Alteration of the Regime of Several Tax Benefits

Alteration of the Regime of Several Tax Benefits

Law 20/2023, of 17 May, changes the regime of several tax benefits, among which we highlight:

I. Vehicle Tax (ISV):

The reduced rate of Vehicle Tax (ISV) applicable to motorhomes (Articles 7, 8 and 9 CISV) has been gradually eliminated, with provision for its annual and progressive reduction until 1 January 2027.

These alterations will come into effect on 1 January 2024.

The intermediate ISV rate for vehicles manufactured before 1970 has also been revoked.

II. Corporate Income Tax (IRC):

The Patent Box regime has been amended, establishing that income arising from contracts whose object is the temporary assignment or use of industrial property rights when registered (and no longer when subject to registration) are eligible for deduction from taxable income, effective as from 28 June 2022.

In addition, and with effect from 1 July 2023, some tax benefits were excluded from the adjustment of the liquidation result foreseen in no. 1 of article 92 of the CIRC, namely:

i) Tax incentive to salary increases (art. 19-B of the Statute of Fiscal Benefits);

ii) Net job creation for companies operating in inland territories and the Autonomous Regions (art. 41-B of the EBF); and

iii) Food donations to the State, Private Social Solidarity Institutions (IPSS) and non-profit Non-Governmental Organisations (ONG) (art. 62 of the EBF).

It is clarified that the rules of the IRC Code that grant “tax benefits” are not covered by the adjustment of the liquidation result foreseen in Article 92 of the CIRC. This rule has an interpretative nature.

III. Tax Benefits Statute (EBF),

The following amendments were made to the Tax Benefits Statute:

i) Expiry of tax benefits – Cultural patronage will now be subject to the general regime of automatic expiry of tax benefits after 5 years.

ii) Regarding the Extension of Tax Benefits, under the EBF, although they are subject to the five-year limitation rule, certain tax benefits are extended:

1) Intellectual Property (Article 58 of the EBF) – this extension will come into effect on 1 January 2022;

2) Scientific sponsorship (Article 62-A of the EBF) – this extension will come into effect on 1 January 2023.

iii) Regarding the IRS exemption applicable to Workers Sent Abroad, it will now only cover taxpayers who perform public functions or commissions abroad in the service of the Portuguese State.

The amendment takes effect on 1 July 2023.

iv) As regards the Tax Scheme of the Tax Incentive to Capitalisation of Companies (ICE), it is established that the amount of net increases in eligible shareholders’ equity shall be calculated by reference to the sum of the amounts determined in the financial year itself and in each of the previous nine tax periods, and the amount of the net increases in eligible shareholders’ equity will be deemed to be zero in situations where such sum results in a negative difference.

In addition, the concept of “eligible increases in equity” provided for in Article 43-D(6)(a)(iv) of the EBF now includes the appropriation of distributable accounting profits, in accordance with commercial legislation, in retained earnings or, directly, in reserves or in the increase of capital.

Transitional regime: For the purposes of this provision, the first accounting profit covered is considered to be the profit for the period 2022, whose resolution and corresponding application, in retained earnings or, directly, in reserves or in the capital increase, occurs in the tax period starting on or after 1 January 2023.
Without prejudice to the above, the capital increases made using the profits generated in the tax period beginning in 2022 that have benefited from the regime of the conventional remuneration of share capital provided for in the former Article 41-A of the EBF are not considered for the purposes of sub-paragraph iv) of paragraph a) of no. 6 of Article 43-D of the EBF.

On the other hand, it is specified that “net increases in eligible equity” are the difference, positive or negative, between:

i) increases in eligible equity capital; and

ii) withdrawals, in cash or in kind, from holders of capital, by way of a reduction in capital or distribution of assets, and distributions of reserves or profits brought forward.


The changes concern the intermediate VAT rate, which is no longer applicable to coloured and marked petrol, but only to gas oil, coloured and marked, fuel oil and respective mixtures.

V. Excise Duties (IEC)

Coloured and marked oil and heating gas oil will no longer benefit from the reduced rate.

These changes take effect on 1 July 2023.

Elsa Rodrigues

Elsa Rodrigues

Founding Partner/Lawyer