PSD Tables Authentic Interpretation Bill on 6% VAT for Urban Rehabilitation — Aiming to Settle Court-Split Reading Predating the 2023 Code Revision

The PSD parliamentary group has tabled a project of law in the Assembleia da República (Assembly of the Republic) that seeks to fix, by way of an interpretação autêntica (authentic legislative interpretation), the divergent court readings of Verba 2.23 of List I annexed to the Código do IVA (Value Added Tax Code) — the rule that anchors the 6% reduced IVA rate on empreitadas de reabilitação urbana (urban rehabilitation works). The proposal, which entered Parliament on Tuesday 3 June 2026, targets the version of the rule in force before Law 56/2023 rewrote the housing tax frame, and would apply retroactively to the entire window the older drafting governed — which the PSD draws back to 2008.

The interpretive split that the bill tries to close turns on the so-called ORU requirement. The tax authority and the lower fiscal courts had read Verba 2.23 as conditioning the 6% rate on two parallel conditions: that the building sits inside an Área de Reabilitação Urbana (ARU, Urban Rehabilitation Area) properly delimited by municipal deliberation, and that the autarchy has also approved a specific Operação de Reabilitação Urbana (ORU, Urban Rehabilitation Operation) covering the parcel. Where only the ARU exists but no ORU has been formalised, the AT (Autoridade Tributária e Aduaneira, Tax and Customs Authority) has assessed contractors at the standard 23% rate and pursued back-taxes plus interest.

Successive rulings out of the Tribunais Administrativos e Fiscais (TAF, Administrative and Tax Courts) and the Centro de Arbitragem Administrativa (CAAD, Administrative Arbitration Centre) have gone both ways, producing what the PSD preamble calls a quadro de "insegurança jurídica" for promoters, owners and the building trade. The proponent quotes the safeguard logic explicitly: "the preservation of predictability and legal certainty, the guarantee of coherence in public urban-rehabilitation incentive policies, and the protection of the public interest in ensuring the continuity of works and rehabilitation projects."

If approved, the bill will fix the reading in the contractor's favour: the 6% rate applies to urban-rehabilitation works inside any duly delimited ARU, regardless of whether an ORU has been simultaneously approved. As an interpretação autêntica under Article 13 of the Código Civil (Civil Code), the new norm would integrate into the original provision and apply to all pending and future tax assessments under the pre-Law-56/2023 drafting — opening the door to refund claims by promoters who paid the 23% rate under the AT's reading and lost at first instance.

The fiscal cost is not estimated in the preamble. The IVA differential between the 6% reduced rate and the 23% standard rate runs at 17 percentage points of taxable base, and the universe of ARU-located rehabilitation contracts run between 2008 and the entry into force of Law 56/2023 in October 2023 is sizeable. Câmaras Municipais (City Councils) that delimited ARUs without formalising matching ORUs — historic centres in Lisbon, Porto and the smaller inland capitals are the bulk — will see the share of their rehabilitation pipeline that qualifies for the reduced rate expand.

The text now enters the Comissão de Orçamento, Finanças e Administração Pública (COFAP, Budget, Finance and Public Administration Committee) for sectoral analysis. The Government, whose Ministério das Finanças (Ministry of Finance) is a structural opponent of retroactive tax reliefs, is expected to file an opinion before generalidade vote. With PSD already inside the parliamentary majority, the bill's path depends largely on whether CDS-PP and IL line up and whether Chega abstains — a configuration that has carried prior housing-tax bills in this legislature.