EU Recommends Portugal Adjust Property Tax System to Increase Housing Supply
According to Portuguese newspaper ECO, the European Commission has recommended that Portugal reassess its Municipal Property Tax (IMI) system as part of broader efforts to improve the functioning of the housing market.
The European Commission has suggested that Portugal gradually reduce its reliance on taxes levied at the point of property transactions and place greater emphasis on recurring property taxation, including updating the taxable property value (VPT) used to calculate IMI. The Commission argues that such measures could encourage homeowners to place underused or vacant properties back on the market, thereby increasing housing supply and improving residential mobility.
At the same time, the European Commission recommends that temporary support measures be provided to low-income and vulnerable households that may be affected by any future changes, helping to alleviate housing cost pressures.
The Commission also notes that Portugal has experienced one of the strongest increases in house prices in Europe over the past decade. Data shows that nominal house prices in Portugal have risen by more than 100% since 2015, with housing affordability pressures becoming particularly pronounced in coastal urban areas such as Lisbon and Porto.
According to ECO, the European Union also acknowledges that investment in social housing has increased significantly in recent years, with part of the funding coming from European funds. Nevertheless, the housing market continues to face structural imbalances between supply and demand, and the pace of new housing construction has not yet been sufficient to meet market needs.
Analysts point out that the Commission’s recommendation is not simply about raising property tax rates. Rather, it aims to improve the structure of property taxation, encourage more efficient use of housing stock, and bring more homes onto the market in order to help address Portugal’s long-standing housing shortage.
Reference link: https://www.theportugalnews.com/news/2026-06-04/european-union-suggests-portugal-increase-property-tax/1033573
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