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Companies can deduct 1/3 of R&D expenses

Novabase with 30.91 ME to invest in technology-based SMEs

Published this week in Diário da República, the new System of Tax Incentives for Research and Development in Companies (SIFIDE) increases the rate of deduction of expenses in this area, allowing companies to reduce taxes by at least a third of the amount. The Ministry of Science, Technology and Higher Education says that Portugal now has the «highest level of tax incentives in the European space for R&D in companies».

Deductions from collection can reach 82.5% from collection under IRC. The tax deduction rate of SIFIDE is 32.5%, which can be added to the 50% deduction of the increase in this expense compared to the average of the previous two years up to the limit of 1.5 million euros.

With the new law, the tax deduction rate is increased by 12.5 percent and doubles the deductible limit related to the increase in R&D expenditure compared to the average of the previous two years.

It is recalled that Portugal led the growth of R&D expenses of companies in Europe between 2005 and 2007, which amounted to 0.61% of GDP. The data from the National Scientific and Technological Potential Survey also show an increase in the number of companies with R&D activities, which went from 930 in 2005 to 1,500 in 2007.