What is verba 2.42?
Verba 2.42 is an item of List I annexed to the VAT Code, the list of goods and services taxed at the reduced rate — 6% on the mainland; the Azores and Madeira have their own reduced rates. According to the AT, it covers empreitadas of construction or rehabilitation of buildings intended for sale as permanent own home (habitação própria e permanente) or for housing rental, where the verba’s requirements are met (Ofício-Circulado 25117/2026, §29). The Ofício refers to sub-item 2.42.1 in its example and announces separate guidance on it.
The rate’s own requirements — which buildings, which values, for how long — are set in the verba and in separate AT guidance that this page does not summarise. Do not apply 6% on the strength of this page.
How does verba 2.42 link to the reverse charge?
Before the change, the construction reverse charge (CIVA art. 2(1)(j)) only applied when the buyer had full or partial VAT deduction rights. A buyer that only makes exempt supplies — such as a company that only lets residential property — was invoiced with VAT.
Decreto-Lei 97/2026, of 20 May, added a second part to art. 2(1)(j): the reverse charge also applies to buyers that only make supplies without deduction rights when they acquire construction or rehabilitation empreitadas under verba 2.42. The AT lists the conditions (§7, §36):
- The purchase is of construction services, supplied by an entity holding an alvará or certificado de empreiteiro (Lei 41/2015).
- The buyer is a VAT taxable person — with deduction rights, with only exempt activity under CIVA art. 9, or exempt under the small-business scheme of art. 53.
- The services are construction or rehabilitation empreitadas within verba 2.42, in the strict sense of building or rehabilitating (§34–35).
- A buyer without deduction rights must inform the contractor that verba 2.42 applies (§37).
What does this mean for invoices and returns?
The contractor issues the invoice without VAT, with “IVA - autoliquidação”; the buyer self-assesses VAT at the reduced rate (§40, example 12). A buyer that is exempt and does not normally file VAT returns submits a periodic return by the end of the month after the transaction, only for the periods with such operations, self-assessing without any deduction (example 12, §44).
The verba 2.42 extension applies only to empreitadas, not to subempreitadas; subcontracts remain under the first part of art. 2(1)(j) (§33). The new rules apply from 1 July 2026, but for VAT due between 1 January and 30 June 2026 the contractor and buyer may, by joint option, apply them retroactively, with the contractor correcting the invoices (§49–51).
Confirm with your accountant
This page explains Portuguese rules as we read them on 29 September 2026; it is not tax or legal advice, and Audiree does not give tax advice as a product output. Confirm how the rules apply to your company and your contracts with a Portuguese certified accountant (contabilista certificado).
Frequently asked questions
Is the 6% rate automatic for any housing project?
No. Verba 2.42 has its own requirements (use of the building and other conditions) that this page does not cover. Check eligibility with a contabilista certificado before invoicing at 6%.
Does the verba 2.42 reverse charge apply to subcontracts?
No. According to Ofício-Circulado 25117/2026 (§33), the verba 2.42 extension applies only to empreitadas; subcontracts follow the general construction reverse charge in the first part of CIVA art. 2(1)(j).
Who pays the VAT on a verba 2.42 empreitada?
The buyer, by self-assessment at the reduced rate, when the contractor is licensed and the buyer is a VAT taxable person — even one that only makes exempt supplies. The contractor invoices without VAT.
Can the change apply to work invoiced before 1 July 2026?
For VAT due from 1 January to 30 June 2026, contractor and buyer may jointly opt to apply the reverse charge, with the contractor correcting the invoices (Ofício §50–51).