On December 23, Ordinance no. 352/2024/1 was published in the Portuguese Official Gazette.

This regime regulates the Tax Incentive for Scientific Research and Innovation (“IFICI”), provided for in article 58-A of the Portuguese Tax Benefits Code.

The Tax Incentive for Scientific Research and Innovation was created by Law no. 82/2023, of December 29, which approved the State Budget for 2024[1], and revoked the non-habitual tax resident regime. This new regime aims to stimulate the growth and development of Portuguese companies and attract talent to the country, by taxing income derived from certain activities at a special rate of 20%, for a period of 10 years. This tax incentive applies to taxpayers who have not been tax residents in Portugal in the five years prior to the year they become tax residents herein.

According to the approved regime, taxpayers can benefit from this tax incentive if they carry out "highly qualified professions", in industrial and service companies which main activity corresponds to a specific economic activity code (CAE), defined by Ordinance of the competent Government members.

The recently approved Ordinance regulates the application of this new tax incentive regime by means of:

I)       Approves the list of "highly qualified professions" and specifies that to qualify in these professions the taxpayer must have a minimum level of education qualification, in accordance with international criteria:

a) Managing director and executive manager of companies.

b) Director of administrative and commercial services.

c) Director of production and specialized services (except director of other specialized services and leadership functions of the security forces and services).

d) Specialist in physical sciences, mathematics, engineering and related techniques (excluding architects, urban planners, surveyors and designers).

e) Industrial products or equipment Designer.

f) Doctor.

g) University and higher education teachers. 

h) Specialist in information and communication technologies.

II)      Defines the list of CAE codes of the main activity of industrial and service companies in which taxpayers must develop the "highly qualified professions":

a) Extractive industries.

b) Manufacturing industries.

c) Information and communication activities.

d) Research and development of physical and natural sciences.

e) Higher education; and

f) Human health activities.

Furthermore, the Ordinance establishes the procedure for registration of this tax incentive - until January 15 of the year following the one in which the taxpayer becomes a tax resident in Portugal -, and foresees the competence of the authorities before which the requests are submitted to assess if the requirements related to the activities carried out by the taxable persons are met, whilst the Portuguese Tax Authority assesses the compliance of the remaining legal requirements.

A transitional regime was also approved, and it is applicable to taxpayers who became tax resident in Portugal in 2024, stating that those may submit their registration requests, and report changes, until March 15, 2025.

This tax incentive became effective on December 24, 2024, and applies to taxable persons who became tax resident in Portugal after January 1, 2024.

[1] Regarding this new tax incentive and the revoke of the non-habitual resident regime, check our Summary on the main tax amendments contained in the State Budget for 2024:  https://www.clareira.com/en/novidade/main-tax-amend