Tax Benefits for the Reinvestment of Retained Earnings (DLRR)

The reinvestment of retained earnings is a tax incentive to micro, small and medium-sized companies that allows 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 income tax, in tax periods beginning on or after January 1st, 2014, up to 10% of retained earnings that are reinvested in eligible assets, within two years from the end of the tax period of the retained earnings.

    The annual deduction is capped at up to 25% of the income tax liability.

    The maximum amount of the retained and reinvested earnings that may be deducted annually is EUR 5.000.000, by IRC taxpayer.

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