Portugal's 2026 Budget brings VAT cuts for agriculture, art, and game meat.

Portugal’s 2026 Budget introduces multiple VAT reductions effective 1 January 2026, expanding the application of the reduced 6% rate across agriculture, art, and specific food products. Key measures include cutting VAT to 6% for olive oil production, art gallery sales, and game meat, while extending existing VAT exemptions for agricultural inputs and pet food for animal welfare associations until the end of 2026.

The 2026 State Budget (OE2026), approved by Parliament last week and now awaiting promulgation by the President, includes a package of Value Added Tax (VAT) reductions set to take effect on January 1, 2026.

The lists of goods and services subject to the reduced 6% VAT rate will be expanded, with five main measures approved:

-          Olive oil production VAT cut: The operation of transforming olives into olive oil will have its VAT rate change from the standard 23% down to 6%. This aligns the production process with the already reduced rate applied to the final olive oil product.

-          Fertilizer VAT exemption extended: The current VAT exemption on the purchase of fertilizers, soil correctives, flour, cereals, and seeds used in agriculture will be extended for another year, remaining in effect until December 31, 2026.

-          Art gallery VAT reduction: Sales of artworks in art galleries will see their VAT rate drop from the standard 23% to the reduced 6%. This change aims to stimulate the art market and standardize the tax treatment, which was previously only applied when the sale was made by the artist or rights holder.

-          Game Meat VAT Cut: The VAT on the sale of game meat will also be reduced from 23% to 6%, matching the rate applied to other fresh and frozen meats.

-          Pet food exemption extended: The VAT exemption on pet food acquired by legally constituted animal welfare associations will be extended for another year, lasting until December 31, 2026, to help support their operational costs.