Insights
Urban development charges: TMU, land cessions and compensations in licensing
The feasibility study closed with a comfortable margin: land cost, design, construction, sale. Months later, with the project approved, the council's assessment arrives and the numbers change. Municipal urbanisation tax, a fee for issuing the permit, a compensation because the operation included no land cessions. None of these items was in the original spreadsheet, and all of them must be paid before the works can start.
The scene repeats itself because development charges are the least visible chapter of licensing in Portugal: they are not written into the RJUE as concrete amounts, they are spread across municipal regulations that change from one municipality to the next. The same building can pay very different sums depending on where it is built. Understanding how these charges work, and requesting them in writing before buying the land, is worth as much as the design itself.
Where the law says you pay: articles 116 and 117 of the RJUE
The basis is in the RJUE: article 116 provides for the tax for the creation, maintenance and reinforcement of urban infrastructure, known as TMU, and article 117 subjects the issue of permits for urban operations to fees, from the building licence to the use permit. The general framework is the regime of local authority taxes approved by Law 53-E/2006: each municipality approves a regulation with the basis of assessment, the calculation formula, the economic and financial justification and the exemptions. In practice, a developer should expect this map of charges:
- TMU, calculated with the formula in the municipal regulation;
- fees for issuing titles: the licence, the admission of a prior notification, the use permit;
- cessions of parcels to the municipal domain or, failing that, compensations;
- bonds guaranteeing the proper execution of urbanisation works;
- connection charges to public networks billed by the utility operators.
The TMU: one name, a different formula in every municipality
Municipal formulas generally combine the gross building area, coefficients per zone and per use, a reference construction cost and the share of municipal investment in infrastructure. The result varies widely: the same residential building can generate very different assessments in two neighbouring municipalities, because the coefficients and the zoning are decided by each municipal assembly. That is why this article quotes no euro figures: any number would be true in one municipality and false in the next.
It is also worth looking for the exemptions and reductions in the regulation: many municipalities reduce or waive the TMU in urban rehabilitation areas, for controlled-cost housing or for operations of municipal interest. This is money lost simply by not reading a public document available on the council's website.
Cessions to the municipal domain: article 44 after DL 108/2026
In subdivisions and operations with relevant impact, the developer cedes to the municipality, free of charge, the parcels for green spaces, collective facilities, streets and infrastructure, under article 44 of the RJUE and the parameters of the municipal plans. Decree-Law 108/2026 amended this article and clarified a recent figure: parcels intended for public housing, controlled-cost housing or affordable rental. These areas can be ceded to the municipality's private domain or remain in the developer's ownership, allocated to those uses; in either case, they count towards the cession parameters and generate no additional compensation.
The definition of controlled-cost housing has since been clarified. Portaria 320-A/2026/1, of 31 July gave new wording to article 1(b) and article 15-A of Portaria 65/2019 and now covers the programmes referred to in article 23 of Decree-Law 68/2019 and dwellings under a sale contract, a lease for subletting or the respective promissory contracts signed with municipalities or other public entities that undertake to rent or sublet them under Decree-Law 68/2019. Article 3 gives these amendments interpretative status, and article 4 brings the portaria into force on the day after publication, with effects from the entry into force of Portaria 281/2021.
For anyone running the numbers, the reading is simple: a cession is area that leaves the deal. A plot of ten thousand square metres is not ten thousand square metres of buildable land, and that difference has to be in the account from day one.
Compensations and bonds: when there is no land to cede
When the property does not justify locating green spaces or facilities on it, there is no cession: there is a compensation to the municipality, in cash or in kind, set under the terms of the municipal regulation. It is perhaps the item most often forgotten in feasibility studies, and it can reach the same order of magnitude as the TMU.
Bonds, in turn, are not a definitive cost, but they weigh on cash flow: whoever executes urbanisation works posts a bond guaranteeing their proper completion, released in stages with the provisional and definitive acceptance of the works. Whether through bank guarantees, surety insurance or deposits, this is capital tied up for years, and the financial plan has to allow for it.
