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Today’s Top Headlines

EU Sets New Limits On Portuguese Tax Breaks

by Ulrika Lomas,, Brussels

19 June 2014

The European Commission has approved, under European Union state aid rules, Portugal's map for granting state aid between 2014 and 2020.

The map is based on the regional aid guidelines adopted by the EC in June 2013, which set out the conditions on the provision of state aid to businesses by member states to promote regional development. Under the regional aid guidelines, member states are only permitted to grant special tax regimes to certain regions or industries if they are proportionate. This may be to support investments in new production facilities in the less advantaged regions of Europe, or to extend or modernize existing facilities.

The regional aid map for Portugal defines the Portuguese regions that are eligible for regional investment aid under EU state aid rules, and establishes the maximum aid levels (so-called "aid intensities") for companies in the eligible regions. The map will be in force between July 1, 2014, and December 31, 2020.

The designated areas have a total population of 8.97m or 85.01 percent of the population of Portugal. The maximum levels of aid that can be granted to regional investment projects carried out by large enterprises in the assisted areas are between 10 percent and 45 percent of total investment costs, depending on the areas concerned. These percentages can be increased by 10 percentage points for medium-sized enterprises, and by 20 percentage points for small enterprises.

Under the new map, regions accounting for 69.01 percent of Portugal's population will continue to be eligible for regional investment aid at maximum aid intensities ranging from 25 percent of the eligible costs of the relevant investment projects in mainland Portugal, and over 35 percent in Madeira, and up to 45 percent in the Azores.

Other regions that are less advantaged relative to the EU or national average (but with a gross domestic product per capita above 75 percent of the EU average) may also be eligible provided that they comply with certain criteria and with an overall population coverage ceiling. Areas covering 15.77 percent of the population of Portugal will be eligible for regional investment aid under this category, at a maximum aid intensity of 10 percent of the eligible costs of the relevant investment projects.

The maximum aid intensities for regional investment aid in Portugal's assisted regions have slightly decreased, as compared with the previous map, by up to five percentage points compared with the rules in place during the period January 1, 2011, to June 30, 2014, depending on the region.

TAGS: tax | investment | business | European Commission | Portugal | interest | accounting | gross domestic product (GDP) | Madeira | European Union (EU) | Europe | Other

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