Portugal Introduces New Tax Incentive for Scientific Research and Innovation - IFICI
Portugal has approved a new tax incentive aimed at boosting investment in scientific research and business innovation (IFICI), effective for tax periods starting on or after 1 January 2024. The regime is designed to support companies that make qualifying investments in R&D and innovative sectors, particularly through partnerships with research entities.
Key Features of the Incentive
Eligibility
The incentive is available to companies subject to corporate income tax (IRC) in Portugal, including both Portuguese residents and non-resident entities with a permanent establishment in the country.Scope of the Deduction
A 130% tax deduction is allowed for expenses incurred in the context of contracts with:Entities part of the national scientific and technological system
Technology and innovation centres, or
Business interface centres
These contracts must be aimed at activities involving:
Scientific research
Business R&D
Demonstration actions linked to green or digital transitions
Application Timeline
The incentive applies from FY2024 onwards and is contingent on approval from the Tax and Customs Authority.
Conditions and Compliance
The deduction may be applied only in the tax year in which the expense is incurred.
The Tax and Customs Authority will publish a list of eligible entities annually.
Companies should maintain clear documentation linking the expense to the qualifying contracts and R&D activities.
The measure must comply with EU State Aid rules, which may impact its application in some contexts.
Strategic Considerations
The IFICI offers a significant opportunity for companies engaging in collaborative innovation, particularly in projects aligned with Portugal’s green and digital transition goals. The 130% deduction exceeds traditional cost recovery and positions Portugal as a more competitive destination for R&D investment within the EU.
