Tax Incentive for Scientific Research and Innovation
General Rules
Under the terms set by law, the IFICI incentive covers researchers and highly-qualified workers who:
- become tax residents in Portugal;
- have not been deemed as such in the previous five years;
- receive income resulting from specific activities foreseen in the law, such as academic careers in higher education and scientific research, qualified positions in the research and development fields, and workers with a PhD in the research and development fields; and,
- perform their duties in entities speficied in the law, such as technology and innovation centres, companies that benefit from specific tax incentives as per the tax legislation, industrial and service companies exporting at least 50 percent of their turnover, have roles within start-up companies, and others.
If the above criteria are met, the taxable employment income and business or professional income arising from the referred specific activities may benefit from a special tax rate of 20 percent for a 10-year period, and will apply during that 10-year period for any portion of a year that the taxpayer is considered a tax resident of Portugal. The 10-year period commences in the year when the beneficiary registers as a resident for tax purposes herein.
Additionally, it is foreseen that taxpayers who do not benefit from this special regime according to the described terms in one or more years of the 10-year period can benefit from it in any of the remaining years of that period, starting from the year in which they again regain residency in Portugal.
The rules provide for the following:
- An exemption of tax in Portugal is available for foreign-source income (employment income, business and professional income, investment income, rental income, and capital gains) that is received by the taxpayers covered by this incentive. However, this exemption is an exemption with progression, and as such, the exempt income will be added in for the purpose of determining the marginal rates applicable to any other income received that is subject to taxation at such rates.
- An increased rate of 35 percent is applicable whenever the income received under this regime arises from a tax haven.
Lastly, individuals who benefit (or have benefited) from the NHR special regime, as well as those who chose to be taxed under the regime applicable to “former residents” (ex-residentes), are excluded from the above-described tax regime.
Issuance of Ministerial Decree No. 352/2024/1
On 23 December 2024, Ministerial Decree No. 352/2024/1 was issued. It regulates the IFICI, and thereby establishes:
- the procedures for registration under this regime applicable to taxpayers residing in Portuguese territory whose activities may be covered by the IFICI.
- the list of highly-qualified professions and relevant company’s CAEs3, which are relevant for cases (set in law) in which registrations should be filed with the Portuguese tax authorities.
Additionally, the Ministerial Decree establishes that taxpayers registered as residents in Portuguese territory should submit their registration requests for the application of this regime by 15 January of the year following the one in which they become residents, using an official form (model of which still to be made available by the Ministry of Finance). The entity with which the taxpayer must register will depend on the professional activity performed.
However, a transitional regime is provided, allowing taxpayers who became residents in Portuguese territory in 2024 to register under this regime until 15 March 2025.
Nonetheless, in cases where the registration is completed after such deadline, the taxation under the IFICI takes effect from the year in which the registration is completed and lasts for the remaining period of the 10 years (counted from the year when the individual became a tax resident of Portugal).
The Ministerial Decree entered into force the day after its publication and applies to taxpayers who became tax residents in Portuguese territory from 1 January 2024 onwards.
