Contractual Tax Benefits for Productive Investment

Contractual tax benefits for investments of at least 3 million euros in productive assets. These benefits are individually negotiated with Portuguese national authorities and are granted for up to 10 years.

This scheme applies to direct investment related to the following economic activities:
  • Extractive and transforming industries;
  • Tourism;
  • Computer technology activities and associated services;
  • Agricultural, piscicultural, stock-rearing and forestry activities;
  • Research and development and high-intensity technology activities;
  • Information technology and audiovisual and multimedia production;
  • Defence, environment, energy and telecommunications;
  • Activities related to shared services centres.

  • Access Conditions for Beneficiaries
    Investment projects are eligible whenever their investors meet the following conditions:
    • Have technical and management skills;
    • Evidence a balanced financial situation with a financial autonomy of 20% or more;
    • Have an accounting duly organized;
    • Have a taxable income not determined by indirect methods;
    • Ensure own financial contribution (own resources or external financing) in at least 25% of the projects’ eligible costs;
    • Have tax payments and social security contributions regularized;
    • Not be subject to an outstanding recovery order following a previous Commission Decision declaring an aid illegal and incompatible with the common market.
  • Conditions of Access for Projects
    Projects of initial investment are eligible provided that their implementation has not started at the date of submission of the application requesting the aid, and as long as technical, economic and financial viability is demonstrated, the creation of jobs and their maintenance is provided and at least one of the following conditions is fulfilled:
    • They are regarded as relevant for the strategic development of the national economy; or
    • They contribute for the reduction of regional asymmetries; or
    • They contribute for the enhancement of technological and national scientific research, for environment improvement or for improving competitiveness and production efficiency.
  • Benefits
    The following tax benefits can be granted to investment projects, in a cumulative way:
    • Tax credit, determined on the basis of the application of a percentage between 10% to 25% of the relevant applications of the project actually made, to be deducted from the declared taxable amount;
    • IMI (Municipal Property Tax) exemption or reduction, during the term of the contract, relating to the property used by the undertaking in connection with the investment project;
    • IMT (Property Transfer Tax) exemption or reduction, regarding real property acquired by the undertaking for use in the exercise of its activity pursuant to the project;
    • Stamp Duty exemption, payable on any deeds or contracts necessary to the realisation of the investment project.

    The tax credit is subject to the following limits:
    • In the case of the set up of new companies, annual deductions may correspond to the total tax payable for each year;
    • In the case of projects in existing companies, annual deductions may not exceed 25% of the total tax benefit granted or 50% of the tax payable as assessed for each year.

  • Criteria for determining the Benefits
    Up to 10%
    Depending on the purchasing power per capita index of the region where the project is located. In Porto, the last two annual calculations show a purchasing power per capita index higher than the national average, thus this increased rate is not applicable.
    Up to 8%
    If the project promotes the creation of new jobs or their maintenance until the term of the contract, according to the following grades:
    • 1% ≥ 50 or more jobs;
    • 2% ≥ 100 or more jobs;
    • 3% ≥ 150 or more jobs;
    • 4% ≥ 200 or more jobs;
    • 5% ≥ 250 or more jobs;
    • 6% ≥ 300 or more jobs;
    • 7% ≥ 400 or more jobs;
    • 8% ≥ 500 or more jobs.
    Up to 6%
    If the project contributes for the strategic development of the national economy, of regional asymmetries, the enhancement of technological and national scientific research, for environment improvement or for improving competitiveness and production efficiency.
    Where a project is recognised as being of exceptional importance to the national economy, an increase up to 5% may be granted by a decision of the Council of Ministers, subject to the total limit of 25% of the relevant applications.
  • Relevant Applications
    For the purpose of calculation of the benefits, the expenses associated to the investment projects linked to tangible fixed assets are considered as relevant applications, except: 
    • Land that is not included in projects of extractive industry meant for the exploration and concession of minerals, table and medical waters, quarries, barriers and sand pits;
    • Buildings and other constructions not directly linked to the productive process or to the essential administrative activities;
    • Light passenger or mixed use vehicles;
    • Other transportation means whose value exceeds 20% of the total amount of the relevant applications;
    • Furniture and comfort or decoration items, except for hotel equipment linked to tourism exploitation;
    • Social equipments;
    • Other investment assets not directly and essentially associated to the productive activity of the company, except for the productive equipments for economic purposes, of residuals that result from the productive transformation or consume process in Portugal, as long as of recognised industrial and environmental interest;
    • Used equipments and replacement investments.

    Intangible fixed assets are also considered relevant applications. They are constituted by expenses linked to technology transfer, namely through the acquisition of patents, licenses, know-how or technical skills not protected by patents. Where the IRC taxpayers are not small or medium enterprises, expenses cannot exceed 50% of the relevant applications. 

    The following expenses are also eligible, as long as they are executed less than one year as of the date of application to obtain the tax aid:
    • Advance payments up to the amount of 50% of the cost of each acquisition;
    • Expenses regarding the studies directly related with the investment, regarding that they are accounted as intangible assets.
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