Portugal will reduce VAT on Olive Oil production starting in 2026.

Portugal’s 2026 State Budget introduces a VAT reduction on olive oil production, lowering the rate to 6% on the mainland and 4% in Madeira and the Azores. Effective January 1, 2026, the change covers olive oil, pomace, and related processing services, replacing the temporary 23% rate applied earlier this year

Portugal is set to lower the VAT rate on olive oil production as part of its 2026 State Budget. The proposed change will reduce taxes on activities that turn olives into olive oil.

Olive oil production will be taxed at:

• 6% in mainland Portugal

• 4% in Madeira and the Azores

This includes both olive oil and olive pomace, as well as processing services offered by mills.

The government has submitted a draft amendment to the VAT Code, adding olive oil transformation to the list of goods and services eligible for reduced tax rates.

The new VAT rates will take effect on January 1, 2026, replacing the temporary 23% rate introduced earlier this year due to EU regulation changes