The Portuguese Tax and Customs Authority recently clarified the VAT framework for non-residential (commercial) sublease contracts that include associated costs, through Binding Information No. 29156, with a resolution date of January 26, 2026, issued by the Director of DSIVA Services, by delegation of powers.
This resolution is particularly relevant for companies with leasing or subleasing structures, shared spaces, or contractual models that provide for billing expenses to the user, especially in the real estate and asset management sectors in Portugal.
What did the Tax Authority clarify?
The Binding Information analyzes a sublease contract composed of two distinct components:
(i) the sublease of the space, through payment of rent calculated per square meter; and
(ii) associated costs, such as taxes, fees, and costs related to heating, electricity, gas, cleaning of common areas, and other similar expenses.
Regarding the sublease of the space, the Tax Authority concludes that when this results in a passive provision of the property to the tenant, granting the right of exclusive occupation for a determined period and through a rent, without relevant additional services, the operation benefits from the VAT exemption provided for in paragraph 29) of Article 9 of the VAT Code (CIVA).
Associated costs
Associated costs, when they correspond to separate services and are invoiced separately, according to actual consumption or contractually established criteria, are subject to VAT and are not exempt, in accordance with Articles 1 and 4 of the VAT Code.
Single service or “all-inclusive” rent – not VAT exempt
However, the Tax Authority warns that when these costs are added to the rent and invoiced together, forming a single service, the operation ceases to qualify as a mere exempt lease, and the entire operation becomes subject to VAT at the standard rate, under paragraph c) of number 1 of Article 18 of the VAT Code, rendering Article 9’s exemption inapplicable.
Practical impact on companies
This Binding Information reinforces the importance of having an appropriate contractual structure, a clear separation between rent and associated costs, and a rigorous invoicing model, under the risk of losing the VAT exemption applicable to leasing.
In non-residential lease and sublease contracts, rent should be invoiced independently, with an express indication of the VAT exemption, while associated costs, such as energy, cleaning, maintenance, or fees, should be invoiced separately or clearly itemized, and are subject to VAT at the standard rate (23%). Billing as a lump sum or “all-inclusive” solution may lead the operation to be considered a single service, losing the VAT exemption.
The Tax Authority also values the economic reality of the operation, making it essential to demonstrate the autonomy of the invoiced services, as well as ensuring proper accounting and documentary separation, including objective allocation criteria, economically justified prices, and evidence of the subtenant’s control or influence over respective consumption.
At Belzuz Advogados, S.L.P., we offer specialized legal and tax advisory services in VAT and real estate taxation, supporting our clients in analyzing the tax framework of lease and sublease contracts, reviewing and structuring contracts in compliance with tax legislation and case law, as well as evaluating the impact of associated costs on VAT.