In Portugal, urban planning licensing has functioned, in practice, as a true implicit tax on investment. It does not appear in any tax code, it is not paid through an assessment issued by the Tax Authority, but it produces equivalent economic effects: it consumes time, generates uncertainty, and increases the financial cost of projects. The high degree of municipal autonomy, the regulatory density of planning instruments and the procedural fragmentation have created a system where predictability — an essential element for economic decision-making — has become the exception.

Data confirms the market perception. According to a recent survey by the Associação Industrial Portuguesa (AIP) on licensing problems in Portugal, conducted among 238 companies across the country and from all sectors of activity, though with a higher incidence in industry (58%), the main barriers to investment are “the complex and time-consuming procedures for amending Municipal Master Plans (PDM), the approval timelines for Detail Plans (PP) and Urbanization Plans (PU), as well as processes for removing land from the National Ecological Reserve (REN) and National Agricultural Reserve (RAN).” AIP also noted that at least €1.3 billion in business investment is currently blocked due to licensing issues and further warned of projects stalled for more than five years.

In other words: the problem is not merely administrative — it is economic. And, we add, it is fiscal.

From an internal perspective, the Ombudsman also confirms that this complexity is not merely theoretical. In the 2024 Activity Report, the Ombudsman identifies recurrent complaints relating to delays and failures in municipal action in urban planning matters, with processes remaining for years without effective decision or adequate oversight. The report highlights that such omissions undermine citizens’ trust, weaken the enforcement of urban planning law, and create inequality between those who comply with the rules and those who benefit from administrative inaction. It also notes that “complaints submitted to the Ombudsman in this area often constitute requests for intervention against the omission or significant delay by municipalities in adopting measures to enforce urban planning legality as provided for in the Legal Framework for Urbanization and Building (RJUE).”

Licensing as a fiscal variable (even when no one mentions taxes)

When an urban planning process drags on, it is not only a construction project that is postponed. Fiscal revenue is postponed as well. And this is particularly relevant for those of us who analyze the economy through the lens of taxation.

1. VAT: The tax that waits for the crane

The construction investment cycle is VAT-intensive:

• construction works;

• procurement of materials;

• architectural and engineering services;

• inspections and technical specialties.

The longer the project timeline, the greater the dilution of revenue over time. The State does not necessarily lose the tax — but it loses financial value (time value of money) and revenue predictability. In a context of fiscal consolidation, this variable is far from irrelevant.

2. IMT and Stamp Duty: No license, no deed

Blocked projects mean postponed transactions.

Without a valid urban planning title, a property may not be financeable or transferable.

The result? IMT and Stamp Duty are collected later — or not collected at all.

In a real estate market already constrained by lack of supply, the effect is cumulative.

3. IMI: The VPT that is slow to emerge

Delays in completing construction imply delays in property valuation and the updating of the Taxable Asset Value (VPT).

Without an updated VPT, there is no new IMI tax base.

It is a silent but structural effect: less urban development, slower expansion of municipal tax bases.

4. Personal and Corporate Income Tax: Less supply, less taxable income

Reduced housing supply means:

• fewer declared rental incomes;

• less market turnover;

• reduced associated economic activity;

• greater pressure on compensatory public policies.

In macroeconomic terms, unpredictable processes act as a diffuse surtax on productive investment.

The legislative response: from authorization to responsibility

It is in this context that Proposal for Law No. 48/XVII/1.ª emerges, introducing a new amendment to the Legal Framework for Urbanization and Building (RJUE), adjustments to the urban rehabilitation regime, and to the so-called Urbanistic Simplex (Decree-Law No. 10/2024).

The objective is clear: to replace a model centered on prior administrative authorization with a model based on technical responsibility and subsequent oversight.

And here the structural changes begin.

1. Prior communication as the rule: The end of “waiting for the decision”

Prior communication becomes central whenever urban parameters are sufficiently detailed.

In practice:

• express authorization is no longer required to begin many urban operations;

• construction may proceed after submitting the communication and paying the fees;

• municipal control shifts to a later stage.

The model moves closer to a qualified form of tacit approval.

From a fiscal perspective, this change is anything but neutral:

It reduces the dead time between investment decision and execution — accelerating economic cycles and, consequently, tax cycles.

Less idle time means:

• VAT collected earlier;

• Deeds executed earlier;

• VPT updated earlier;

• Taxable income generated earlier.

2. Rationalization of deadlines: From procedural rigidity to proportionality

The traditional regime relied on a succession of formal stages (preliminary review, requests for additional documents, external opinions, interim decisions), often with suspensive effects and independent timelines, which in practice significantly prolonged the overall duration of the procedure — especially in more complex operations.

The legislative amendment embraces a logic of simplification and procedural concentration, reducing formal dependencies and favoring a more integrated analysis of the urban operation. The objective is not to artificially shorten legal deadlines, but to prevent procedural fragmentation from generating delays that are disproportionate to the project’s actual complexity.

From an economic — and here, fiscal — perspective, temporal predictability is almost as valuable as actual reduction of timelines. For investors, what compromises profitability is not only duration but unpredictability.

And unpredictability is, financially speaking, risk. Risk reduces investment. And less investment means a smaller future tax base.

3. Self-assessment of fees: A small silent revolution

The possibility of self-assessing urban planning fees is reinforced.

Instead of waiting for the municipality to issue payment slips, the applicant:

• calculates;

• pays;

• provides proof.

This point is particularly relevant from a fiscal standpoint:

• it requires greater regulatory clarity in defining calculation formulas;

• it increases transparency and financial predictability.

More importantly: it reduces the risk of administrative blockages due solely to the issuance of payment documents.

Time, again, is a fiscal variable.

4. Farewell to the permit as a suspensive condition

The receipt proving payment of fees becomes sufficient to start construction work, and the permit ceases to be the symbolic key that unlocks the construction site.

This change has a real impact on project financial scheduling — and, consequently, on the anticipation of associated taxation.

Debureaucratizing to tax better

There is, however, a relevant “philosophical” change. Whereas the system previously relied on prior verification, it now relies on technical responsibility and subsequent oversight.

Oversight shifts:

• less initial documentary validation;

• more posterior control and accountability.

For technicians, this means increased responsibility; for developers, stricter compliance requirements; and for the State, a greater need for effective enforcement.

Urban planning as indirect fiscal policy

Licensing has never been merely an administrative matter.
It is a structural variable in economic policy — and therefore in fiscal policy.

When decision times are excessive or unpredictable, the effect is not neutral: internal rates of return fall, investment decisions are delayed and future tax bases shrink. The impact is felt in construction VAT, in IMT on transactions, in IMI arising from updated valuations and in IRS and IRC due on generated income.

The reform now underway does not change tax rates nor create new taxes. But it may change something more important: the economic dynamics that support tax collection. By reducing uncertainty and idle time, the legislator is not only simplifying procedures — it is removing a contextual cost that operated, in practice, as an invisible tax on investment.

If it produces the expected effects, licensing simplification may demonstrate that, at times, the most efficient way to strengthen public revenue is not to tax more, but to allow economic activity to happen.

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