The Portuguese Government established a new tax incentive regime for scientific research and innovation through the State Budget for 2024.
This regime provides for a special rate of 20% on net income from dependent work (category A) and on business and professional income (category B) resulting from certain professional activities, mentioned below, for a period of ten consecutive years, as well as exemption from taxes on income from dependent work, business and professionals, capital (category E), property income (category F) and capital gains (category G) obtained abroad. This new tax incentive regime was created for taxpayers who:
Become residents in Portugal for tax purposes;
Have not been resident in Portugal in any of the last five years;
They earn income from any activity falling into the following categories:
Academic teaching at universities and scientific research activities integrated into the national scientific and technological system;
Functions qualified within the scope of contractual benefits for productive investment, under the terms provided for in applicable legislation;
Highly qualified functions, as defined in a decree issued by the members of the Government responsible for the areas of finance and economics, carried out in: (i) companies with eligible applications, in the fiscal year in which they began their activities or in the five previous fiscal years, which benefit or have benefited from the Investment Support Tax Regime, under the terms set out in applicable legislation; or (ii) industrial and service companies whose main activity corresponds to an economic activity code (CAE) defined in a decree issued by the members of the Government responsible for the areas of finance and economics and which export at least 50% of their revenue in the fiscal year in which they began their activities or in any of the two previous years;
Other qualified functions and members of corporate bodies of entities involved in economic activities recognized by the Agency for Investment and Foreign Trade of Portugal, E.P.E. or by IAPMEI – Agency for Competitiveness and Innovation, I.P. as relevant to the national economy, particularly with regard to attracting productive investment and reducing regional asymmetries;
Research and development carried out by personnel, provided that the associated costs are eligible for the purposes of the tax incentive regime for business research and development, under the terms provided for in applicable legislation;
Functions and members of corporate bodies of entities certified as start-ups, under the terms provided for in applicable legislation; or
Functions or other activities carried out by tax residents in the autonomous regions of the Azores and Madeira, under the terms to be defined by regional legislative decree.
Currently, highly skilled roles include managing director and chief executive officer, directors of corporate administrative and commercial services, directors of production and specialized services, as well as information and communications technology specialists.
With regard to industrial and service companies, these include manufacturing industries, computer programming, consultancy and related activities, data processing activities, information domiciliation and related activities, web portals, scientific research and development activities.
Although this new tax incentive regime only applies to income generated by the mentioned activities, the fact is that the creation of this regime by the Portuguese Government deserves to be praised, as it is a very favorable regime that aims to attract talent and qualified workers to Portugal, while simultaneously promoting the growth of companies in the country.
Furthermore, the Portuguese Government has already announced that the professional and business categories that will be able to benefit from the special rate of 20% on net income from dependent work (category A) and business and professional income (category B) will soon be expanded, which means that this scheme will become even more attractive in the future, allowing more people to benefit from it.
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