tax notes international - Tuck School of Business - Dartmouth College

Portugal
Government Submits Budget
Supplement
The Portuguese government on January 19 submitted
to the parliament a budget supplement proposal
containing several tax measures, including a new investment
tax credit for 2009, an expansion of the research
and development tax credit, and the extension
of the Portuguese holding regime to EU-incorporated
entities moving their seat or place of effective management
into Portugal. (For prior coverage of the recently
passed 2009 Budget Law, see Tax Notes Int’l, Jan. 12,
2009, p. 137, Doc 2009-232, or2009 WTD 4-1.)
The supplementary budget bill, titled ‘‘Initiative for
Employment and Investment,’’ is the government’s reaction
to the worsening economic conditions in Portugal.
If approved, the bill’s measures would be effective
from January 1, 2009.
New Investment Tax Credit
The bill includes a new tax incentive designed to
stimulate investment. The Regime Fiscal de Apoio ao
Investimento (RFAI 2009) would provide several tax
benefits for qualified investments made in some business
sectors.
The RFAI 2009 includes the following tax benefits:
• an ITC that operates as a deduction against corporate
income tax otherwise payable (up to a limit
of 25 percent of the tax due) equal to 20 percent
(for qualified investments lower than €5,000,000)
or 10 percent (for qualified investments higher
than €5,000,000) of the qualified investment; any
unused credit may be carried forward for four
years; and
• an exemption on real estate transfer tax (IMT),
property tax (IMI), and stamp tax on the acquisition
of real estate for investment purposes; the
real estate tax exemptions are subject to the approval
of the municipality where the investment is
made.
The following investments are eligible for the tax
incentive:
• new tangible assets; however, the following new
assets are excluded: land (except when used for
resource extraction), buildings (except when used
for factories or administrative offices), noncommercial
vehicles, furniture (except when used for
tourism purposes), social equipment (except if acquired
under legal obligation), and other assets
that are not directly connected with the activity
developed; and
• intangible assets that qualify as expenses with
transfer of technology through the acquisition of
patent rights, licenses, know-how, or unpatented
technical knowledge; for large companies (that is,
those not qualifying as small and medium-size
enterprises under the EU definition), the investments
in intangible fixed assets may not exceed 50
percent of the qualified investment.
Under the RFAI 2009, qualifying investments must
be maintained for a five-year period subject to a recapture
rule and the qualifying investment must be designed
to promote the creation of employment during
2009.
The RFAI 2009 is limited to taxpayers engaged in
the following business sectors: agriculture, forestry,
agro industries, energy, tourism, and manufacturing or
extraction industries (except steelwork industries, shipbuilding,
and synthetic fibers as defined in article 2 of
Commission Regulation 800/2008). The tax incentive
is also extended to companies that realize investments
in next-generation broadband equipment. The RFAI
2009 is not applicable to companies that fall within the
meaning of ‘‘company in difficulty’’ as defined by the
EU guidelines on state aid for rescuing and restructuring
firms in difficulty.
This ITC may not be used concurrently with any
other similar tax incentive, and the total tax incentive
cannot exceed the maximum amount of aid for a given
region as stipulated by the guidelines on national regional
aid for 2007 to 2013. 1
R&D Tax Incentive
PORTUGAL
The bill would also amend the Portuguese R&D
investment tax credit. The Sistema de Incentivos
Fiscais em Investigação e Desenvolvimento Empresarial
(SIFIDE) would ultimately increase the amount
of tax credit available for qualifying R&D investments.
Under the proposal, credits against corporate tax liability
would be available for qualifying R&D expenses up
to the following amounts:
• a basic credit equal to 32.5 percent of the qualifying
expenses for the relevant year; and
• an additional credit equal to 50 percent of the
amount by which the qualifying expenses for the
relevant year exceed the average R&D expenses
incurred over the two preceding years, with a ceiling
of €1.5 million. This deduction would only be
applicable to costs that have not been subsidized
by the state. Any unused credit would remain to
be carried forward for six years.
1
Guidelines on national regional aid for 2007-2013 (2006/C
54/08).
TAX NOTES INTERNATIONAL FEBRUARY 2, 2009 • 405
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