Tax Incentives for Scientific Research and Innovation
The Tax and Customs Authority has published an information leaflet on this IRS tax relief scheme.
IFICI is the acronym used to identify the Tax Incentive for Scientific Research and Innovation, created by Article 58-A of the Statute of Tax Benefits (EBF), which establishes a system of tax benefits under IRS with the aim of attracting talent and encouraging scientific research and innovation in Portugal.
TAX BENEFIT
This scheme provides for taxation at a special rate of 20% of employment income (net income from categories A and B) obtained in Portugal, in the context of activities considered eligible, for a period of 10 consecutive years, starting from the year of registration as a resident in Portuguese territory, without prejudice to the option of aggregation.
Entities that pay or make available to beneficiaries income from categories A1 or B2 resulting from activities that entitle them to the scheme must withhold tax on this income at the rate of 20%, upon presentation of proof of application for registration.
Income from employment (categories A and B), capital (category E), property (category F) and increases in assets (category G) obtained abroad by IFICI beneficiaries is, as a rule, exempt.
However, income obtained abroad in any category, when paid or made available by non-resident entities domiciled in a country, territory or region subject to a clearly more favorable tax regime, is taxed at a rate of 35% (which can be a flat rate or autonomous, depending on the case).
In order for the benefit to apply, the beneficiary must be considered tax resident in Portugal at any time during the year and continue to earn income from eligible activities, provided that the start of a new activity takes place within a maximum of six months after the end of the previous activity.
In cases where the beneficiary has not taken advantage of the scheme in one or more years of that 10-year period, they can resume taking advantage of it in any of the remaining years, provided that they are once again considered resident for IRS purposes, and once again earn income from the aforementioned activities.
INCOME EXCLUDED FROM THE SCHEME
The IFICI regime does not apply to income earned from jobs covered by Article 22(2)(c) of the Investment Tax Code (CFI).
