PORTUGAL Law and Practice Contributed by: Francisco Cabral Matos, Rita Pereira de Abreu and Margarida Campelo, VdA
especially those located in jurisdictions considered tax havens. 2.3 Special Incentives Investment Support Tax Regime The Tax Regime for Investment Support ( Regime Fis- cal de Apoio ao Investimento – RFAI), as a standard - ised credit for initial investments in specified regions and sectors (notably manufacturing, tourism, extrac - tive industries, certain agroexpenses up to EUR15 million and of 10% of the qualifying expenses that exceed such cap; and a property taxation exemption/ reduction, namely on Municipal Property Tax, Property Transfer Tax and Stamp Duty on properties’ acquisi - tion and holding during the investment period. The RFAI operates under EU regional aid rules (the General Block Exemption Regulation) and the national regional aid map, so eligibility, aid intensities and ceil - ings depend on the project’s location, sector and size, and are subject to state aid limits. Incentive for Corporate Capitalisation Portugal’s Incentive Regime for Corporate Capi - talisation ( Regime de Incentivo à Capitalização das Empresas – ICE) grants a CIT deduction calculated by applying a statutory notional rate to the net increase in eligible equity over a multi-year observation period. The eligible base generally reflects positive move - ments in a company’s funds – eg, capital contribu - tions, profit appropriations to reserves, or conversions of shareholder debt into equity – net of reductions (distributions or capital reductions). The deduction is subject to quantitative limits (EUR4 million or 30% of tax EBITDA). Any unused amount may be carried forward for up to five years. If there is a net decrease in eligible equity, the resulting amount is zero and no deduction will be allowed. Contractual Tax Benefits for Productive Investment The Contractual Tax Benefits Regime for Productive Investment ( Regime Contratual De Benefícios Fiscais Ao Investimento Produtivo ) provides for benefits that may be granted under contract for projects with “qual - ifying expenditures” of at least EUR3 million, materi -
alised by 31 December 2027, with a duration of up to ten years after the project’s completion. The legislation in force provides for three main ben - efits: • a CIT credit calculated on the qualifying expendi - tures actually incurred (from 10% to 25%); • Property Transfer Tax and Municipal Property Tax exemption/reduction on properties acquired/used for the project; and • Stamp Duty exemption/reduction on acts/contracts required for the investment. Compliance is monitored by a council including AICEP, IAPMEI (the Portuguese agencies for trade and competition) and the Portuguese tax authorities, and benefits are granted via a contract approved under the Investment Tax Code. Wage Increase Tax Incentive The Wage Increase Tax Incentive ( Incentivo Fis- cal à Valorização Salarial ) applies to employers that increase the average annual base remuneration of their employees by at least 4.7% relative to the pre - ceding year. Under this incentive, eligible entities may deduct from their taxable profit 200% of the costs attributable to such wage increase, up to a cap of five national minimum wages per employee (EUR920 per Under Portuguese tax legislation, losses can be car - ried forward but not carried back. Tax losses may be carried forward indefinitely, and the deduction is lim - ited to 65% of the taxable profits of the relevant year. If the ownership changes by more than 50% of the share capital or voting rights, tax losses will only be carried forward if the transaction has valid economic reasons that do not have tax evasion as their main objective or one of their main objectives. The burden of proof lies with the taxpayer to demonstrate that the transaction was not primarily tax-motivated. Carrying forward is also free from any limitation if any of the following apply: month, in 2026). 2.4 Loss Relief
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