The Tax Regime for Investment Support (RFAI), enshrined in articles 22 to 26 of the Investment Tax Code (CFI), represents one of the most significant tax incentives in Portugal for companies that make investments in new productive assets. In 2026, this regime offers a significant deduction, allowing up to 30% of the eligible investment to be directly offset against the Corporate Income Tax (IRC) liability, with a limit of 15,000,000 euros in "a" regions, and with the possibility of deducting up to 50% of the assessed tax. This article details its characteristics, eligibility, calculation, and the obligations for companies.

1. The RFAI: A Pillar for Productive Investment in Portugal

1.1. Framework and Definition

The Tax Regime for Investment Support (RFAI) finds its legal framework in articles 22 to 26 of the Investment Tax Code (CFI), approved by Decree-Law no. 162/2014, of October 31. This regime constitutes an economic policy measure aimed at stimulating business investment, job creation, and regional development, through the granting of a tax benefit in the form of a tax credit against Corporate Income Tax (IRC).

In practice, the RFAI is a tax credit, meaning that a company making investments in relevant applications can deduct a percentage of that investment directly from its IRC liability for the financial year. This characteristic distinguishes it from other deductions that only affect the taxable base, giving it an immediate and more substantial financial impact on the company's tax bill. For a Small and Medium-sized Enterprise (SME) that is expanding its productive capacity — whether by acquiring new machinery, installing a new production line, or modernising productive equipment — the RFAI can often be the tax benefit with the greatest direct impact on its IRC settlement.

1.2. Objectives and Economic Relevance

The main objectives of the RFAI are:

• Stimulate private investment: By reducing the tax cost of investment, the RFAI encourages companies to modernise and expand their operations.
• Promote job creation: Eligibility for the regime is intrinsically linked to the creation and maintenance of jobs, contributing to a reduction in unemployment and an increase in national productive capacity.
• Foster territorial cohesion: The differentiation of deduction rates according to the geographical location of the investment aims to promote economic development in less developed regions, contributing to the reduction of regional disparities.
• Increase business competitiveness: The modernisation of assets and productive processes allows companies to improve their efficiency, quality, and innovation capacity, making them more competitive in national and international markets.

The economic relevance of the RFAI is undeniable, especially in contexts of economic recovery or the need for industrial restructuring. By facilitating access to capital for investment, the regime contributes to the sustainable growth of the Portuguese business fabric.

2. Deduction Values and Limits in 2026

2.1. Deduction Rates by Region

The RFAI deduction rates were significantly altered by Law no. 12/2022, of June 27, which revised the tier thresholds and applicable percentages. For the year 2026, the applicable deduction percentages are as follows, varying according to the geographical location of the investment, in accordance with the regional aid map:

Regions	Deduction
"a" Regions (North, Centre, Alentejo, Azores, Madeira)	30% of relevant applications up to €15,000,000 + 10% on the amount exceeding €15,000,000
"c" Regions (Algarve, Greater Lisbon, Setúbal Peninsula)	10%, no tier

This regional differentiation reflects the legislator's intention to encourage investment in economically disadvantaged or less dynamic regions, classified as "a". A company investing, for example, in the North or Centre region will benefit from a 30% deduction on its eligible investment, while the same company investing in Greater Lisbon would benefit from only 10%.

2.2. Annual Deduction Limits against IRC Liability

Under article 23 of the Investment Tax Code (CFI), the RFAI deduction against IRC liability is subject to annual limits, which aim to ensure the sustainability of public accounts and the proportionality of the benefit:

• As a rule, the deduction is limited to 50% of the IRC liability assessed for the tax period to which the investment relates.
• However, for companies in their initial period of activity and the two subsequent tax periods, the deduction can be up to 100% of the IRC liability, which constitutes an additional incentive for new ventures.

It is crucial to note that if the assessed credit exceeds the deductible limit for the financial year, the undeducted portion is not lost. The remaining amount can be carried forward and deducted in the 10 subsequent tax periods, i.e., for a period of ten years, which provides great flexibility and security for companies, ensuring that the tax benefit is fully utilised over time.

3. Eligible Investments and Exclusions

3.1. Relevant Applications

For RFAI purposes, relevant applications, under paragraph 1 of article 22 of the CFI, are considered to be investments in tangible fixed assets and certain intangible assets, which are allocated to the company's operations and are in a new condition. The focus is on modernisation and increasing productive capacity.

