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Other tax matters

Tax Benefits

CIT 

Patronage

Hospital Institutions (public enterprises)

Donations granted to hospital institutions having the status of public enterprise ("Empresa Pública Empresarial" or “EPE”) are eligible as a tax benefit under the patronage regime.

Celebration of the 500 years of the Circumnavigation

Donations granted by natural or legal persons to the celebration of the circumnavigation by the Portuguese navigator are eligible as a tax benefit under the cultural patronage regime.

Portuguese EU Council Presidency Mission

Donations granted by natural or legal persons to the Mission Structure for the Presidency of the Council of the European Union, during the respective mandate, are eligible for patronage regime.

Dubai World Exhibition (2021)

Donations granted by natural or legal persons to the Embassy of Portugal in the United Arab Emirates, for the purposes of the Portuguese participation in the Dubai World Exhibition (2021), are eligible for patronage regime.

World Youth Day

Donations, in cash or in kind, to the Fundação JMJ-Lisboa 2022, which is a legal entity responsible for preparing, organising and coordinating the World Youth Day 2023 in Lisbon, are allowed as tax deductible costs for 140% of the respective amount. This benefit will be in force until the end of the event.

Cultural patronage

The tax benefits foreseen under the cultural patronage are now applicable to entities that are engaged as their primary activity in cultural activities. Theatre, opera, ballet, music, cinema, dancing, performing arts, visual arts, organization of festivals and other artistic expression, film, audio visual and cinematographic, audiovisual and literary productions are eligible.

Extraordinary cultural patronage in 2021

Donations eligible under the cultural patronage benefit from an additional deduction of 10% (20% in case of inland regions). The following conditions should be met:

  • annual amount of € 50,000 or higher, per each beneficiary entity;

  • donations in benefit of actions or projects aiming at heritage conservation or museologic programmes; and

  • such actions or projects are recognised upfront by the competent Government members (finance and culture).

The applicable annual cap of 8/1000 of the turnover is increased by 50% in case the respective difference relates to said actions or projects.

Transitional tax incentive scheme for external promotional activities

Costs incurred in 2021 and 2022 with joint external promotional activities are allowed as tax deductible for 110% of the respective amount. This measure applies to micro, small and medium sized companies resident for tax purposes in Portugal, as well as permanent establishments in Portugal of non resident entities in the same conditions. It is also required that the beneficiaries of this incentive carry out directly and primarily agricultural, commercial or industrial activities. 

Eligibility conditions and expenses are defined in the proposal. Eligible expenses include costs with participation in fairs and exhibitions outside Portugal, specialised consultancy services rendered by outsourced consultants, as well as activities aiming at internationalisation.

Depending on the nature of the eligible expenses, this benefit is subject to European Union de minimis rules and on matters of state aid.

Tax benefits scheme for R&D (SIFIDE II)

The eligibility for the R&D tax benefits scheme (“Sistema de incentivos fiscais em investigação e desenvolvimento empresarial II” or “SIFIDE II”) of equity investments in R&D institutions or contributions to private or public investment funds will require effective investment in equity or quasi-equity of R&D companies.

It is clarified that a “company mainly dedicated to R&D activities” corresponds to a company with a recognition in the technological area.

In addition to the mandatory period of maintenance of the investment in an investment fund, an additional requirement is introduced. Within five years, it is required that the investment fund effectively makes an investment of at least 80% in the so-called companies dedicated to R&D activities, and these effectively invest in R&D activities. Otherwise, the CIT liability of the tax year concerned is increased by the amount of unpaid CIT resulting from the misuse of the tax benefit (proportionally if applicable).

Extraordinary and transitional regime of job maintenance

In 2021, access to certain tax benefits and public support measures will depend on job maintenance. This shall apply to entities engaged mainly in agricultural, commercial or industrial activities (micro, small and medium sized companies are excluded) that assess positive net profit in 2020.

