Even in a time filled with challenges, corporate investments are a way to sustain economic growth and tax reliefs are a way to make them happen. That’s why we must tell you all about this new opportunity that allows for an IRC tax deduction of up to 25% of investments.
This is the IFR – Incentivo Fiscal à Recuperação, or in other words, the Tax Incentive for Recovery. This new tax incentive was recently launched, following negotiations for the 2022 State Budget, and applies to investments made in the second semester of the year.
Any company liable to CIT and developing a commercial, industrial, or agricultural activity can benefit from this tax incentive. However, as a rule, taxpayers cannot distribute profits for a 3-year period nor terminate labor contracts for the same amount of time.
Eligible expenses
A CIT credit will be available if companies incur such expenses as:
- Tangible assets;
- Non-consumable biological assets;
- Intangible assets.
It’s important to bear in mind though that the overall cap for eligible investments is 5 million euros per company. Also, the annual tax deduction is set at 70% and the unused amount can be deducted in the 5 subsequent tax periods.
CIT credit
The eligible investment period runs from July 1st to December 31st. But if your company was launched after January 2022, investments made from the start of the 7th tax month until the end of the 12th month are also eligible.
All in all, this results in a CIT credit of up to 25% of eligible expenses, which may correspond to:
- 10% of eligible expenses made in the tax year in question at the average of the eligible investments incurred in the three previous years;
- 25% of eligible expenses incurred in the tax year in question, provided that the full amount exceeds the investment incurred in the three previous years.
Do you want to know more about this tax benefit? And what about other opportunities to invest in Portugal with assurance and confidence?
Our partners at ESTRATEGOR can help you with that! For more than two decades businessmen and investors all over the country have been relying on them to move their projects forward.
Feel free to contact us if you aim to live or invest in Portugal!