Not to be confused with the reduced VAT in ARUs
This is a general regime, applicable in any municipality in the country, whether or not the property is in an Urban Rehabilitation Area. The criterion is not location - it is the sale price or rent. A new-build project in any area can access this benefit, provided it meets the limits below; a renovation project inside an ARU can, in addition, access the benefit explained in the first article of this Guide, which depends only on location.
The two routes to the 6% rate
| Use of the property | 2026 limit |
|---|---|
| Sale as the buyer's own permanent home | €660,982 |
| Residential rental, minimum contract of 36 months (consecutive or not) | €2,300/month |
The sale limit corresponds to the upper value of the 2nd IMT bracket for a permanent own home in 2026; the rent limit corresponds to 2.5 times the 2026 guaranteed monthly minimum wage. Both limits are updated every year.
The criterion is no longer where the property is. It is now who it will be sold or let to, and for how much.
The 70% rule in mixed-use buildings
In buildings that combine housing with other uses (retail, services), at least 70% of the total construction area must be allocated to housing for the construction contract as a whole to benefit from the reduced rate.
Self-build: a different mechanism
If an individual directly contracts the construction of their own permanent home (self-build, with no intermediate developer), the mechanism is not direct invoicing at 6% - it is a refund scheme. VAT is paid at the standard 23% rate at the time of the works, and the individual can then ask the Tax Authority to refund the difference compared with 6%. The application must be made within 12 months of the use permit being issued, and the refund should be made within 150 days of the application being received.
If a property built or sold under this regime ends up being sold above the €660,982 limit, the builder or developer is called on to pay the tax difference that was not charged - the 17 percentage points between 6% and 23% on the value of the construction contract. This makes it especially important to set the sale price properly before invoicing the works at the reduced rate.
Reverse charge
The decree also extends the reverse-charge mechanism in certain situations: the invoice is issued without VAT charged by the supplier, and the customer must self-assess and pay the tax to the State. The Tax Authority has published Circular Letters no. 25116 and 25117 clarifying how these rules apply in practice - it is worth the finance department and the contractor having them to hand before invoicing any construction contract under this regime.