In short: for years the Tax Authority required, for the reduced VAT rate on rehabilitation works, that beyond a delimited urban rehabilitation area there also be an approved urban rehabilitation operation. Law No. 48/2026 says otherwise — and says it by authentic interpretation, with effect back to 2009. This note explains what changes, who can react and within what limits.
What the law establishes
Law No. 48/2026 of 17 August provides an authentic interpretation of item 2.23 of List I annexed to the VAT Code, as worded by Law No. 64-A/2008 of 31 December. Article 2 provides that urban rehabilitation works are taken to mean all works carried out on buildings or public spaces located in urban rehabilitation areas delimited in accordance with the law, irrespective of the approval of an urban rehabilitation operation. The cumulative requirement that fuelled arbitration and court disputes is thereby removed. Ref.: Law No. 48/2026, Official Gazette No. 158/2026, Series I, of 17/08/2026.
Why the date matters
Article 3 provides that the law takes effect as from the entry into force of Law No. 64-A/2008. Being an authentic interpretation, the new law becomes part of the interpreted rule under Article 13 of the Civil Code: it does not create a regime from August 2026 onwards, it clarifies what the provision always meant. The instrument entered into force on 18 August 2026. It is this retroactivity that opens the door to revisiting works invoiced years ago.
What the retroactivity does not reopen
This is worth saying before expectations are raised: the retroactivity inherent in interpretative statutes does not reopen situations covered by res judicata or by a final administrative decision. Cases decided with final effect, or tax assessments that became settled because they were not challenged within the statutory periods, are not undone by this law. What remains open are the periods not yet settled and pending proceedings.
Contractors and developers: what to review
Those who charged VAT at the standard rate out of caution, faced with the Tax Authority position, now have an express statutory argument for applying the 6% rate on works under way. Three things are worth reviewing in concrete terms: the formal delimitation of the area at the date of the works, which the law does not dispense with; the classification of the works as rehabilitation, which must still be demonstrated; and the tax pass-through clauses in contracts and tender documents, to establish who benefits from any regularisation.
Owners, condominiums and municipalities: the route to recovery
For those who bore the tax, the discussion is about recovery and depends on the contractual terms and on the time limits. Articles 78 and 98(2) of the VAT Code set the limits of regularisation and of the right to deduct, and the General Tax Law those of complaint and review. It is worth recalling that, on interest for late repayment in ex officio review applications, the Plenary of the Tax Chamber of the Supreme Administrative Court laid down that it is due only after one year has elapsed from the application — so reacting within the ordinary time limits remains more advantageous than waiting. Ref.: Judgment No. 18/2026 of the Supreme Administrative Court, Official Gazette No. 149/2026, Series I, of 04/08/2026.
The immediate step
Run a triage: identify works from recent financial years on properties located within delimited areas, separate those covered by a settled decision from those that are not, and confirm in which periods it is still possible to complain, seek review or regularise. This is file work, not argument — the law provides the ground, but proof of location and of the nature of the works still lies with whoever invokes it.
This note is provided for information purposes only and does not constitute legal advice. For an analysis of your specific situation, please contact us.