This scheme provides for a special 20% tax rate on net income from employment (category A) and business and professional income (category B) arising from certain professional activities, mentioned below, for a period of ten consecutive years, as well as a tax exemption on income from employment, business and professional activities, capital (category E), property (category F) and capital gains (category G) obtained abroad. This new tax incentive scheme was established for taxpayers who:
- Become a resident in Portugal for tax purposes;
- Have not been a resident in Portugal in any of the previous five years;
- Earn income from any activity falling under the following categories:
- Academic teaching in universities and scientific research activities comprised in the national scientific and technological system;
- Qualified job positions within the scope of the contractual benefits for productive investment, under the terms provided for in the applicable law;
- Highly qualified jobs, as defined in an ordinance issued by the Government members in charge of the areas of finance and economy, exercised in: (i) companies with eligible applications, in the financial year in which they began operating or in the previous five financial years, that benefit or have benefited from the Investment Support Tax Scheme [Regime Fiscal de Apoio ao Investimento] under the terms provided for in the applicable law; or (ii) industrial and service companies whose main activity corresponds to a business activity code (CAE) defined in an ordinance issued by the Government members in charge of the areas of finance and economy and which export at least 50% of their turnover in the financial year in which they began operating or in any of the previous two financial years;
- Other qualified jobs and members of governing bodies of entities engaged in economic activities recognised by the Agência para o Investimento e Comércio Externo de Portugal, E.P.E. or by IAPMEI – Agência para a Competitividade e Inovação, I.P. as relevant to the national economy, namely in terms of attracting productive investment and reducing regional asymmetries;
- Research and development carried out by staff, provided the costs thereof are eligible for the purposes of the tax incentive scheme for research and business development, under the terms provided for in the applicable law;
- Job positions and members of governing bodies of entities certified as start-ups, under the terms provided for in the applicable law; or
- Job positions or other activities carried out by tax residents in the autonomous regions of the Azores and Madeira, under the terms to be defined by regional legislative decree.
At this moment, highly qualified jobs include general manager and executive manager, directors of administrative and commercial services of companies, directors of production and specialised services, specialists in information and communication technologies.
Regarding the industrial and service companies, they include manufacturing industries, computer programming, consultancy and related activities, data processing activities, information domiciliation and related activities, web portals, scientific research and development activities.
Although this new tax incentive scheme only applies to income generated from the activities mentioned above, the fact remains that the establishment of this new scheme by the Portuguese Government is to be commended, as it is not only a very favourable scheme that aims to attract talent and skilled workers to Portugal, but it also seeks to promote the growth of companies in Portugal.
In addition, the Portuguese Government has already announced that the professional and business categories that may benefit from the special 20% tax rate on net income from employment (category A) and business and professional income (category B) will soon be extended, which means that this scheme will become even more appealing in the future as more people will be able to benefit from it.
Written by Patrícia Cabriz, Associate at CCA's Private Clients Department
Website: www.cca.law
I don't see any difference to the previous scheme
By Darren Johnstone from Porto on 30 Jul 2024, 19:04