Categories of assets that are generally eligible include:

• Machinery and equipment: Acquired in new condition, directly allocated to production or the provision of services.
• Installations and basic equipment: Infrastructure components that support productive activity.
• Intangible assets: Expenses with patents, exploitation licenses, models or designs, provided they are acquired from unrelated third parties and are used exclusively by the company, and do not exceed 50% of the total eligible relevant applications, as per paragraph 2 of article 22 of the CFI.
• Construction, acquisition, modernisation or expansion of buildings: Provided they are allocated to the company's productive or administrative activity, in accordance with legally established conditions.

3.2. Typical Exclusions

The legislator established a set of exclusions to prevent undue exploitation of the benefit or its application to investments without a productive character. The most common exclusions, provided for in paragraph 3 of article 22 of the CFI, are:

• Land: Although essential for the location of facilities, the value of the land itself is not eligible.
• Buildings: In general, the acquisition of buildings is not eligible, except when it concerns buildings allocated to productive or administrative activities under certain acquisition or construction conditions. The construction or acquisition of buildings for housing, for example, is expressly excluded.
• Light passenger vehicles: Vehicles for personal or mixed use, which are not directly allocated to the company's essential productive activity (e.g., goods transport vehicles or rental vehicles without a driver).
• Furniture and comfort or decorative items: Except when allocated to the company's main activity and proving indispensable for its operation (e.g., specific furniture for laboratories or production areas).
• Social equipment: Investments in equipment intended for leisure or employee well-being activities that are not directly productive.
• Second-hand assets: The RFAI aims to encourage investment in new assets, which contribute to modernisation and innovation.
• Assets subject to financial leasing contracts: Only assets acquired in ownership by the company are eligible.

The distinction between what counts and what does not count as a relevant application is a critical point where many mistakes are made. It is essential that companies validate each item of their investment plan with a specialist before budgeting for the tax benefit, to avoid negative surprises.

4. Practical Examples of RFAI Application

To illustrate the application of the RFAI, we present two practical examples with numerical calculations.

4.1. Example 1: Company in the Centre Region with Medium Investment

An industrial company, based in the Centre region ("a" Region), decides to invest €200,000 in new productive equipment in 2026, with the aim of modernising its production line. This company is not in its initial period of activity.

• Eligible investment: €200,000
• Deduction rate ("a" Region, up to €15M): 30%
• RFAI credit assessed: 30% × €200,000 = €60,000.

Suppose the IRC liability assessed by the company in 2026 is €40,000.

• Annual deduction limit: 50% of IRC liability = 50% × €40,000 = €20,000.

In this case, the company can only deduct €20,000 from its IRC liability in the 2026 financial year.

• Amount to carry forward: The remaining RFAI credit (€60,000 - €20,000 = €40,000) can be carried forward and deducted in the 10 subsequent tax periods, until fully utilised.

The total benefit for the company remains €60,000; the 50% limit merely spreads the deduction over time. If this company were in its initial period of activity, it could deduct the full €40,000, as the limit would be 100% of the tax liability.

4.2. Example 2: Company in the North Region with Large Investment

A large company, located in the North region ("a" Region), plans an investment of €20,000,000 in the acquisition of high-tech machinery in 2026. The company has a high annual IRC liability.

• Eligible investment: €20,000,000
• RFAI credit calculation:
  • Portion up to €15,000,000: 30% × €15,000,000 = €4,500,000
  • Portion exceeding €15,000,000 (€5,000,000): 10% × €5,000,000 = €500,000
• Total RFAI credit assessed: €4,500,000 + €500,000 = €5,000,000.

Suppose the IRC liability assessed by the company in 2026 is €12,000,000.

• Annual deduction limit: 50% of IRC liability = 50% × €12,000,000 = €6,000,000.

In this case, the RFAI credit assessed (€5,000,000) is less than the annual deduction limit (€6,000,000). Thus, the company can deduct the full RFAI credit assessed, i.e., €5,000,000, from its IRC liability in 2026.

• Amount to carry forward: There is no amount to carry forward to future periods, as the entire credit was utilised in the year.

5. Obligations and Conditions for Maintaining the Benefit

The granting of the RFAI tax benefit is not unconditional. Its maintenance depends on compliance with a set of obligations and conditions, non-compliance with which may lead to the loss of the benefit and its subsequent repayment, with compensatory interest. These obligations aim to ensure that the investment effectively contributes to economic policy objectives.

5.1. Maintenance of Assets and Activity

One of the primary conditions, established in paragraph 1 of article 25 of the CFI, is the maintenance of the assets allocated to the investment and of the company itself in the region where the investment was made, for a minimum period:

• 3 years for Small and Medium-sized Enterprises (SMEs).
• 5 years for companies not qualifying as SMEs.

