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Portugal

The Portuguese R&D tax credit scheme (SIFIDE) offers a base rate of 32.5% on all qualifying expenditure (QE). An additional incremental rate of 50% can be added for all QE over the average of the 2 previous tax periods. If no prior claims have been submitted, all QE receives an 82.5% tax credit.

Although the definition of R&D is the same as most other jurisdictions, the evaluation is tighter and demands a higher degree of novelty and the existence of technical uncertainty.

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portugal Are other R&D Incentives available? Is foreign-owned R&D eligible?R&D must occur in the country?Is pre-approval required? Are previous financial years claimable? P o r tugal Gen e rosit y Ease of Application 40%
Portugal all Companies


Volume based and incremental – 32.5% up to 82.5% tax credit
Benefit Overview


The Portuguese R&D tax credit scheme (SIFIDE*) works by allowing a company to apply a deduction to its tax amount. There is no cap related to qualifying expenditure, but there is a cap of €1.5 million for the incremental rate. The application must be presented to the National Agency for each claim, which takes almost one year to be evaluated. Although, the tax credit can be applied before the approval. Full technical and financial justifications are needed to support the claim. If the tax credit is not fully applied, there is the possibility to carry forward the tax credit remaining value for 8 fiscal years. A company that benefits from SIFIDE may be subject to a technical audit, performed by the official innovation agency (ANI). New SMEs that have not yet completed two fiscal years and which have no incremental rate, can have an increase of 15% base rate. Qualifying expenditures of R&D activities from eco-design projects could be considered at 110%. * SIFIDE (Sistema de Incentivos Fiscais à I&D Empresarial)
Eligible Claim Period


Only R&D activities from the previous fiscal year are eligible and the application has to be filed within 5 months of the financial year end.
Historical Background


The Portuguese scheme was introduced in 1997. In 2004 there was a suspension of SIFIDE. The suspension ended in 2005 and the current regime will run until 2020.
Ease of Application


The application needs to be presented to the National Agency for each claim, which takes almost one year. Full technical and financial justifications are needed to support the claim. SIFIDE requires applications to be evaluated by a body of R&D experts. Although the definition of R&D is from the Frascati Manual, the evaluation demands a higher degree of novelty and the existence of technological uncertainty. A state of the art technological analysis is also required, and so the National Agency evaluation team will often contain experts.
Regulating Body Policies


Ministry of the Economy through the Innovation National Agency (ANI – Agência Nacional de Inovação)
Eligible Costs


Mainly:

  • Staff salaries – R&D Team plus technical management team (all need at least level 4* qualifications) at 100%. 120% for all PhD staff.
  • R&D Subcontractors
  • Indirect costs, capped at 55% of Staff cost (including Directors, Management & other staff with less than level 4 qualifications; consumed/transformed materials; project-specific costs; and subcontractors.)
  • Acquisition of tangible fixed assets, as long as they are new and directly allocated to the R&D activity (no land or buildings)
  • Patent registry and maintenance
  • Patents acquisition related to the R&D activities (only for SMEs)
  • Specific R&D auditing and certifications.

* employee has a minimum of secondary level of education plus a traineeship, i.e. the employee must have a minimum rating level of four as defined in the National Qualifications Framework

Issues to Consider


The Portuguese R&D Tax credit scheme is very demanding. A good knowledge of the regulation and claim process is needed. R&D definitions are Frascati based. The evaluation demands a higher degree of novelty and the existence of technological uncertainty. Audits, technical or fiscal, may exist.