SIFIDE II: What is it and how can you apply?

June 13, 2023

I. Introduction to SIFIDE

A. What is SIFIDE? B. Objectives of SIFIDE C. Benefits for businesses

II. How SIFIDE works

A. Eligibility Criteria 1. Research and Development (R&D) Activities 2. Types of Eligible Expenditures 3. Required Documentation B. Calculation of tax benefit 1. Base rate and incremental rate 2. Deduction limit and benefit period 3. Deduction and use of tax credit

III. Examples of application of SIFIDE

A. Technology company: Software development B. Pharmaceutical Industry: Research of new drugs C. Automotive Sector: Innovation in electric vehicles.

Introduction to SIFIDE

Although the applications for this year have already closed, this incentive will be in force until 2025. So you can already start preparing for the next periods, in case you are eligible. Let’s get to know Sifide II better:

The System of Tax Incentives for Business Research and Development, known as SIFIDE, is a tax regime in Portugal aimed at fostering research and development (R&D) activities carried out by companies. Through SIFIDE, companies can obtain significant tax benefits, encouraging them to invest in innovation and technological improvements. In this article, we will explore in detail how SIFIDE works and its main benefits for companies.

What is SIFIDE?

SIFIDE is a system created by the Portuguese government with the purpose of supporting companies that engage in R&D activities. These activities may include scientific research, experimental development, creation of new products or processes, among others. SIFIDE seeks to encourage innovation and competitiveness of companies, recognizing the costs and risks associated with these activities.

SIFIDE Objectives

SIFIDE’s main objective is to stimulate companies to invest in R&D, promoting the generation of knowledge, the creation of qualified jobs and the increase of competitiveness in the market. Furthermore, SIFIDE aims to boost the development of strategic sectors of the Portuguese economy, encouraging the modernisation and sustainability of companies.

Benefits for businesses

Companies that qualify for SIFIDE can enjoy several benefits. The most significant is the possibility of tax deduction of a percentage of R&D-related costs when determining taxable profit. This reduces the tax burden on companies’ income, allowing them to invest more in R&D activities. Furthermore, SIFIDE also provides for the use of tax credits, which can be offset in future tax periods or claimed in reimbursement.

syphids II framework — Absolute figures for the years in force of Sifide. More information can be found on ANI’s website.

How SIFIDE works

To enjoy the benefits of SIFIDE, companies must meet certain eligibility criteria and follow the procedures established by the programme. We will examine the main aspects of how SIFIDE works.

Eligibility Criteria

Research and Development Activities (R&D)

To benefit from SIFIDE, a company must be involved in R&D activities. This can include research and development of new products, the creation of new processes or significant improvements in existing products or services. It is important that the activities are technically challenging and aim at scientific or technological breakthroughs.

Types of eligible expenditure

SIFIDE allows companies to deduct a portion of the costs related to R&D activities. This includes expenses with qualified personnel, acquisition of specialized equipment, contracting external consultancy, among others. It is essential to keep accurate records and adequate documentation to prove the expenses incurred.

Necessary documentation

To apply for SIFIDE benefits, the company must submit the appropriate documentation proving the R&D activities carried out and the associated costs. This may include technical reports, proof of expenses, description of the R&D projects, among other documents. It is essential to follow the guidelines established by the tax authorities to ensure the eligibility and success of the application.

Calculation of the tax advantage

Base rate and incremental rate

The SIFIDE tax benefit is calculated on the basis of two rates: the base rate and the incremental rate. The base rate represents a fixed percentage of eligible costs, which can be deducted from the company’s taxable profit. The incremental rate is an additional percentage applied to costs that exceed the amount spent on R&D in the previous period. This rate encourages companies to increase their R&D investments over time.

Deduction limit and benefit period

SIFIDE sets a maximum limit on the tax deduction a company can claim. This limit is determined by the type of R&D activity and the size of the company. In addition, the SIFIDE tax benefit is applied for a specific period of time, usually several consecutive years. This allows companies to plan and carry out long-term R&D projects, knowing that they will be able to take advantage of the tax benefits over that period.

Deduction and use of the tax credit

The tax deduction obtained through SIFIDE can be used to reduce the tax payable by the company. If the deduction is greater than the tax due, the excess amount can be offset in future tax periods or claimed as a refund. This flexibility helps companies manage their cash flows and maximise the benefit from SIFIDE.

Examples of application of SIFIDE

In order to illustrate the application of SIFIDE in practice, let us consider some examples in different sectors.

Technology company: Software development

A technology company engaged in software development can benefit from SIFIDE by investing in research and innovation to improve its products. For example, the company may be working on a new business management system that uses advanced algorithms for data analysis. During the development process, the company incurs expenses in hiring specialized programmers, purchasing equipment and software licenses.

By using SIFIDE, the company can deduct a portion of these expenses in its income tax return. This will reduce the company’s taxable profit and, consequently, its tax burden. This tax saving will allow the company to invest in more research and development resources, promoting continuous innovation and improving its competitiveness in the market.

