Portugal offers national and foreign investors investment in the form of financial incentives, repayable or non-refundable, tax benefits and co-financing. Exceptional subsidies may also be granted, such as reimbursement of employers’ costs with the training of employees.

The incentives may include:

• Incentives granted under the «Portugal 2030» programme established through an agreement with the EU covering the period from 2021 to 2027;
• Incentives granted under the «Recovery and Resilience Plan» (Plano de Resiliência e Recuperação, PRR) from 2021 to 2026;
• Tax incentives granted under the Investment Tax Code, which aim to promote the competitiveness of the Portuguese economy; and
• Incentive programmes designed for specific situations, such as the creation of jobs, which may include temporary reductions of the employer’s social security contributions, financial support for hiring young people, unemployed, etc. and co-funding of training costs.

The Portuguese Government also set up a system for monitoring, facilitating and reducing bureaucracy in the implementation of projects considered to be of «potential national interest», the so-called «projetos de interesse nacional» or PIN projects.

“Portugal 2030” is an investment programme in the amount of 23,000 million euros that implement the Partnership Agreement signed by Portugal and the EU on 14 July 2022.

The main goals of this program are as follows:

• To improve innovation, technology development, and competitiveness in Portugal;
• To address the tasks outlined in the Paris Agreement, invest in the green transition, renewable energy, and the fight against climate change and global warming;
• To improve the public transportation network;
• To promote better education, employment, social inclusion, and equality in accessing public healthcare; and
• To implement development strategies with local governments and create "green" cities.

These goals are part of the four agendas of the 2030 Strategy:

• People First: aiming for a better demographic balance, greater inclusion, and reduced inequality;
• Digitalization, Innovation, and Qualification as drivers of development;
• Climate transition and sustainability of resources; and
• Improving Portugal's international competitiveness and promoting social cohesion.

"Portugal 2030" is organized into twelve programs that were approved in December 2022:

• Five regional programs that correspond to Intercity Communities and Metropolitan Areas (NUTSII), as well as separate ones for the Azores Islands and Madeira;
• Four programs covering demographics, skills and inclusion, innovation and digital transition, climate action and sustainability, and the sea; and
• Programs for European Territorial Cooperation.

The goal of Portugal 2030 is to achieve concrete results. For a project to be approved, the beneficiary must commit to material and financial execution and achieve the negotiated results. Progress is subject to audits and monitoring.

The first public tenders were announced during the first quarter of 2023 and covered various sectors, including training, health, railroads, the environment, information and communication, and technical assistance. Approximately 400 million euros are to be awarded under the first public tenders.

You may learn more about Portugal 2030 at www.Portugal2030.pt.

The Recovery and Resilience Plan (PRR) is a program approved by the European Commission to be implemented in Portugal. It aims to restore sustained economic growth and strengthen convergence with Europe over the next decade. The PRR is funded by the European Union's "NextGenerationEU" program, with a total investment of €16,644 million. This includes €13,944 million in grants (84% of the total) and €2,700 million in loans (16%) covering the period from 2021 to 2026.

The main objectives of the PRR are as follows:

• Resilience (61% of the PRR): This portion will be used to improve economic recovery and increase responsiveness to future crises and associated challenges. It focuses on social, economic, and productive fabric and territorial resilience.
• Climate transition (21% of the PRR): This portion will be used to promote better and more sustainable use of resources, increased production of renewable energy, and decarbonization of the economy and society.
• Digital transition (18% of the PRR): This portion aims to promote digital inclusion through education, training in digital skills, and the digital transformation of the business sector and government.

These three structuring dimensions are implemented through 20 components, 37 reforms, and 83 investments, following a result-oriented approach based on milestones and targets.

Applications for PRR grants and loans are made through an online platform called "Recuperar Portugal," which facilitates the process. The implementation of PRR measures or investments will be governed by contracts between the Mission Unit "Recuperar Portugal" and the direct or intermediary beneficiaries.

The Project Recognition and Monitoring System is a monitoring mechanism for projects that are recognised as having potential national interest (Potencial Interesse Nacional, PIN).

The PIN recognition system does not constitute a fund allocation program per se but a monitoring program for the applications and execution of the investment projects that are benefiting from or are intended to benefit from the incentives.

For projects to be recognised as PIN’s, they must meet the following cumulative requirements:

• Represent an overall investment of €25 million or more;
• Create 50 or more direct jobs; and
• Be presented by reputable and reliable sponsors.

