The PSD's bill, which will now be discussed in detail, aims to clarify the application of the reduced VAT rate of 6% to urban rehabilitation projects for properties in urban rehabilitation areas (ARU), regardless of whether an urban rehabilitation operation (ORU) has been approved, and has retroactive effects to 2008.

"Through this bill, we proceed with the authentic interpretation of Item 2.23 of List I annexed to the VAT Code, in the wording prior to the entry into force of Law No. 56/2023, of 6 October," indicates the text of the document.

Since 2012, the delimitation of an Urban Rehabilitation Area (ARU) may not occur simultaneously with an Urban Rehabilitation Operation (ORU), leading to disagreements with the Tax Authority (AT) over the application of the reduced VAT rate based solely on the existence of an ARU.

For years, builders and real estate developers applied the reduced VAT rate of 6% to rehabilitation works located in ARUs, but, meanwhile, the AT has also started requiring the existence of an ORU approved by the municipalities, leading to additional VAT charges at the rate of 23% on works already completed and sold.

Stating that "the doubts have shaken the confidence of citizens and businesses in the word of the State," Deputy Hugo Carneiro, from the PSD, justified the measure with the need to "reaffirm the coherence of public policies to support construction and urban rehabilitation."

Filipe de Sousa, from JPP, highlighted that applying the reduced VAT rate in urban rehabilitation areas enhances legal security for those who build, and announced his favourable vote, as did the CDS-PP bench.

Patrícia Gonçalves, from Livre, stated that the party would support the PSD's initiative, which "is going in the right direction," but "does not validate the government's overall housing policy."

Referring to the executive's recent tax package, which considers rents of up to 2,300 euros per month or the sale of homes up to approximately €660,000 as "moderate," the deputy accused the Government of legislating "only for the high-end segment of the market."

"The clarification is going in the right direction, but the overall path of the government's housing policy remains profoundly misaligned with people's lives," she added.

While the PCP bench, through Paula Santos, doubted that the measure would benefit small and medium-sized enterprises, the socialist António Mendonça Mendes welcomed the PSD's initiative and highlighted the positive impact of the project to "solve a problem of years of instability for economic agents and families".

Catarina Salgueiro, from Chega, demanded to know the financial impact of the change on public accounts, with the expected return of millions of euros in VAT to builders since 2009.

Also under discussion was a bill from the Liberal Initiative (IL) that introduces corrections to the application of the reduced VAT rate of 6% for the construction and rehabilitation of owner-occupied permanent housing and moderate rental housing, extending it to real estate development, but it was rejected with votes against from CDS-PP, PSD, PS, Livre, PCP and BE.

Liberals believe that the effectiveness of the 6% VAT rate for construction for rent, introduced in the government's recent package of fiscal measures to combat the housing crisis, also depends on the possibility of extending it to real estate developers.

In the economic area, a bill from Chega that increased the deductible limits on income tax for amounts invested in retirement savings plans (PPR), and another from the Liberal Initiative to create tax-exempt savings and investment accounts, were also rejected.