PORTUGAL Trends and Developments Contributed by: Tânia de Almeida Ferreira, CCA Law Firm
Recalibration: ending “indirect SIFIDE” for new fund contributions A defining element of the reform is the decision to dis - continue, going forward, the fund-based route (“indi - rect SIFIDE”), ie, the ability for companies to generate SIFIDE benefits through contributions to investment funds that, in turn, invest in target companies expect - ed to carry out qualifying R&D activities. The policy rationale is clear: public materials support - ing the reform highlight a structural mismatch between the tax benefit generated and the effective execution of R&D investment, with concerns that significant amounts have remained parked in fund structures rather than being translated into timely, real-economy R&D outcomes. The reform therefore shifts the incen - tive back towards a substance-based model, where relief is more closely anchored to actual R&D activity and verifiable qualifying expenditure. Importantly, this is not framed as a retroactive change. Instead, it operates prospectively, while introducing targeted transitional rules for amounts already con - tributed. Transitional rules for existing SIFIDE fund capital: a longer deployment window and “productive innovation” allowance To address the practical reality of substantial com - mitted – but not yet fully deployed – capital in exist - ing SIFIDE fund structures, the legislative package includes transitional measures for contributions made up to the end of 2025. Key points include the following. • Extended time to invest The framework moves to a five-year investment window for funds to meet minimum investment requirements in investee companies, and for investee companies to demon - strate that the relevant investments are effectively carried out within the required perimeter. • “Productive innovation” as an eligible application (within limits) Up to 20% of the relevant contribu - tions may be channelled into productive innovation investments, provided these are directly derived from and functionally complementary to R&D activities completed in the previous three years.
Alongside broader tax trends in Portugal, such as increased transparency and reporting, data-driven audits, stronger anti-abuse scrutiny (GAAR/PPT) and ongoing international alignment (EU/OECD initiatives), this note focuses on four developments selected for their immediate, day-to-day relevance to market par - ticipants. These elements are: i) the extension and recalibration of SIFIDE; ii) the ESOP regime for start - ups; iii) the proposed 6% VAT rate for housing con - struction; and iv) the growing use of SIC structures in real estate. Extension and Reform of the SIFIDE R&D Tax Incentive Portugal’s System of Tax Incentives for Business R&D (SIFIDE) has been a central feature of the corporate tax landscape for decades, supporting private-sector innovation by allowing companies to deduct a per - centage of eligible R&D expenditure from their Corpo - rate Income Tax (CIT) liability. While SIFIDE has been amended and reconfigured over time, the current framework (SIFIDE II) remains one of the most relevant tax instruments for R&D-intensive groups operating in Portugal. A one-year extension to 2026: continuity, but with a clear “transition year” signal Following several prior renewals, the government has advanced a legislative package aimed at extending the “direct” SIFIDE II regime to cover the 2026 tax period. For calendar-year taxpayers, this means that quali - fying R&D expenditure incurred during 2026 should continue to generate SIFIDE credit to be claimed in the relevant CIT return, subject to the ordinary rules and the supporting technical documentation typically required for SIFIDE claims. From a policy standpoint, the fact that the extension is limited to one year, as opposed to a multi-year renew - al, is a meaningful signal, as it points to a managed transition – maintaining legal certainty for taxpayers’ 2026 planning while preserving flexibility for a broader redesign thereafter. In parallel, the Portuguese govern - ment has indicated that a dedicated working group will be tasked with developing proposals for a deeper review of the regime during 2026, reinforcing the view that the current extension is a bridge to more struc - tural reform.
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