Exceptionally, projects that meet two of the following criteria may be recognised as PIN, even if they do not meet the first two requirements described above:

• Internal Research and Development (R&D) activity of at least 10% of the company's turnover;
• A significant part of the company’s business is related to its patents;
• Demonstrable interest in environmental compliance: this may be made by the adoption of internal measures to reduce its carbon footprint or other environmental burdens, the production of recyclable/green products, etc.;
• The company must have a minimum of 50% of its turnover originated from international markets; or
• Outstanding production of tradable goods and services.

For the operationalisation of this system, the government created a support commission for investors (Comissão Permanente de Apoio ao Investidor, CPAI).

The project developer must file an application that fulfils the requirements for PIN recognition according to a model previously approved by the CPAI.

The recognition of the project as a PIN must take place in a maximum of 30 days, counting from the reception date of the application.

For the projects recognised as PIN, a process manager responsible for monitoring the administrative procedures is assigned.

The recognition of a project as a PIN ensures a priority treatment in the licensing procedures. PIN projects also benefit from a special administrative procedure, which involves:

• Simultaneous processing of the central government’s administrative procedures;
• Reduction and simultaneous completion of the internal procedures determined by the administrative authorities that are responsible for issuing the necessary licenses;
• A single period to consult the relevant administrative procedures;
• Simplification of the procedures related to the zoning plan instruments relevant to the project;
• Tacit positive reports and tacit deferral under the various applicable procedures; and
• Simplification of procedures to obtain construction permits.

The investment projects that engage in certain activities may, until 31 December 2027, benefit from tax incentives for a period of up to ten years starting from the completion of the investment project, provided that the amount invested is equal to or greater than €3 million. Such projects regard (i) extractive and manufacturing industry activities, (ii) tourism, (iii) agricultural and forestry activities, (iv) defence, environment and energy, or (v) research activities.

The tax benefits may include:

• Tax credits;
• Reduction of or exemption from real estate taxes, such as IMI (Imposto Municipal sobre Imóveis), during the term of the agreement, regarding the buildings used by the project developer when executing the project; and
• Exemption from stamp duty regarding all acts or contracts required to carry out the project.

In addition to these tax benefits, municipalities may grant total or partial exemptions from IMI or IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) for specific investments made in the Municipality.
Projects that prove to be technically, economically and financially viable, provide for the creation or maintenance of jobs and fulfil at least one of the following conditions may be granted access to the contractually defined fiscal benefits attributed to productive investment:

• Be relevant to the strategic development of the national economy;
• Substantially contribute to the reduction of regional asymmetries; and
• Contribute to technological innovation and national scientific research, improve the country’s environmental awareness and structures or enhance competitiveness and productivity.

To access these benefits, the investor must submit an electronic application to one of the State investment agencies, AICEP or IAPMEI.

The investment incentives may be withdrawn:

• If the project developer fails to comply with the contractually defined obligations;
• If the project developer does not fulfil his/her/its tax obligations; or
• If the project developer provides false information about its business or the project or presents manipulated data in the presentation, appraisal and monitoring of projects.

The termination of the contract will cause the loss of the tax benefits and the obligation to pay back the uncollected tax revenues plus interest.

Tax incentives may be granted to business research and development, which allows corporate income tax taxpayers with residence in Portugal engaged in agricultural, industrial, commercial and services activities or non-residents with a permanent business establishment in the territory to deduct from the amount of corporate income tax collection the amount corresponding to research and development expenditure in the part that has not been co-funded by the State through non-refundable fundingfrom the State, and provided that it is carried out in the taxation periods between January 2014 and the end of 2025.

To qualify for the tax deductions mentioned above, investors must meet the following conditions cumulatively:

• The taxable profit cannot be determined by indirect methods; and
• The applicant cannot have any unpaid State and Social Security taxes or contributions.

Investment incentives must have one of these forms:

• A contract between the State and the investor, designated by contractual incentives;
• Autonomous incentives, depending on specific situations that are supposed to be protected; or
• Assignment conceded by State-funded programs.

Relevant legislation

Investment Tax Code [Portuguese Only]

Decree-Law 76/2011 that creates the Projects of National Interest Support Mechanism [Portuguese Only]

Decree-Law 154/2013 that establishes a Permanent Commission for PIN Projects Investors Support [Portuguese Only]

Useful links

Portuguese Investment Agency (AICEP Portugal Global)

«Portugal 2020» Official Website

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