Portugal: Business & Investment incentives at a glance
It is commonly accepted that Portugal has an open economy and a business environment that is favorable and investment friendly. In fact, Portugal has the talent, the infrastructure, social stability, the know-how, a perfect climate and a unique quality of life.
In fact, with a growing and booming economy, Portugal has one of the most vibrant European entrepreneurship ecosystems, resulting from investments made over the last decades in the qualification of human resources, in the implementation of infrastructures and the development of technology, which provide enormous opportunities for those looking to launch or invest in new businesses.
With the goal to launch and to invest in new businesses in Portugal, we highlight below some of the incentives available to companies currently available:
1) Portugal 2030 Program
The Portugal 2030 Program is the result of a Partnership Agreement established between Portugal and the European Commission, which aims the accomplishment of major strategic objectives in areas such as innovation, digital transition, connectivity, climate action, sustainability, qualifications and inclusion.
The Portugal 2030 Program is executed between 2021 and 2027, though different programs, in the global amount of €23 billion, being 7 of the programs of regional scope, 4 of the programs addressed to specific areas (such inclusion, innovation, digital transition, sustainability and sea, and a final program concerning European territorial cooperation).
The projects are financed through European and Portuguese Funds, and subject to prior approval and further audits to confirm its implementation and if the objectives were met.
2) Recovery and Resilience Plan
The Recovery and Resilience Plan (PRR) is a program approved by the European Commission to be implemented in each member-state of the European Union (EU), with an implementation period until 2026, which aims to implement a set of reforms and investments aimed at restoring sustained economic growth after the Covid-19 pandemic, reinforcing the objective of convergence with Europe over the next decade.
With objectives in areas related to economic recovery and climate and digital transition, projects in these areas are financed through loans, under favorable conditions, grants or subsidies.
3) Projects of Potential National Interest (PIN Projects)
The PIN Projects are investment projects either from Portuguese or foreign source that, by meeting some requirements, benefit from a specific monitorization system.
In fact, recognition as a PIN Project does not constitute a fund, grant or subsidy allocation program, but rather a system for monitoring the application and execution of investment projects that are or intend to be subject to incentives in the processing of processes.
In general, to be considered as PIN Project, the following cumulative requirements should be met:
a) A global investment ≥ EUR. 25,000,000.00.
b) Direct jobs ≥ than 50 the meet.
c) Be submitted by promoters of recognized suitability and credibility.
However, if the investment project do not meet the requirements foreseen in paragraphs a) and b) above, in may be exceptionally recognized as PIN Projects, provided that meet two of the following requirements: (i) R&D activity amounting to at least 10% of the company's turnover; (ii) An innovation component, resulting in a significant portion of its activity being anchored in a patent developed by the company; (iii) A clear environmental interest; (iv) An export vocation, resulting in at least 50% of its turnover being directed to the international market; and, (v) Significant production of marketable goods and services.
4) Investment Tax Code
The Portuguese Tax Code of Investment (TCI) is an important legal diploma in which are foreseen and defined different tax regimes or tax benefits specially addressed to attract investments, not only from Portuguese source, but also from foreign source.
The regimes or tax benefits set out in the TCI are the following:
a) Contractual tax benefits to productive investments projects:
Tax benefits defined by agreement, for a period up to 10 years, in productive investments projects in specific areas, such as extractive or manufacturing industry, agricultural, aquaculture, fish farming, and forestry activities, research and development and high-tech activities or information technologies and audiovisual and multimedia production, with a minimum amount of EUR. 3,000,000.00, among other requirements.
The tax benefits that may be granted are the following: (i) corporate income tax (CIT) credit, (ii) exemption or reduction of property transfer tax and of property tax, (iii) exemption of stamp tax, and (iv) special tax rate for qualified or skilled workers.
b) Tax Scheme for Investment Support (RFAI)
The tax scheme for investment support consists of tax benefits granted to CIT taxable persons who operate in defined areas for investments made in specific tangible and intangible assets destined for the development of their activities.
The tax benefits granted consists of: (i) CIT tax deduction, (ii) exemption or reduction of property transfer tax and of property tax, (iii) exemption of stamp tax.
c) Entrepreneurial R&D Tax Incentives System (SIFIDE)
The entrepreneurial R&D tax incentives system consists of a tax benefit or tax relief specially addressed to CIT taxable connected or related with R&D expenses incurred by companies, aiming therefore to increase their competitiveness.
The R&D expenses considered for this tax benefit or tax relief relates with the (i) acquisition or purchase of specific tangible assets, (ii) expenses incurred with employees directly involved in R&D, (iii) expenses related to patents, among other expenses incurred and directly related with R&D, which consists of a CIT tax deduction.
