Tax Benefits for the Reinvestment of Retained Earnings (DLRR)

The reinvestment of retained earnings is a tax incentive for micro, small and medium-sized companies that allows a corporate income tax (IRC) deduction of the retained and reinvested earnings used for the acquisition of relevant applications.


  • Beneficiaries
    IRC taxpayers with a permanent establishment in Portugal and non-residents in Portuguese territory, which undertake primarily a commercial, industrial or agricultural activity, may benefit from this deduction scheme.
  • Requirements
    The IRC taxpayers that meet the following conditions, in a cumulative way, may benefit from this tax aid:
    • Be included in the category of micro, small and medium-sized enterprise;
    • Have an accounting duly organized;
    • Have a taxable income not determined by indirect methods;
    • Have their tax payments and social security contributions regularized.
  • Relevant Applications
    Relevant applications are considered to be the ones linked to tangible fixed assets, including those acquired new, except:
    • Land, except where it is intended for the commercial operation of mining concessions, mineral and spring waters, quarries, clay or sand pits in projects within the extractive industry;
    • Construction, purchase, repair or extension of any facilities, except where these are factories or intended for administrative activities;
    • Passenger or mixed-use motor vehicles, pleasure craft and tourism aeroplanes;
    • Comfort or decoration items, except for hotel equipment linked to tourism exploitation;
    • Assets related with the activity under agreements or PPP's awarded to entities within the public sector.

  • Benefits
    Taxpayers are entitled to deduct from the IRC tax due in reporting periods beginning on or after January 1st, 2014, up to 10% of retained earnings that are reinvested in eligible assets within three years from the end of the reporting period.

    From 2018 onwards, small companies have the annual deduction capped at 50% of the corporate income tax due and larger companies at 25%.

    The maximum annual deductible amount is 10 million euros.
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