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Tax Benefits for Productive Investment

Tax Benefits for Productive Investment

Do you know which tax benefits are most relevant for investors?

These Tax Benefits aim to promote and support investment in sectors considered strategic in the economy, foster innovation, favoring sustainable growth and promoting the competitiveness of companies, the creation and maintenance of employment, regional development and the strengthening of the capital structure of companies.

The list of rules is extensive, some investments are eligible in more than one typology and can generate several doubts, but we help! With regard to companies, the following stand out:

  • Contractual Tax Benefits for Productive Investment (BFCIP) - Tax benefits scheme valid for up to 10 years for projects with investment > 3 M€
  • Investment Support Tax Scheme (RFAI) - Aims to promote investment and job creation
  • Corporate Capitalization Incentive (ICE) - Enables the deduction of up to 5% from the companies tax collection of equity capital increases made after January 1st of 2023
  • Tax benefits applicable to Inland Territories - Aims to encourage the establishment of companies in inland territories

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Tax Benefits for Productive Investment FAQ'S

If the investments fulfil the other requirements and conditions to qualify for RFAI, a company may have more than one RFAI project running simultaneously.

As an example, if a company has an ongoing SI Productive Innovation project of PT2020, in which it is benefiting from the RFAI on the same investment expenses and, in addition, has other "extra-project" investments that also constitute eligible expenses under this tax benefit, the latter configures another investment project.

This possibility is provided for in the Model 22 periodic income statement itself, i.e., in table 078-A of Annex D, where all the information on regional investment projects is placed, it is possible to add autonomous lines depending on the number of projects that the company has underway.

Recognition of an item as an intangible asset requires an entity to demonstrate that the item meets, first, the definition itself and, second, the criteria for its recognition.

NCRF 6 establishes three conditions for an expenditure to be defined as such an asset: identifiability, control, and future economic benefits.

It is therefore concluded, provided these conditions are met, that an intangible asset is subject to impairment if it has a limited duration.

Yes. All commercial or civil companies in commercial form, cooperatives, public companies, and other legal persons governed by public or private law with registered office or effective management in Portuguese territory, may deduct an amount corresponding to the conventional remuneration of share capital (RCCS), calculated by applying, limited to each financial year, the rate of 7% to the amount of contributions made up to 2M€.

This tax benefit is deducted in the calculation of the taxable profit for the tax period in which the contributions are made and in the following five tax periods. These contributions may be made by cash contributions, the conversion of credits, the use of the profits of the year itself in the context of the incorporation of a company or the increase of share capital, provided that the profit of the beneficiary companies is not determined by indirect methods and does not reduce its share capital with refund to the shareholders, either in the tax period in which the contributions are made or in the following five tax periods.

The Tax Authority has been considering that a tangible fixed asset is considered to be in "new condition" if it has not previously been part of the non-current assets of the company that intends to benefit from the tax benefit or of any other company.

Yes, it is eligible. This PPA has raised several doubts about its framework, as it may fall within the exception of eligible activities in the RFAI, more specifically in the sector of processing and marketing of agricultural products.

Where the activity of 'processing agricultural products' is concerned, it is only possible to benefit from the RFAI if the final product resulting from it is not an agricultural product according to the definition provided for in the TFEU and, as such, is not included in the list in Annex I to the Treaty.

Although Annex I to the TFEU includes several headings of Chapter 15 of the CN, it does not include heading 1509 which includes "Olive oil and its fractions, whether or not refined, but not chemically modified", so it can be concluded that CAE 10412 is eligible under the RFAI, provided that the other requirements and conditions are met in order to enjoy this tax benefit.

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