The honeymoon phase between Portugal and its cut-price green gadgets lasted barely three summers. On 1 July the country quietly reinstated the standard 23 per cent IVA on air-conditioning units, solar panels, heat pumps and small wind turbines, ending the 6 per cent discount that had helped thousands of households modernise their heating and cooling systems since 2022. Installers, climate advocates and consumer groups warn that the sudden jump in price could slow Portugal’s push to decarbonise homes and leave residents—particularly foreigners still mastering local tax rules—paying more to stay comfortable during ever-hotter summers.

A short-lived incentive tucked into an emergency budget

When Lisbon first cut the value-added tax on selected clean-energy devices to 6 per cent, the move was billed as a fast way to blunt the energy-price shock that followed Russia’s invasion of Ukraine and to accelerate Portugal’s National Energy and Climate Plan 2030. The legislation, however, included a sunset clause that set 30 June 2025 as the final day of the reduced rate unless lawmakers renewed it. They did not. Finance officials say normalising the VAT schedule was necessary to stabilise public revenue, yet the decision arrived with little fanfare and even less public debate.

What the higher tax means for property owners and tenants

The price impact is immediate. A basic reversible heat pump that cost roughly €3,500 before installation now climbs by about €800 once the 23 per cent IVA is applied. Foreign residents renovating a holiday flat or relocating permanently should check whether quotations issued before 1 July included the lower rate; unless a signed contract and down-payment were registered with the tax office before the deadline, the higher tax applies. Renters will feel the pinch indirectly as landlords factor larger capital expenditures into future lease renewals.

Industry reaction: ‘An unnecessary hurdle’

Celeste Campinho, president of the Portuguese Installers Association (AIPOR), calls the reversion to 23 per cent “an unnecessary hurdle at the very moment we need to scale up clean heating and cooling”. The trade body argues that higher upfront costs could deter households from replacing aging, inefficient air conditioners that use refrigerants with a heavy climate footprint. Environmental NGO Zero describes the change as a fiscal back-slide that clashes with EU Fit-for-55 targets and coincided, rather awkwardly, with World Refrigeration Day on 26 June.

How Portugal now compares with its neighbours

Spain currently taxes domestic solar and heat-pump installations at 10 per cent, while France applies 5.5 per cent to a similar basket of products. Portuguese installers fear that the gap in fiscal treatment may push cross-border shoppers to source equipment elsewhere, echoing the boom in Spanish photovoltaic imports seen during previous tax differentials.

Are there other incentives left on the table?

The national Programme for More Sustainable Buildings still offers partial rebates for high-efficiency equipment but its latest funding window closed in April and the next call has yet to be announced. Some municipalities—including Lisbon, Cascais and Porto—operate their own grants that can offset part of the VAT hike, though paperwork is usually in Portuguese and approval times vary. Prospective applicants should budget several weeks for documentation and keep all receipts, as reimbursements are processed after installation.

Labour shortages could magnify delays

Even before the tax shift, the HVAC sector lacked qualified technicians. A study by the Polytechnic Institute of Setúbal estimates the industry needs an additional 5,000 electricians and refrigeration specialists to meet demand through 2030. Higher prices may dampen orders, but any installations that do proceed could still face scheduling backlogs stretching deep into autumn.

Could the 6 per cent rate return?

Opposition parties across the spectrum have signalled that restoring a lower bracket will be on the table during the autumn budget debate, especially if Brussels tightens emission-reduction milestones next year. The soonest any change could legally take effect is January 2026. Until then, homeowners should plan on the full 23 per cent and treat any future tax relief as a bonus rather than a certainty.

Staying cool—financially and literally

For Portugal’s rapidly growing expatriate community, the lesson is clear: double-check tax lines in renovation quotes, investigate local subsidies early, and allow extra time for installation. The country remains committed on paper to phasing out fossil-fuel heating and cooling, but for at least the next 18 months the journey toward a greener home comes with a higher fiscal toll.