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Approval of Amendments to the Tax Codes by the Assembly of the Republic 0
16 abril 2021

The Portuguese Parliament (“PP") approved, on 25 March last, Decree no. 126/XIV, which amends the Statute of Tax Benefits ("STB"), the Stamp Duty Code ("SDC"), the Investment Tax Code ("ITC"), the Vehicle Tax Code and the Single Circulation Tax Code and creates an extraordinary measure for the calculation of time limits under the Corporate Income Tax ("CIT").
The main changes approved recently by the Parliament are listed below.
 A. Amendments to the STB
  • Permanent tax benefits
According to Decree no. 126/VIV, the tax benefits granted in the context of income paid by collective investment undertakings to their participants and cultural patronage provided for in articles 22-A and 62-B of the STB, respectively, cease to be considered tax benefits of a temporary nature.
  • Madeira Free Trade Zone tax regime
Following the recommendations of the European Commission, Decree no. 126/XIV extends the tax benefits of regime IV of the Madeira Free Trade Zone ("MFTZ") for one year (i.e., until 31 December 2021). Having said that, new companies that are set up in the MFTZ until the end of 2021 will be able to benefit from the application of a reduced corporate tax rate of 5% until 31 December 2027.
In addition to the abovementioned extension, Decree No 126/XIV introduced a series of amendments to Article 36-A of the STB with a view to ensuring the compatibility of the MFZ's regime IV with EU law. In this context, the criteria for granting tax benefits to entities licensed to operate in the MFTZ were reviewed to determine the maximum ceilings of the taxable income to which the reduced 5% rate is applicable with the creation of jobs.
B. Amendments to the ITC
  • Tax benefits granted to investment projects
According to Decree no. 126/XIV, the award of tax benefits to investment projects under a contractual regime, which amounts are equal to or exceed EUR 3,000,000, has been extended until 31 December 2021.
C. Extraordinary measure for determining time limits for CIT
Decree no. 126/XIV also establishes the suspension of the counting of the following time limits during the 2020 and 2021 tax period:
(i) Time limit for reinvestment of the realisation value in the acquisition, production or construction of tangible fixed assets, intangible assets or, non-consumable biological assets;
(ii) Time limit for the deduction of CIT under the Investment Support Tax Regime;
(iii) Time limit for deducting research and development expenses incurred within the scope of SIFIDE II.
D. Extension of the validity of certain tax benefits
Pursuant to Decree no. 126/XIV, the validity of the tax benefits foreseen in the following articles was extended as follows:
  • Until 31/12/2025: (i) tax benefits to the financial system and capital market foreseen in articles 28, 29, 30, 31, 32-B, 32-C of the STB; (ii) other tax benefits contained in articles 52, 53, 54, 55, 59 8 and (iii) tax benefits relating to patronage referred in articles 63 and 64 of the STB;
  • Until 31/12/2027: tax benefits to the MFTZ and Santa Maria Free Trade Zone mentioned in nos. 4 to 20 of Article 33 of the STB;
  • Until 31/12/2021: tax benefits to intellectual property included in Article 58 of the STB.
António Vicente Marques – Sociedade de Advogados, SP, RL
Sociedade de Advogados de Responsabilidade Limitada
April 2021
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