The «charges due» and the DL 108/2026 calendar
DL 108/2026, applicable to procedures started from 1 October 2026, brought a discreet novelty with practical effects: the notion of «charges due» now anchors procedural deadlines. In the prior notification route, for example, the subsequent verification of the project's legal and regulatory conformity lapses one year after the payment of the fees and other charges due or, if later, after the start of use of the building. In other words: the day you pay is no longer just accounting, it starts the clock on the legal certainty of your title. Keeping proof of payment has become risk management, not filing. For the full picture of the changes, see our guide to DL 108/2026.
Estimating before you buy: simulation and feasibility
The good news is that almost all of this can be estimated in advance. The fee regulation is published on each municipality's website; several councils have simulators or counters that run the calculation from the operation's data; and nothing prevents a formal written request for a simulation, with the intended area, use and location. In smaller municipalities this is solved with one meeting; in large councils there are formal channels and the request takes longer, one more reason to do it early.
The natural home for these numbers is the feasibility study that precedes the land purchase, next to the PDM parameters and the construction costs. Readers of our land purchase checklist and our licensing guide know the principle: first establish what can be built and what the right to build costs, only then negotiate the price. CertiAmb's consulting service does exactly this backstage work before the client signs anything.
Frequent mistakes and risks
- closing the land purchase without estimating TMU, fees and compensations, and discovering the charges with the project already approved;
- using another municipality's figures as a reference, when each municipal regulation has its own formula;
- forgetting that the absence of cessions generates a cash compensation, and leaving it out of the account;
- ignoring exemptions and reductions (rehabilitation areas, controlled-cost housing) the operation might qualify for;
- underestimating the weight of the urbanisation works bond in the cash flow plan;
- not keeping the proofs of payment which, under DL 108/2026, mark legal deadlines.
Frequently asked questions
What is the municipal urbanisation tax (TMU)?
It is the tax provided for in article 116 of the RJUE for the creation, maintenance and reinforcement of urban infrastructure. Each municipality sets its own calculation formula in a local regulation, under the general regime of local authority taxes (Law 53-E/2006), so the amount varies from one municipality to another.
How much will I pay in fees for my project?
There is no single national figure: the amount depends on the municipal fee regulation, the building area, the use and the location. The safe way to know is to read the municipal regulation and to ask the council for a written simulation before closing the land deal.
What are cessions to the municipal domain?
They are parcels the developer hands over to the municipality free of charge in subdivisions and operations with relevant impact: green spaces, collective facilities, streets and infrastructure. DL 108/2026 amended article 44 of the RJUE and clarified the parcels intended for public housing, controlled-cost housing or affordable rental, which may remain in the developer's ownership allocated to those uses and count towards the cession parameters.
What if there is no land to cede?
When the property does not justify a cession, the developer pays the municipality a compensation, in cash or in kind, under the terms of the municipal regulation. It is an amount many feasibility studies forget, and it can weigh as much as the TMU.
When are these charges paid?
As a rule, upon issue of the permit or admission of the prior notification, before works start. Payment also has legal effects: under DL 108/2026, the one-year deadline for the subsequent verification of a prior notification runs from the payment of the fees and other charges due or, if later, from the start of use.
Closing notes
Development charges are not negotiated at the end: they are estimated at the beginning. Between the TMU, the permit fees, the cessions or compensations and the bonds, the difference between a deal with margin and a deal that breaks even can sit in a municipal regulation nobody opened. Before closing on a plot or launching an operation, talk to the CertiAmb team: we survey the charges of the municipality in question, request the simulations from the council and integrate everything into the feasibility study and the design, so the council's assessment is never a surprise.
This article is provided for information purposes only and does not constitute legal, tax or technical advice. Each situation should be assessed individually by a qualified professional.