Pharmaceutical industry: research into new drugs

In the pharmaceutical industry, the research and development of new drugs is key to scientific advancement and the development of innovative treatments. A pharmaceutical company investigating new drugs to treat specific diseases can benefit from SIFIDE.

The costs involved in clinical research, efficacy testing, clinical trials and drug registration can be considerable. However, by using SIFIDE, the company can deduct a portion of these costs in its income tax return, reducing its tax burden. This encourages the company to continue investing in research that may lead to the development of innovative medicines, benefiting both the company and the patients who may benefit from these new therapies.

Automotive: Innovation in electric vehicles

With the growth in environmental awareness and the search for more sustainable solutions, the automotive sector has increasingly invested in the research and development of electric vehicles. A car manufacturer developing new electric car models can benefit from SIFIDE.

By using SIFIDE, the company can deduct a portion of the costs related to research, development and innovation in electric vehicles. This includes expenses with engineers specialised in electric mobility, testing of batteries and electric propulsion systems, as well as the acquisition of green technologies.

Through SIFIDE, the company may reduce its tax burden, allowing it to invest even more in research and development of electric vehicles. This tax deduction contributes to the advancement of sustainable mobility and the creation of cleaner and more efficient transport solutions.

These are just a few examples of all the areas that can make an application.

Conclusion

SIFIDE plays a crucial role in promoting innovation and encouraging R&D activities carried out by companies in Portugal. By providing significant tax benefits, SIFIDE encourages companies to invest in scientific research and technological development, boosting the country’s economic advancement and competitiveness.

Golden Executive – Consultores, Lda | Technical Advisory Department

This text is merely informative and does not exempt the reading and interpretation of the supporting legislation in force, as well as for taking any decision or action that may affect your assets or business you should consult Golden Executive – Consultores, Lda.

NEW MEASURES TO SUPPORT TOURISM

December 22, 2022

0

The APOIAR Programme Regulation has a new Support Tourism measures aimed at financing the accommodation, restaurants and similar and other tourism activities sector, with an allocation of 70 million euros, to be attributed by Turismo de Portugal.

The ordinance came into force on December 14.

This reinforcement stems from the Medium-Term Agreement on Improving Income, Wages and Competitiveness, signed between the Government and social partners in October, which provides for administrative simplification and the elimination of context costs for companies in the accommodation, catering and tourism sector.

Thus, it increases the support to tourism companies that were supported in the scope of the Programme Apoiar due to the impacts of the pandemic, considering now the current context – effects of inflation, increased energy costs and conflict in the European space.

The support to be granted takes the form of a non-refundable subsidy and corresponds to 10% of the final financial support calculated, cumulatively, for each beneficiary company, in the measures Apoiar.pt, Apoiar Restauração and/or Apoiar +Simples, of the APOIAR 2022 Programme.

If, of the support requests presented, the budget allocation foreseen for this measure is not fully used, the unused amount will be redistributed proportionally amongst the applicant companies according to the support initially paid and received. Each beneficiary company may not, however, receive, in the end, a value of support higher than 50% of the value of the final support calculated, cumulatively, within the scope of the measures Apoiar.pt, Apoiar Restauração and/or Apoiar + Simples.

Beneficiaries are companies that:

meet the eligibility criteria;
have had an application approved under the APOIAR Programme, in the measures Apoiar.pt, Apoiar Restauração or Apoiar +Simples;
they develop their main economic activity within the list of the envisaged CAE.

The list of eligible activity codes in the TOURISM SUPPORT is as follows:

Section I – Hotels, restaurants and similar accommodation

55: Accommodation.

56: Catering and similar.

Section II – Other tourism activities

77: Rental activities.

79: Travel agencies, tour operators, other reservation services and related activities.

823: Organisation of fairs, congresses and other similar events.

86905: Thermal activities.

93210: Activities of amusement parks and theme parks.

93211: Activities of travelling amusement parks.

93292: marina activities.

93293: Organisation of tourist entertainment activities.

93294: Other amusement and recreation activities n.e.

93295: Other itinerant entertainment activities.

Section III – Other cultural activities

90: Theatre, music, dance and other artistic and literary activities.

91: Activities of libraries, archives, museums and other cultural activities.

Section IV – Service activities

93110: Management of sports facilities.

93192: Other sporting activities n.e.

The beneficiaries’ eligibility criteria and required access conditions must be met at the date of formalisation of the application.

Besides developing main activity inserted in the CAE list and having had an application approved under the measures Apoiar pt, Apoiar Restauração or Apoiar +Simples, the company is also required to:

is in operation;
has not been subject to insolvency proceedings, under the terms of the Insolvency and Corporate Recovery Code;

(both situations are verifiable through the submission of a declaration of compliance, signed by the beneficiary under oath, and the remaining conditions are confirmed through the automatic procedures of the 2020 Branch)

have fulfilled all claims relating to ESIF funding;
have fulfilled all obligations related to social security and tax authorities.

The application for support is unique for each beneficiary company and must be submitted through a simplified electronic form available on the Simplified Access Platform (PAS Compete).

The access is made through the accreditation of the Tax Authority or through the Citizen Card/Mobile Digital Key in the case of individual entity.

