Portugal’s construction VAT reverse charge: what changed on 1 July 2026

Under article 2(1)(j) of the Portuguese VAT Code (CIVA), the person liable for VAT on civil construction services — including remodelling, repair, maintenance, conservation and demolition of immovable property, under an empreitada (main contract) or subempreitada (subcontract) — is the buyer, when the buyer is a VAT taxable person with a seat, permanent establishment or domicile in Portugal and makes supplies that give a full or partial right to deduct VAT.

In practice: the subcontractor invoices the net amount with no VAT, and the main contractor self-assesses the VAT in its own periodic VAT return and, where entitled, deducts it in the same return. The tax authority (AT) stresses that the reference to empreitada or subempreitada is indicative, not restrictive (Ofício 25117/2026, §8–9).

Decreto-Lei 97/2026, of 20 May, amended CIVA art. 2(1)(j). On 24 June 2026 the AT published Ofício-Circulado 25117/2026 explaining the new scope. Three points matter most on site:

• The licence test. For the reverse charge, “construction services” are those within the construction activity as defined in Lei 41/2015 and performed by legally licensed entities — holders of an alvará or certificado de empreiteiro for public or private works (§10–12). A supplier without one charges VAT, even for work that is construction in substance (§21, example 8). Licences can be checked on the IMPIC portal (§13).
• Housing works at 6%. The rule now also covers buyers that only make VAT-exempt supplies without deduction rights when they buy construction or rehabilitation empreitadas under verba 2.42 of List I (§4, §7). See the 6% VAT housing page.
• Old guidance revoked. The instructions apply where VAT becomes due from 1 July 2026, and all earlier AT guidance that contradicts them is revoked (§53–54). The long-cited Ofício-Circulado 30101 of 24 May 2007 should no longer be relied on where it conflicts.

The reverse charge is about services. Materials sold on their own follow the general rule, with VAT charged by the supplier — the Ofício’s example 5 uses tiles and cement bought outside the works contract, even from a licensed contractor. By the same logic, a ready-mix concrete or rebar delivery with no execution of works is a sale of goods with normal VAT; confirm edge cases (for example, concrete pumped and placed by the supplier) with your accountant.

Supply and installation is a construction service when the goods are permanently integrated in the building, the work falls in a subcategory of Annex I to Lei 41/2015 and the supplier is licensed — examples include PV panels, HVAC, lifts, doors and windows, and made-to-measure joinery (§15–16). Mere supply with accessory, reversible assembly (appliances, free-standing furniture screwed to a wall) is a supply of goods with VAT (§17–18).

When a licensed contractor supplies construction services, the reverse charge covers the whole supply, including items that would not qualify on their own, such as crane hire with or without operator, rubble removal and site supervision (§20, example 7).

The supplier issues the invoice without VAT and with the mention “IVA - autoliquidação” (CIVA art. 36(13); Ofício §40). The usual invoicing rules on timing and content still apply (§39). If the supplier never invoices, the buyer is still liable to self-assess (§41). VAT wrongly charged by the supplier on a reverse-charge supply cannot be deducted by the buyer (§47–48) — the practical reason to check every subcontractor invoice before it is booked.

Advance payments are also reverse-charged: the buyer self-assesses in the period of payment (§42), and an invoice issued before the work is done triggers self-assessment in the period of issue (§43).

• Supplier (contractor): periodic VAT return, table 6, field 8 — taxable amount only (§44).
• Buyer with deduction rights: table 6, fields 1 or 3 (base) and 2 or 4 (VAT); deduction in fields 20–24 where applicable; table 6-A, field 102 (§44).

Where the construction supplier has no seat, permanent establishment or domicile in Portugal and no Portuguese VAT representative, the reverse charge applies under CIVA art. 2(1)(g) instead, and the Portuguese buyer self-assesses (§14, example 2 — a Spanish company assembling steel structures in a Portuguese industrial building). A foreign contractor that is itself registered in Portugal and buys construction services there is a Portuguese taxable person like any other: whether it self-assesses depends on the licence test and its deduction rights.

Audiree does not decide VAT treatment. It reads each delivery note and invoice from a photo or PDF with AI, checks every line against the contract price, and checks that the document total matches the sum of its lines — so an invoice whose total does not add up, for example because VAT was added where the net was expected, goes to review with the exact difference. It is built in Portugal and works today with Portuguese construction companies. See the paperwork on a Portuguese obra for the other documents involved.