The Incentive for Company Capitalization (ICE) is a tax benefit aimed at strengthening the financial soundness of Portuguese companies by promoting an increase in their equity. Updated in May 2025 by the Ordem dos Contabilistas Certificados (OCC) (Order of Certified Accountants), the ICE Practical Guide offers detailed guidance on applying this incentive.
📌 What is ICE?
ICE allows companies to deduct a percentage of eligible net increases in equity from their taxable profit, thereby encouraging business capitalization.
🏢 Who Can Benefit?
Corporate Income Tax (IRC) taxpayers who meet the following criteria can benefit from ICE:
- Primarily engage in a commercial, industrial, or agricultural activity;
- Maintain organized accounting in accordance with current legal standards;
- Determine taxable profit based on their accounting records;
- Have their tax and social security situation regularized.
Entities subject to the supervision of the Bank of Portugal or the Insurance and Pension Funds Supervisory Authority, as well as branches in Portugal of credit institutions, other financial institutions, or insurance companies, are excluded.
📈 How Does the Benefit Work?
For the tax period of 2025, the deduction corresponds to the application of the 12-month Euribor rate, calculated based on the average of the last day of each month, plus a spread of 2 percentage points, to the amount of eligible net increases in equity.
The deduction cannot exceed, in each tax period, the greater of the following limits:
- €4,000,000;
- 30% of earnings before depreciation, amortization, net financing expenses, and taxes (fiscal EBITDA).
The part of the deduction that exceeds the second limit can be carried forward for the five subsequent tax periods.
🧮 Calculation of Eligible Increases
Eligible net increases in equity are calculated based on the sum of values verified in the current year and the six preceding tax periods, being considered zero in situations where a negative difference results from this sum.
🛡️ Anti-Abuse Rules
ICE is subject to anti-abuse rules aimed at preventing the undue use of the benefit, particularly in restructuring operations such as mergers, demergers, and asset contributions, which may have implications for the maintenance of the tax benefit.
📝 Declaration Procedures
To benefit from ICE, it is necessary to fill out Annex D of IRC Model 22 declaration, according to the detailed instructions in the ICE Practical Guide.
✅ Conclusion
ICE represents a significant opportunity for companies to strengthen their equity structure, benefiting from a relevant tax deduction. However, its application requires in-depth knowledge of the established conditions and procedures.
This article was prepared based on information available to date and is intended for informational purposes.
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