Legal Alert | NHR 2.0 - IFICI Regulation

The entry into force of the Tax Incentive for Scientific Research and Innovation (IFICI - NHR 2.0)

Approved by the State Budget Law for 2024 and in effect since January 1 of the current year, the IFICI  (NHR 2.0) remained without regulation. Finally, nearly a year after the regime came into force, Ordinance no. 352/2024/1, of December 23 (Ordinance), was published and will come into effect tomorrow with retroactive application to January 1, 2024. This Ordinance regulates and defines the eligible activities, the covered sectors, the criteria and procedures for adherence, as well as the requirements necessary for confirming the applicable conditions.

Applications request

The Ordinance stipulates that taxable person’s resident in Portuguese territory must submit their application for the IFICI by January 15 of the year following the one in which they become residents in that territory.

Accordingly, the application must be submitted, depending on the activity performed, to one of the competent entities, namely: the Foundation for Science and Technology (Fundação para a Ciência e Tecnologia, I.P.); the Portuguese Agency for Investment and External Trade (Agência para o Investimento e Comércio Externo de Portugal, E.P.E.); the Tax and Customs Authority (Autoridade Tributária e Aduaneira); the AICEP, E.P.E., or the IAPMEI – Agency for Competitiveness and Innovation (Agência para a Competitividade e Inovação, I.P.); the National Innovation Agency (Agência Nacional de Inovação, S.A.); and the Startup Portugal – the Portuguese Association for the Promotion of Entrepreneurship, depending on the eligibility requirement.

Verification of the requirements

The application for the IFICI regime depends on the verification of the requirements regarding the activity carried out by the taxable persons (individuals applying for the regime’s application), which is the responsibility of the entities to which the applications are submitted, and the other legal requirements, which is the responsibility of the Tax Authorities.

Among the various possible eligibility criteria, we highlight the regulation now published by the Ordinance regarding highly qualified professions carried out in industrial and service enterprises, whose main activity corresponds to a CAE code (economic code of activity) defined in an ordinance of the members of the Government responsible for the areas of finance and economy and which export at least 50% of their turnover, in the fiscal year in which they began their functions or in any of the two previous exercises.

Highly qualified professions

The professions qualified for the purposes of the IFICI are those that fall under the following codes of the Portuguese Classification of Occupations, annexed to Deliberation no. 967/210, of the Statistical Council, of May 5, published in the Diário da República, 2^nd series, no. 106, of June 1, namely: 

• 112 – CEO and executive manager of companies;
• 12 – Directors of administrative and commercial services;
• 13 – Directors of production and specialised services;
• 21 – Specialists in the physical sciences, mathematics, engineering and related techniques;
• 2163.1 – Industrial product or equipment designer;
• 221 – Doctors;
• 231 – Professor of university and higher education; 
• 25 – Specialists in information and communication technologies (ICT).

The Ordinance also clarifies that the roles of directors, managers and managing directors of companies with relevant applications in the exercise of their functions or in the previous five financial years, who benefit or have benefited from the tax regime to support investment, are also considered highly qualified professions.

Furthermore, and as a complement, the list of codes identifying industrial and service companies is also approved, for the purposes of Article 58-A, no. 1, (c), (ii), of the EBF (Tax Benefits Code). Regarding the scope of activities, it must be taken into account the CAE, revision 3, approved in the annex to Decree-Law no. 381/2007, of November 14, as follows: 

• Extractive industries – divisions 05 to 09;
• Transformative industries – divisions 10 to 33;
• Information and communication activities – divisions 58 to 63; 
• Research and development of physical and natural sciences – group 721; 
• Higher education – subclass 85420;
• Human health activities – subclasses 86100 to 86904.

Procedure

In order to demonstrate that they comply with the necessary requirements to benefit from the IFICI, taxable persons must submit to the entities referred to in Article 2, no. 2, of Ordinance: 

• Copy of the individual employment contract, when the activity carried out is a job;
• Up-to-date permanent commercial certificate, when the activity carried out is that of a member of a corporate body;
• Copy of the scholarship contract, when the activity carried out is a scientific research;
• Proof of applicable academic qualifications;
• The document referred to in Article 10, no. 2, of Ordinance for the situations there provided;
• Other documents that may be requested.

It is the duty of the company where the activity is carried out to prove the requirements listed in Article 58-A, no. 1 (c), of the EBF, by confirming (by 15^th of March), in the respective area of the Portuguese Tax Authorities’ System, that it meets the conditions set out in points i) and ii), as well as proving that the taxable person exercises a highly qualified profession. The elements to be confirmed will be made available by the Portuguese Tax Authorities by the end of February.

Regulation remains pending on other very relevant eligibility criteria, as for example, in relation to other qualified jobs and members of corporate bodies, in entities that carry out economic activities recognized by AICEP, E.P.E., or by IAPMEI, I.P., as relevant to the national economy, namely in terms of attracting productive investment and reducing regional asymmetries.

The publication of these lists and well-defined criteria addresses the need for predictability sought by companies and applicants to the regime, and it will facilitate the application of the regime throughout 2025.

Morais Leitão tax team is available for any further questions.