Last checked: 23 October 2026. I read the consolidated text of the VAT Code (updated to Decree-Law no. 97/2026 and Rectification Declaration no. 26/2026/1 of 13 July), the tax authority’s circular letter no. 30135 of 26 September 2012, and three binding information rulings. The links are at the end.
Quick answer. When a company does the replacement as a works contract (a job at an agreed price) on a home used as a dwelling, the labour pays 6%. Windows are materials: they also pay 6% only if they are worth 20% or less of the overall price. If they are worth more, the invoice must separate labour (6%) from materials (23%). If you only buy the windows, with no installation, VAT is 23%.
This is general information, not tax advice. Your case may have details that change the rate.
What the law says
The standard VAT rate is 23% and the reduced rate is 6% (article 18 of the VAT Code). Operations in List I of the Code pay 6%. For window replacement the relevant item is 2.27, which covers “works contracts for improvement, remodelling, renovation, restoration, repair or maintenance of buildings or parts of them used as dwellings” (my translation). The text adds that the reduced rate does not cover the materials incorporated, unless their value does not exceed 20% of the overall value of the service.
Circular letter no. 30135 explains how the tax authority applies this rule.
The most common cases
| Situation | VAT |
|---|---|
| Works contract on a home, materials up to 20% of the total | 6% on everything |
| Works contract, materials above 20%, invoice with labour and materials on separate lines | 6% on labour, 23% on materials |
| Works contract, materials above 20%, invoice with a single overall price | 23% on everything |
| Buying only the windows, with no installation | 23% |
| Work paid by the hour or the day | Outside item 2.27, in general 23% |
The row for buying without installation comes from article 18(1)©: whatever is not in List I pays 23%. Binding information no. 15432 (2019) says the same for materials the owner buys directly, even if they later go into the works.
Conditions for the 6%
- It must be a works contract. The tax authority uses the Civil Code definition: a job done for a price fixed beforehand, “work agreed as a whole and not by the day” (my translation). Service hired by the hour or the day is left out.
- The property must be a dwelling. What counts is a home or unit used as a dwelling at the start of the works and still used so afterwards. A home empty before or after the works, because it is for sale or to let, does not qualify. It does if it was lived in and the new tenancy starts right after.
- Who the client is. The owner, the tenant or the condominium (in a residential building).
- Mixed works. If the job includes parts outside the item, such as a shop, the company must separate the amounts on the invoice. Without separation, everything pays 23%.
- Outside the item: new construction, extensions and rebuilding, cleaning, upkeep of green spaces, and property used for a professional or commercial activity.
An example with round numbers
Illustrative example. The figures are made up to show the arithmetic and are not window prices. Price of the job before VAT: 1,000 EUR.
- Materials 150 EUR (15%). Below 20%. VAT: 6% of 1,000 EUR = 60 EUR.
- Materials 600 EUR (60%), labour 400 EUR, on separate lines. VAT: 6% of 400 EUR = 24 EUR, plus 23% of 600 EUR = 138 EUR. Total 162 EUR.
- The same job, with a single overall price. VAT: 23% of 1,000 EUR = 230 EUR.
The texts I read do not say whether the 20% is measured before or after VAT. The example uses amounts before VAT. Ask the company to show the calculation.
What about windows in particular?
In a replacement, the windows are materials built into the job and may be worth more than 20% of the total. I found no source for the typical share. I also found no tax authority ruling on windows. The closest is binding information no. 13536 (2018) on doors: the labour of replacing and fitting doors in homes, under a works contract, falls under item 2.27. That is only an analogy.
Other cases
- Urban rehabilitation area (item 2.23). Rehabilitation works on buildings in legally delimited urban rehabilitation areas pay 6%. The item’s text has no 20% rule. Information no. 13536 quotes an earlier wording and advises having a document from the municipality proving the building lies in the area. Ask the company for the item in writing.
- Decree-Law no. 97/2026. It creates item 2.42, 6% for construction or rehabilitation works on properties to be sold as the buyer’s permanent home or let, with price and rent limits, until 31 December 2032. I saw nothing applying it to replacing windows in the home where you already live.
- Reverse charge. Article 2(1)(j) makes a business client with the right to deduct VAT account for the tax on construction works contracts. A private person paying for the windows of their own home is not in that case.
- State Budget for 2026. In the consolidated VAT Code of July 2026, item 2.27 and article 18(1) carry no recent amendment note (the note on article 18(1) dates from 2010). I did not read the budget law, only the consolidated Code.
- Azores and Madeira. The regional assemblies may set lower rates (article 18(3)). I did not read the regional rates: confirm.
What the quote should show
- The word empreitada (works contract) and a closed price for the described job: removing the old windows, supplying, fitting and finishing.
- Labour and materials on separate lines, each with the amount before VAT, the rate and the VAT.
- The share of materials in the total, and how it was calculated.
- The item used. The invoice should say “Taxa reduzida ao abrigo da verba 2.27 da Lista I anexa ao CIVA”, with the client (ask for your name and tax number) and the property identified.
- Work outside the dwelling (for example a shop) on separate lines.
- The price without and with VAT, so you can compare like with like using the quote checker and the quote comparison.
Before paying, ask: “Under which VAT item do you classify this job, and why?”
Confirm with someone who knows
Ask an accountant. You can also put the question to the tax authority through the e-balcão of the Portal das Finanças or by its phone service (217 206 707, the number shown in the Portal’s documents). The binding information rulings I read answer requests made under article 68 of the General Tax Law.
What I could not confirm
- A tax authority decision on windows or frames.
- Whether the 20% is measured before or after VAT.
- Whether the 2012 circular letter has been replaced: I found no other, but I only read this one.
- The Azores and Madeira rates.
- Changes to the VAT Code after July 2026: I read the consolidated version dated 23 July 2026.
- The typical share of windows in the price of a replacement.
Sources
- Portal das Finanças: VAT Code, consolidated text (in Portuguese; updated to Decree-Law no. 97/2026 of 20 May and the Rectification Declaration of 13 July 2026): article 18, items 2.23, 2.27 and 2.42, article 2(1)(j). Read on 23 October 2026.
- Circular letter no. 30135, 26 September 2012 (in Portuguese): points 3 to 5 and 7 to 10. Read on 23 October 2026.
- Tax authority binding information (in Portuguese): no. 15432 (2019), no. 16132 (2019) and no. 13536 (2018).
- Portal das Finanças: Decree-Law no. 97/2026 (in Portuguese): item 2.42 and the 2032 deadline.
- Portal das Finanças: e-balcão leaflet (in Portuguese): how to put a question to the tax authority.
What to do next
- See the grants and the VAT summary in Grants for windows.
- Understand what moves the price in How much PVC windows cost.
- Learn what to ask in How to ask for a quote and Questions for the installer.
- Before ordering, see Can I replace my windows?.