Among the tax benefits and public support measures covered are credit facilities with state guarantee, the regime of convencional remuneration of share capital (“Remuneração Convencional do Capital Social”), the  tax regime for investment support (“Regime Fiscal de Apoio ao Investimento” or “RFAI”), the SIFIDE II and the extraordinary regime for investment (“Crédito Fiscal Extraordinário ao Investimento II” or “CFEI II”).

Further regulation is expected from the competent Government members (finance and social security).

“Large companies with profits in 2020 are required to maintain jobs in order to have access to tax benefits.”

Extraordinary support to the implementation of accounting SAF-T (PT), QR Code and ATCUD

Expenses incurred with the implementation of the accounting Standard Audit File for tax purposes Portuguese version (SAF-T (PT)) are allowed an additional deduction of 20% for the purposes of the computation of the taxable income of CIT taxpayers who are small and medium sized companies, as well as PIT taxpayers with organised accounting. Implementation should be concluded until the term of the 2021 tax year.

Expenses incurred with the implementation of the QR Code and ATCUD are also allowed an additional deduction of 20% for the purposes of the computation of the taxable income of CIT taxpayers as well as PIT taxpayers with organised accounting. The additional deduction if of 40% in case the QR Code and ATCUD are included in all invoices and other relevant documents until the end of the first quarter of 2021. 30% in case said information is included until the end of the first semester of 2021.

Expenses incurred from 1 January 2020 onward and until the end of each period mentioned are eligible for this benefit.

For taxpayers with a special tax year the above mentioned additional deductions incurred in the 2019 tax year shall be considered in the 2020 tax return.

In case the eligible expenses relate to assets subject to depreciation, the above mentioned benefits apply to the costs accounted for as depreciation or amortisation throughout the useful life of the asset. 

This benefit cannot be cumulative with other tax benefits of the same nature in respect of the same eligible expenses.

Consequence are foreseen for taxpayers that do not conclude the implementation of the accounting SAF-t (PT), QR Code and ACTUD within the deadlines mentioned above. The additional deductions are added back for the purpose of computation of the taxable profit of the tax year concerned, plus 5%.

Legislative authorisation – Promotion of inland regions (“Programa de Valorização do Interior”)

As in the 2020 State Budget law, the Government is granted authorisation to introduce a tax benefits scheme to promote inland regions (“Programa de Valorização do Interior”) corresponding to a CIT credit of 20% of the costs incurred with the creation of jobs in inland regions that exceed the national minimum wage, capped at the CIT due in the tax year concerned. This legislative authorisation relies on the authorisation from the European Union to expand the regional aid scheme.

“R&D incentives: Investment funds are required to make effective investments of at least 80% in R&D companies within 5 years.”

Tax Benefits

Personal Income Tax

Patronage

World Youth Day

Donations, in cash or in kind, to the Fundação JMJ-Lisboa 2022, which is a legal entity responsible for preparing, organising and coordinating the World Youth Day 2023 in Lisbon, are allowed:

  • as a tax deductible costs for 140% of the respective amount under Category B (Business income);

  • as a tax credit corresponding to 30% of the donations made.

These benefits shall last until the end of the event.

Tax Benefits

PIT/CIT

Portuguese sovereign debt issued in the Chinese market

The PIT and CIT exemptions on interest from Portuguese sovereign debt issued in renminbi in the Chinese internal debt market are maintained in 2021.

“Investment in R&D within the existing tax benefits scheme SIFIDE II requires additional compliance obligations for investment fund and R&D companies.”

Extraordinary Levies

Audiovisual levy

There is no update on the monthly amounts of the audiovisual levy.

Bank levy

The bank levy is maintained in 2021.

Solidarity surcharge for the banking sector 

The solidarity surcharge for the banking sector ("Adicional de Solidariedade Sobre o Setor Bancário") is maintained in 2021.

Pharmaceutical industry levy

The extraordinary pharmaceutical industry levy is maintained in 2021.

Extraordinary levy on suppliers of medical devices to the national health system

The extraordinary levy applicable to suppliers of medical devices including for in vitro diagnosis to the national health system (“Sistema Nacional de Saúde” or “SNS”) suppliers of medical devices including for in vitro diagnosis (hereafter devices) is maintained in 2021. This levy was introduced following the 2020 State Budget law. 

