Contractual Tax Benefits
Besides other national benefits, companies investing in the Azores may receive tax benefits that only apply to the Region.
Minimum investment amount
With regard to the granting of Contractual Tax Benefits the investments must be recognized as strategically relevant for the region and be over:
- €2 million if implemented in the islands of São Miguel and Terceira (€1 million if implemented in Terceira Island, subject to job creation);
- €400,000 if implemented in any other islands;
- €200,000 in case of investment projects in Marine Biotechnology and/or Aquaculture, regardless of their location, with more than 10% investment expenses on R&D.
Strategic relevance will be recognized for investment projects that promote the rehabilitation of urban centers in towns or cities, or are aimed at the production of tradable goods and services, provided that, in the latter case, they concurrently seek at least two of the following goals:
- Reduce regional asymmetries or decrease insularity costs;
- Promote the development and diversification of the regional economic structure;
- Promote net job creation;
- Contribute to the integration and streamlining of fishery, agricultural or animal farming activities with other activities, thus promoting their modernization;
- Introduce innovative technological processes in the regional corporate sector, promote interaction with entities included in the Regional Scientific and Technological System or attract human resources with high-level scientific and technical skills;
- Promote adequate environmental and territorial sustainability;
- Reorganization, conversion, modernization, merging or concentration and business cooperation agreements that can be a basic requirement for reaching some of the goals specified above.
The following tax benefits may be granted cumulatively to promoters of investment projects that are subject to the taxes specified herein:
- Corporate Income Tax deductions (up to a 90% annual limit), of 30% of the relevant project investments effectively made (80% in Terceira islands for investments applied until 2019);
- Exemption or reduction of the IMI (Portuguese Municipal Property Tax), for a period up to ten years, in relation to buildings used by the promoters for the purposes of the activities developed within the scope of the project;
- Exemption or reduction of at least 75% of the IMT (Portuguese Property Transfer Tax) in respect to real estate acquired by promoters and intended for the development of activities within the scope of the project.
The percentage applied to the relevant investments specified above is added, due to job creation, by:
- 10% ≥ 10 jobs
- 20% ≥ 25 jobs
- 30% ≥ 50 jobs
- 40% ≥ 100 jobs
- 50% ≥ 150 jobs
The overall amount of granted tax benefits shall not exceed the limits set forth by the European Commission in the applicable national state aid map.
Investment in fixed tangible assets acquired as new and related to the realization of the project, except for:
- Buildings or other infra-structures not directly related to the production process or administrative activities except if they arise from rehabilitation urban centers projects;
- Passenger or commercial vehicles or other transport equipment exceeding 20% of relevant applications;
- Furniture and comfort or decoration items, except hotel equipment used for tourism;
- Social service equipment, except those required by Law;
- Other capital goods not directly and indispensably associated with the company’s productive activity;
- Land, unless it is included in extractive industry projects or those intended for golf courses, spas, theme parks or the relocation of business units to industrial parks or areas of business location.
Investments in intangible assets (not exceeding 50% of the relevant investments for large enterprises) with:
- Transfer of technology by acquiring patent rights, licenses, 'know-how' or unpatented technical knowledge, and research and development costs;
- Multi-annual promotion campaigns in foreign markets, such as those for launching or promoting goods, services or brands, including the ones taking place in trade fairs, exhibitions and other similar events of an international nature;
- Technical assistance and studies.
These benefits shall not be cumulated with any other tax benefits of the same nature, whether automatic or contractual, which are subject to be allocated to the same investment project.