This requirement ensures that the investment has a lasting character and that the economic and social benefits remain in the region. The disposal of assets before the deadline, the relocation of activity, or the closure of the company in the region may imply the repayment of the benefit.

5.2. Job Creation and Maintenance

The RFAI is intrinsically linked to the promotion of employment. A condition for eligibility and maintenance of the benefit is the creation of jobs associated with the investment and their maintenance during the minimum period of investment permanence (3 or 5 years, as applicable). The number of jobs to be created must be communicated and monitored, being an essential criterion for assessing eligibility.

The absence of creation or the subsequent reduction in the number of jobs created and maintained as a result of the investment, compared to the average of the 12 months prior to the application, may lead to the loss of the benefit.

5.3. Eligibility in Activity Sectors

The RFAI applies to investments made in eligible activity sectors, generally framed within the scope of the European Union's General Block Exemption Regulation (GBER). There are sectoral exclusions that must be carefully verified. Typically, sectors such as agriculture, fisheries, steel, shipbuilding, synthetic fibres, automotive, and transport may have more restricted access conditions or even be excluded. Companies should consult the lists of eligible and excluded activities to confirm the applicability of the regime to their sector of activity.

5.4. Documentation and Tax File

It is mandatory to establish and maintain a properly organised tax file, which proves the eligibility of the investment and the calculation of the benefit. This file must include, among other elements:

• Detailed identification of relevant applications.
• Invoices and other documents proving the acquisition of assets.
• Proof of payment.
• Calculation of the tax credit.
• Descriptive memorandum of the investment project and its objectives.
• Proof of job creation and maintenance.
• Declarations of compliance with the conditions.

The lack or inadequacy of documentation may lead to the disregard of the benefit in case of a tax inspection.

5.5. Validity Period

The RFAI, in its current configuration, is in force until December 31, 2027. It is important that companies planning to invest consider this deadline, as its eventual extension or alteration will depend on future legislative and community decisions.

6. Common Mistakes to Avoid in RFAI Application

The complexity of the RFAI and its articulation with other tax and community rules can lead to errors that compromise the eligibility or utilisation of the benefit. Below are some of the most common mistakes to avoid:

6.1. Failure to Validate the Eligibility of Relevant Applications

One of the most frequent errors is to consider as eligible investments that, under the law, are expressly excluded (e.g., acquisition of land, light passenger vehicles for non-productive use, second-hand assets). A thorough and prior analysis of each investment item is crucial, preferably with the support of a specialist, to avoid calculating a benefit that will not be accepted by the Tax Authority.

6.2. Ignorance of Annual Deduction Limits and Carry-Forward Rules

Some companies calculate the RFAI credit and assume they can deduct it in full in the year of investment, disregarding the 50% limit of the IRC liability (or 100% for companies in their initial period of activity). Ignorance of the carry-forward mechanism for the next 10 years can generate incorrect expectations about the immediate financial impact of the benefit.

6.3. Failure to Create or Maintain Jobs

The condition of job creation and maintenance is often underestimated. Its non-realisation or the net destruction of employment after the investment can lead to the total loss of the benefit. It is essential to monitor the number of employees and have evidence of their association with the investment.

6.4. Non-Compliance with Asset and Activity Maintenance Periods

The premature disposal of eligible assets or the relocation of activity outside the region before the legal period (3 or 5 years) has elapsed is a serious error that results in the repayment of the benefit, plus compensatory interest. Companies must have strict control over these deadlines.

6.5. Absence or Inadequacy of the Tax File

The lack of a complete and organised tax file, with all supporting documents for the investment and compliance with the conditions, is a significant risk factor in case of a tax audit. The Tax Authority may disregard the benefit due to lack of documentary evidence.

6.6. Failure to Consider the Impact of Other Tax Incentives

The RFAI can be combined with other tax incentives, but there are cumulation rules and maximum state aid limits that must be observed. Failure to consider these rules can lead to an excessive benefit that will be challenged by the authorities. An integrated analysis of tax incentives is essential.

6.7. Underestimating the Importance of Geographical Location

The error of not considering the differentiation of deduction rates based on the geographical location of the investment can lead to incorrect calculations of the expected benefit, especially if the company has investments in different regions.

7. The RFAI in the Context of 2026 IRC: Integrated Tax Strategy

Understanding the RFAI is fundamental for strategic tax management, especially in the context of Corporate Income Tax (IRC) for 2026. The general IRC rate in Portugal is 19%, but Small and Medium-sized Enterprises (SMEs) benefit from a reduced rate of 15% on the first €50,000 of taxable income. The RFAI credit directly offsets the tax assessed at these rates, enhancing its effect.

