the new 10% rate, he’ll pay €1,080. That’s a difference of €1,620 per year — without changing anything he was already doing.
Measure 3: Higher deduction for tenants
If you’re the tenant — and many freelancers rent — there’s an improvement for you too.
The IRS deduction limit for rent payments increases:
- €900 in 2026 (was €700)
- €1,000 from 2027 onwards
In practice, on your annual IRS declaration you can deduct an additional €200 compared to before. It’s not a revolution, but it’s money back in your pocket.
Measure 4: Fixed IMT for non-residents
A brief note for those with foreign clients or considering purchasing property as a non-resident: IMT (the municipal property transfer tax) is fixed at 7.5% for non-residents, regardless of the property’s value.
For residents, IMT continues with the usual progressive tables.
What still needs to come into force
There is an important part that not everyone is mentioning: the law is approved and promulgated, but the implementing decree has not yet been published in the Official Gazette. This means the practical rules — how to claim the VAT refund, how to prove moderate pricing, which forms to use — are still being defined.
What you should do now:
- If you’re planning construction works, don’t sign a contract before the decree is published — to ensure you apply the correct rate
- If you rent out a property, confirm your contract will have at least 3 years’ duration to benefit from the 10% rate
- Keep all documentation of property values — you’ll need to prove the “moderate price” threshold is met
How this relates to your freelance accounts
If you have rental income, it is declared on Annex F of the annual IRS declaration — separate from your self-employment income (Category B). These are two different things and must be handled separately.
Inês, a freelance consultant in Porto, has her activity registered under the simplified regime and rents out a room in her flat. She has two fiscal “hats”: Category B (consultancy) and Category F (room rent). With FIZ, she manages Category B automatically. For Category F, rental records and the annual declaration also need to be in order — it’s important not to mix the two.
Important: The 10% IRS on rental income is not the same as the taxation of your self-employment activity. These are separate rates applied to different types of income. If you consolidate rental income with your business income for tax purposes, it may end up costing more — always calculate both options before submitting your IRS declaration.
In summary
- Construction and renovation VAT drops to 6% — valid for properties priced up to €660,982 intended for personal permanent residence. The 20% materials rule applies. The implementing decree with full details has not yet been published.
- IRS on rental income falls from 25% to 10% — for landlords with rents up to €2,300/month and contracts of at least 3 years, until 2029. A real saving for freelancers who rent out properties.
- Rental income must be correctly declared in IRS — separately from self-employment income. With FIZ.co you handle Category B automatically; for Category F, keep your rental records organised so the annual declaration holds no surprises.
