The proposed harmonisation of lower VAT rates to a single rate of 9% would deepen the crisis in the already struggling construction sector, warn unions and employers represented by the Central Economic Council (CEC).
Under budget proposals, VAT for reduced rates, currently at 6% and 12%, could be standardised at 9%. Earlier this month, the CEC warned such a measure would significantly increase the cost of living, and is now cautioning against “serious economic, social, and environmental consequences for the sector.”
Since 2023, social partners have emphasised that the 6% reduced VAT rate should be preserved and, if possible, expanded. The government initially responded to these calls, and as of 1st July 2025, the reduced rate of 6% was extended to all renovation works, as well as demolition and reconstruction projects.
However, the government now appears to be reconsidering its stance and pushing for a 9% rate. “This is incomprehensible, especially given the clear positive impacts of the current system,” stated the CEC.
The council fears this move could slow the creation and renovation of quality housing, discourage energy-efficient renovations, worsen the housing crisis, and weaken local employment.
Unions and employers argue that the 6% reduced rate is “a crucial support measure that should not be jeopardised.” They recommend maintaining the 6% rate for renovation and demolition-reconstruction projects, extending it to the construction of social housing, and abandoning any plans for harmonising VAT rates at 9%.