The RFAI should be seen as part of a broader tax optimisation strategy, which may include other incentives, such as:

• Extraordinary Tax Credit for Investment (CFEI): A specific regime aimed at stimulating investment during a certain period.
• System of Tax Incentives for Business Research and Development II (SIFIDE II): For companies investing in R&D.
• Deduction for Retained and Reinvested Profits (DLRR): Allows the deduction of profits that are reinvested in eligible assets.

It is crucial to analyse the cumulation and interaction between these different regimes to maximise the overall tax benefit, always within the limits established by state aid rules.

8. Conclusion and Recommendations

The Tax Regime for Investment Support (RFAI) is a powerful tool for Portuguese companies planning to invest in productive assets. Due to its nature as a tax credit, it has a direct and significant impact on the IRC settlement, contributing to the reduction of the tax burden and the release of capital for new investments or to strengthen cash flow.

However, its application requires in-depth knowledge of the legislation, a rigorous analysis of investment eligibility, and continuous monitoring of compliance with associated obligations. Failure in any of these aspects can result in the loss of the benefit, with negative financial consequences for the company.

Practical Recommendations:

1. Advance Planning: The RFAI should be considered at the investment planning stage, before the purchase decision. A prior analysis allows for optimising the project to maximise the benefit.
2. Rigorous Eligibility Analysis: Do not assume the eligibility of all investments. Validate each item based on articles 22 to 26 of the CFI and specific exclusions.
3. Obligation Control: Maintain tight control over the maintenance periods for assets and activity, as well as job creation and maintenance.
4. Complete Tax File: Organise and keep an up-to-date tax file with all supporting documentation. This is your main ally in case of inspection.
5. Specialised Support: Given the complexity of the regime and its interactions with other rules, it is highly recommended to seek the support of tax consultants or accountants specialised in investment incentives. This support can ensure correct framing and maximum utilisation of the benefit, minimising risks.

If your company has investment projects underway or planned, the RFAI should be on the table. At HVR, we are prepared to carry out eligibility diagnostics and support your company throughout the process, from planning to compliance with obligations, ensuring that the tax credit becomes a reality and not a surprise in your IRC declaration.

Frequently Asked Questions about RFAI

What is RFAI?

RFAI (Regime Fiscal de Apoio ao Investimento - Tax Regime for Investment Support) is a tax benefit provided for in articles 22 to 26 of the Investment Tax Code (CFI), approved by Decree-Law no. 162/2014. It consists of a tax credit against IRC, which allows companies to deduct a percentage of their investment in relevant applications directly from their IRC liability.

What is the value of RFAI in 2026?

In 2026, in "a" regions (North, Centre, Alentejo, Azores, Madeira), the deduction is 30% of relevant applications up to €15,000,000 and 10% on the amount exceeding this value. In "c" regions (Algarve, Greater Lisbon, Setúbal Peninsula), the deduction is 10% of the total investment, without a tier. The rates were updated by Law no. 12/2022.

Which investments are eligible?

Generally, eligible investments include new tangible fixed assets (machinery, equipment, installations) and certain intangible assets (patents, licenses, etc., up to 50% of the total). Excluded are land, buildings (with exceptions), light passenger vehicles, furniture and comfort or decorative items (unless allocated to productive activity), and social equipment.

How much can I deduct from my IRC liability?

The deduction is limited to 50% of the IRC liability for the period (art. 23 of the CFI). However, for companies in their initial period of activity and the two subsequent tax periods, the deduction can be up to 100% of the liability. The undeducted portion of the credit can be carried forward and used in the 10 subsequent tax periods.

What are the obligations to maintain the benefit?

The main obligations include: maintaining the assets and the company in the region for 3 years (SMEs) or 5 years (non-SMEs); creating and maintaining jobs associated with the investment; qualifying in eligible activity sectors (General Block Exemption Regulation); and organising a complete tax file with all supporting documentation.

How long is the RFAI valid for?

The RFAI, in its current configuration, is valid until December 31, 2027.

Sources and Legal References

• Decree-Law no. 162/2014, of October 31: Approves the Investment Tax Code (CFI).
• Articles 22 to 26 of the Investment Tax Code (CFI): Specific provisions on the Tax Regime for Investment Support (RFAI).
• Law no. 12/2022, of June 27: Amends the Investment Tax Code, namely the RFAI rates and limits.
• Corporate Income Tax Code (CIRC): General framework for IRC and deductions from tax liability.
• General Block Exemption Regulation (GBER) (Commission Regulation (EU) no. 651/2014, of June 17, 2014): Establishes the eligibility conditions and maximum limits for state aid.