Amendments will be introduced to the tax basis and rules on assessment, collection and payment are being proposed, subject to further regulation.

Extraordinary levy on the energy sector 

The extraordinary levy on the energy sector (“Contribuição extraordinária sobre o setor energético” or “CESE”) is maintained in 2021.

Amendments to the CESE shall be subject to analysis by the Government. These will consider the sustainable reduction of the tariff debt of the national electric system (“Sistema Elétrico Nacional”) as well as alternative financing sources for the energetic industry in social and environmental policies.

Carbon tax on air, sea and river travels

In 2021 a carbon tax due by the user in the amount of EUR 2 applies on air, sea and river travels.

This carbon tax is levied on the issuance of transport tickets in respect of:

  • passenger commercial flights departing from airports and airfields located in the Portuguese territory;

  • landing of passenger vessels on terminals located in the Portuguese territory, in respect of fuelling, repair, embarking and disembarking of passengers.

“Investment in R&D within the existing tax benefits scheme SIFIDE II requires additional compliance obligations for investment fund and R&D companies.”

Levy on plastic, aluminium or other disposable packages used on take away meals

A levy amount to EUR 0.30 per package is levied on disposable packages used on take-away meals including those with home delivery composed by plastic or aluminium or composed by other materials that include plastic or aluminum. 

This levy applies:

  • from 1 January 2022 onward in case of plastic packages and packages with other materials that include plastic;

  • from 1 January 2023 onward in case of aluminium packages and packages with other materials that include aluminium.

Further regulation is expected from the competent Government members (finance and environment).

“A carbon tax is approved for air, sea and river travels, as well as levy on plastic or aluminium or other disposable packages used on take-away meals.”

Stamp Tax

Consumer credit

The 50% increase in Stamp Tax applicable to consumer credit is extended until 31 December 2021. The safeguard clause that excludes existing agreements from the above provision is maintained.

Tax Justice

Payment of tax debts and social security contributions in instalments

The request for payment in instalments can be filed prior to the enforced recovery under an enforcement proceeding.

The request should be decided within 30 days otherwise it is accepted.

There is a waiver of the existing formalities in case of payments in instalments foreseen in no. 3 to 7 of Article 196 of the Tax Procedure and Proceedings Code (in respect of tax debts) and in no. 2 to 4 of Article 190 of the Social Security Code (in respect of social contributions).

Tax compliance

R&D tax benefits scheme (SIFIDE II) – New statement required

Investment funds must provide unitholders a statement of the investment effectively made in R&D companies in the previous tax year. This statement must be provided by the end of the 4th month following the end of the tax year concerned. If applicable, the same statement must mention any lack of investment, and respective amount, within the mandatory timeline of 5 years.

The R&D companies mentioned above are also required to provide to the investment funds a statement detailing the investment made in eligible expenses in the previous tax year. This statement must be provided by the end of the 4th month following the end of the tax year concerned. If applicable, the same statement must mention any lack of investment, and respective amount, within the mandatory timeline of 5 years. This information should be provided by the investment fund to the unitholders, for the purpose of any CIT regularisation.

Unitholders as well as the investment funds concerned must include the above mentioned statements in their tax file (“dossier fiscal”).

“Investment in R&D within the existing tax benefits scheme SIFIDE II requires additional compliance obligations for investment fund and R&D companies.”

Company’s Simplified Information/Annual Statement and accounting SAF-T (PT) – Extension

There is an extension of the deadline to file the accounting SAFT-T (PT) file, as well as of the information to be included in the Company’s Simplified Information/Annual Statement (IES/DA), as foreseen in Decree 31/2019, of 24 January. This now applies to the 2021 IES/DA and following years, to be filed in 2022 respectively following years.

“Extension of the deadline to submit the accounting SAF-T (PT) in respect of the Company’s Simplified Information/Annual Statement.”

Contact us

Rosa Areias

Rosa Areias

Tax Lead Partner, Membro da Comissão Executiva, PwC Portugal

Tel: +351 225 433 101

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