The Portuguese Tax Authorities (PTA), on 27 July 2026, issued Circular No. 4/2026, introducing new guidance on the Municipal Property Tax (MPT) treatment of wind and solar power generation facilities. The Circular repeals Circular No. 2/2021 and reflects the most recent case law of the Portuguese Supreme Administrative Court on this matter.

While maintaining the PTA's long-standing position that renewable energy generation facilities qualify as urban property for MPT purposes, the Circular adopts a broader approach to the determination of their property tax value (PTV). In particular, the PTA takes the view that the valuation should encompass the full set of assets, equipment and infrastructure that make up and support the electricity generation activity.

According to the Circular, all interconnected components required to convert renewable energy into electricity should be considered for valuation purposes, on the basis that they form part of a single autonomous economic unit with an independent economic value.

The Circular seeks to settle a long-standing debate regarding the scope of assets to be considered when determining the PTV of wind farms and solar power plants. As a result, assets that had previously been excluded from the valuation process, such as solar panels in solar plants and blades, rotors and nacelles in wind farms, may now be included in the calculation of the PTV.

The Circular also maintains the PTA's position that these assets should be valued using the cost-based valuation methodology, adjusted by the value of the underlying land, while providing further clarification on a number of practical aspects relating to the determination of the VPT, property registration requirements and the supporting documentation to be provided as part of the PTV determination.

Practical implications

The PTA's revised approach is expected to have a significant impact on the PTV of wind farms and solar power plants and, consequently, on the amount of MPT payable by their owners. By expanding the valuation perimeter to encompass a broader range of assets and infrastructure, the Circular may result in future reassessments and a material increase in the tax burden associated with these facilities.

Given the potential impact of this new administrative guidance, operators in the renewable energy sector should assess its implications for existing assets, future projects and any ongoing valuation disputes or tax litigation involving the MPT treatment of renewable energy facilities.

Implications

With the help of knowledgeable tax advisors, affected taxpayers should assess the implications of Circular No. 4/2026, reviewing property valuations and supporting administrative procedures, disputes and litigation concerning the MPT treatment of renewable energy generation assets.