Unlocking Portugal’s Tax Benefits for Entrepreneurs and Investors

A Comprehensive Guide to the Country’s Attractive Tax Regimes and Incentives

Portugal has long been a popular destination for entrepreneurs and investors, thanks to its favorable business climate, stunning natural beauty, and welcoming culture. In recent years, the country has taken significant steps to enhance its tax regime, making it an even more attractive location for individuals and businesses looking to relocate or invest. In this article, we will delve into the details of Portugal’s tax benefits, exploring the various incentives and regimes that make it an ideal destination for entrepreneurs and investors.

The IFICI+ Tax Regime: A Game-Changer for New Residents

One of the most significant developments in Portugal’s tax landscape is the introduction of the IFICI+ tax regime. This new regime, which came into effect in 2025, offers a flat 20% tax rate on employment and self-employment income from eligible activities, such as scientific research, R&D, innovation, technology, export-focused companies, and startups. This rate applies to new residents for a period of 10 years, making it an extremely attractive proposition for individuals looking to relocate to Portugal.

In addition to the reduced tax rate, the IFICI+ regime also provides tax exemptions on most foreign-sourced income, including dividends, rental income, and capital gains, except for pensions and income from blacklisted jurisdictions. This means that new residents can enjoy significant tax savings on their foreign-earned income, making it easier to maintain a high standard of living in Portugal.

It’s worth noting that the IFICI+ regime has replaced the former Non-Habitual Resident (NHR) tax regime, which is no longer available to new applicants. However, existing NHR beneficiaries will continue to enjoy the benefits of the regime until its expiration.

Tax Incentives for Young Professionals and Employees

Portugal is also committed to attracting young talent, and its tax regime reflects this. Young professionals up to the age of 35 can benefit from a partial income tax exemption on earnings up to €28,000 per year for the first 10 years, with a 100% exemption in the first year, decreasing gradually to 25% by the tenth year. This incentive is designed to encourage young people to start their careers in Portugal and to help them build a secure financial future.

Furthermore, productivity bonuses and profit-sharing rewards are exempt from personal income tax up to 6% of the employee’s annual basic salary. This means that employees can enjoy additional income without incurring a significant tax burden.

Corporate Tax Benefits and Incentives

Portugal’s corporate tax regime is also highly competitive, with a standard corporate income tax rate of 20% (reduced from 21% in 2025, with a target of 15% by 2027). This rate applies to companies engaged in various activities, including manufacturing, services, and trade.

In addition to the reduced corporate tax rate, Portugal offers a range of tax incentives and credits to encourage investment and innovation. The SIFIDE II R&D tax credit, for example, allows companies to recover up to 82.5% of R&D investment, with a base deduction rate of 32.5% and an incremental rate of 50% for increased expenses over the previous two years (max €1.5M).

Companies that invest in intellectual property (IP) can also benefit from a reduced 10% tax rate for income derived from IP developed or used in Portugal, and an 85% reduction for qualified IP income (patent box regime). This makes Portugal an attractive location for companies that rely heavily on IP.

Regional Tax Incentives: Madeira and the Azores

Portugal’s autonomous regions of Madeira and the Azores also offer a range of tax incentives to attract investment and promote economic growth. Companies engaged in export activities and those investing in priority sectors in these regions can benefit from reduced corporate tax rates and additional deductions.

In Madeira, investment projects of €750,000+ (or €250,000 in Porto Santo) in eligible sectors can receive a CIT credit up to 35%, plus exemptions or reductions from property and stamp taxes. Micro, small, and medium-sized companies in Madeira that reinvest up to 25% of retained earnings (capped at €12M) are also eligible for a CIT credit up to 25% of tax due.

Undertakings for Collective Investment (UCI) and Alternative Investment Vehicles (AIVs)

Portugal’s tax regime also provides incentives for Undertakings for Collective Investment (UCI) and Alternative Investment Vehicles (AIVs). The 2024/2025 tax reform updates the tax regime for UCI, including AIVs in real estate, venture capital, and credit, granting CIT exemptions for these entities and extending special tax regimes to their participants/shareholders.

Income from participation units or shares in UCIs is subject to a special 28% personal income tax rate for residents, with updated rules for non-residents.

Golden Visa and StartUP Visa Programs

Portugal’s Golden Visa program remains a key route for non-EU investors, requiring a minimum €500,000 investment in approved alternative investment funds (real estate is no longer eligible). The program offers a range of benefits, including Schengen visa-free travel and eligibility for citizenship after five years with minimal stay requirements.

The StartUP Visa program, on the other hand, offers a residence permit for international entrepreneurs who establish innovative companies and create qualified employment in Portugal. This program provides access to incentives and support programs, making it easier for startups to establish themselves in the country.

Conclusion

Portugal’s tax regime is highly competitive, offering a range of incentives and benefits to entrepreneurs and investors. From the IFICI+ tax regime to the Golden Visa program, there are numerous opportunities for individuals and businesses to reduce their tax burden and enjoy a high standard of living in Portugal.

Whether you’re a young professional, a startup founder, or a seasoned investor, Portugal’s tax regime has something to offer. With its favorable business climate, stunning natural beauty, and welcoming culture, Portugal is an ideal destination for anyone looking to relocate or invest.

By understanding the country’s tax regimes and incentives, entrepreneurs and investors can make informed decisions about their business and personal finances. With the right guidance and support, it’s possible to unlock the full potential of Portugal’s tax benefits and enjoy a successful and fulfilling life in this beautiful country.

Additional Resources

For more information on Portugal’s tax regime and incentives, we recommend the following resources:

• Portugal Pathways
• Migronis
• PwC Tax Summaries
• EY Tax Alerts
• Biz in Portugal

Relevant Keywords

• tax benefits
• entrepreneurs
• investors
• residency

Article Type

• Essay