Portugal’s Tax Incentive Has Doubled Business Investment: A Proven Driver of Growth
Portugal’s investment tax incentive has proven to be an effective tool in supporting private sector investment and promoting economic development.
According to a recent report by the Technical Tax and Customs Assessment Unit (U-Tax), this policy is generating real increases and measurable results in capital investment, job creation, and productivity. Based on this evidence, U-Tax recommends the continuation of the program, highlighting its positive role in supporting business growth and helping to modernize the Portuguese economy.
In 2023, companies that benefited from RFAI showed better performance than those that were eligible but didn’t use the incentive. On average, they invested more and hired more workers. Clear indicators that the RFAI is meeting its core purpose of encouraging investment in Portugal’s productive economy.
U-Tax also evaluated the Tax Incentive System for Business Investment in Research and Development (SIFIDE). The findings showed that each additional euro of tax expenditure under SIFIDE generated more R&D investment. Beneficiary companies reported higher total investment in R&D, along with increases in R&D staffing, productivity, and operational efficiency.
These results highlight the effectiveness of well-targeted tax and fiscal policies. When thoughtfully implemented, they help foster innovation, improve competitiveness, and contribute to sustainable growth.
Overall, Portugal’s experience with both RFAI and SIFIDE shows that well-structured tax incentives can drive economic benefits. By lowering barriers to investment, these programs help businesses grow, innovate, and contribute more to the economy. Making them valuable tools in Portugal’s national economic policy.