After accessing PAS, the request for support becomes available and is visible at the bottom of the homepage in the menu Others – Support Tourism Line.

COMPETE 2020 recommends that companies prepare and check some elements before submitting the application to speed up the process, namely:

the correction of the contact email,
whether the IBAN provided is associated with the company’s NIF,
the regularisation of the company’s tax and social security contributions,
whether the CAE of the company’s economic activity is as such registered in the Information System of the Portuguese Classification of Economic Activities (SICAE) platform.

References

Ministerial Order no. 295-A/2022 – DR no. 238/2022, 1st Supl, Series I of 13.12.2022

Ministerial Order No. 271-A/2020 – DR No. 229/2020, 2nd Supl, Series I of 24.11.2020

Golden Executive – Consultores, Lda | Technical Advisory Department

This text is merely informative and does not exempt the reading and interpretation of the supporting legislation in force, as well as for taking any decision or action that may affect your assets or business you should consult Golden Executive – Consultores, Lda.

Financial Incentives for Internationalization via e-commerce

September 21, 2022

0

Incentivos Financeiros à Internacionalização via e-commerce

Elevate your digital e-commerce strategy through non-refundable financial incentives of up to 50%.

4.0: Internationalization via E-Commerce

Through this e-commerce incentive, large and small companies get support for their individual projects of direct presence in online channels, namely the creation of their own stores and/or joining marketplaces, as well as the development of online promotion campaigns.

This notice intends to contribute to promoting e-commerce in new exporters and in companies that are already in international trade.

FINANCING

Incentive rate of up to 50% (non-refundable) on eligible expenses, according to the following typologies:

10,000 to 25,000 euros, for projects under the “New Exporters” typology
25.000 euros to 85.000 euros, for projects under the “More Markets” typology

DEADLINE

The applications are open until the receiving of the limit number of applications determined according to the budget allocation.

ELIGIBLE EXPENDITURE

In the SI Internationalization via E-Commerce, eligible expenses are considered:

1. The acquisition of equipment and software directly related to the implementation of the project.

2. Expenses related to the acquisition of services from third parties related to:

2a) Design and implementation of strategies applied to digital channels for managing markets, channels, products or customer segments;

2b) User-Centered Design (UX): design, implementation and optimization of customer experience-centered digital strategies that maximize customer attraction, interaction and conversion;

2c) Design, implementation, optimization of Web Content Management (WCM), Campaign Management, Customer Relationship Management and E-commerce platforms;

2d) Creation of own online stores, registration and optimization of the presence in electronic marketplaces, including subscription and membership fees during the project execution period;

2e) Search Engine Optimization (SEO) and Search Engine Advertising (SEA);

2f) Social Media Marketing: Design, implementation and optimization of presence and interaction with customers via social networks;

2g) Content Marketing: creation and distribution of digital content (short text, long text, images, animations, or videos) aimed at capturing the attention and attracting the target customers to the offers marketed by the company;

2h) Display Advertising: placement of advertisements to the company’s offer on third-party sites, including search engine results pages;

2i) Mobile Marketing: translation of the strategies in the previous points for viewing and interacting with customers on mobile devices, namely smartphones and tablets;

2j) Business Intelligence and Web Analytics: collection, processing, analysis and visualization of large volumes of data generated from browsing and interaction of customers in a digital environment in order to identify patterns, correlations and relevant knowledge to strengthen the management and decision-making processes.

3. Costs of technical staff directly allocated to the implementation of the project, with evidence of skills/values in e-commerce and digital marketing and corresponding to a minimum qualification level VI (NQF).

ELIGIBILITY CRITERIA AND ACCESS CONDITIONS

In addition to the eligibility criteria for final beneficiaries and projects set forth respectively in articles 7 and 8 of Ministerial Order 135-A/2022, of April 1st, the final beneficiary must have a positive net worth in the complete fiscal year preceding the application year, and it is mandatory to submit the Simplified Corporate Information (IES) for that year. Alternatively, a subsequent interim balance sheet, certified by a chartered accountant, may be submitted, as long as it is reported up to the application date.

Companies that have been in business for less than a year at the time of application do not qualify to apply.

PREVIOUS PROCEDURES

Perform the e-commerce diagnosis that allows you to evaluate your company’s readiness on the Portugal Exporta website. The result of the evaluation defines the typology of the application to be submitted: New Exporters or More Markets. The recommendations made available in this Diagnostic also aim to provide guidelines for the elaboration of a

Detailed International E-Commerce plan supporting the application submission.

Develop an international e-commerce plan to support its application, the company must submit a detailed International ECommerce Plan (see details in Annex I of Notice of Tender No. 08/C16-i02/2022).

Make the application at the Balcão dos Fundos (Funds Counter) using the electronic form. Attached, submit the E-Commerce Diagnosis made available by AICEP and its International E-Commerce Plan

Don’t waste time. Contact us and find out how we can help you obtain these incentives.

In partnership with Exxa Studio, we offer a turnkey service with even more advantageous conditions.

Incentives