The new incentive for scientific research and innovation.

With the recent end of the Tax Regime for Non-Habitual Residents, Portugal is introducing a new tax incentive strategically aimed at scientific research and innovation.

This regime promises to encourage the arrival of international talent in the country, offering researchers and highly qualified workers the opportunity to benefit from a significant reduction in their income tax for ten years.

To be eligible, professionals must choose to reside in Portugal, by acquiring or renting a Portuguese property and using it as the main permanent residence. Also by having spent a minimum of 183 days a year in the country, and not having lived in Portugal in the previous five years.

Below, we share the main points of this new incentive:

Applicability: It only applies to taxpayers who relocate to Portugal and obtain income from specific jobs and activities, namely:

     i) Teaching in higher education and engaging in scientific research, including scientific jobs in entities, structures, and networks dedicated to the production, dissemination, and transmission of knowledge, integrated into the national science and technology system. Also as jobs and members of governing bodies in entities recognised as technology and innovation centres under Portuguese legislation;

     ii) Qualified jobs and members of governing bodies within the scope of contractual benefits for productive investment under Portuguese legislation;

     iii) Highly qualified professions, defined as such under Portuguese legislation, performed in:

• Companies with relevant investments, in the year of start of their duties or in the previous 5 years, which benefit or have benefited from the tax regime for investment support under Portuguese legislation; or
• Qualified industrial and services companies, defined as such under Portuguese legislation, which export at least 50% of their turnover in the year in which the eligible individual starts working there or in any of the 2 previous years;

     iv) Other qualified jobs and members of governing bodies, in entities carrying out economic activities duly recognised by certain Portuguese agencies as relevant for the local economy, namely for attracting productive investment and reducing regional asymmetries;

     v) Research and development performed by personnel whose costs are eligible for the purposes of the tax incentives for research and business development under Portuguese legislation;

     vi) Jobs and members of governing bodies, in entities certified as startups under Portuguese legislation; or

     vii) Jobs or other activities performed by tax residents of the Autonomous Regions of Azores and Madeira, in terms to be defined by local legislation. 

Tax advantages: The incentive covers professionals who enjoy a reduced tax rate of 20% on income from work in the qualified areas, as well as offering a tax exemption on their foreign incomes.

Duration: The tax benefit is extended for ten consecutive years, starting from the year of registration as a tax resident in Portugal.

For further information, don‘t hesitate to get in touch with us:www.paxlegal.pt/en