SIFIDE 2026: how to turn R&D investment into tax credit

Many companies develop new products, materials, processes, technologies or software solutions without realising that part of that work may qualify as research and development. SIFIDE — the Portuguese System of Tax Incentives for Business Research and Development — rewards that effort through a deduction from corporate income tax (IRC) payable.

The benefit is not a grant, nor does it follow automatically from innovation. The company must demonstrate the R&D nature of its projects, identify the associated expenses and meet the applicable legal conditions.

2026 is covered; 2027 remains open

Decree-Law no. 170/2026, of 21 August, extended SIFIDE II to tax periods beginning on or before 31 December 2026. The legislation in force expressly limits the regime to the 2014 to 2026 tax periods.

At the time of publication of this article, in September 2026, no legal framework had been approved or published for periods beginning in 2027. It is therefore not possible to guarantee that the incentive will continue, or to anticipate whether any renewal will keep the current rates, eligible expenses and access conditions. This conclusion follows from the time scope currently set out in the Tax Investment Code.

For companies whose tax period coincides with the calendar year, the application for 2026 expenses must be submitted by 31 May 2027. Submitting in 2027 does not make expenses incurred in that year eligible: the year of the expense and the year of the application are different things. For companies with a tax period other than the calendar year, the deadline is the last day of the fifth month after the period closes.

The possibility of applying SIFIDE II indirectly through new investments in funds was not extended to 2026 either. Contributions made in earlier periods remain subject to the transitional rules set out in the legislation.

Not all innovation is R&D

Buying more advanced equipment, implementing an off-the-shelf solution, adapting existing software or introducing a routine improvement does not, on its own, demonstrate R&D.

A project with potential to qualify must show relevant novelty and seek to resolve a scientific or technological uncertainty. The company must explain the state of the art, the limitations of known solutions, the challenges encountered, the hypotheses tested, the systematic work carried out and the results obtained.

A negative technical result does not necessarily exclude the project. Failed tests or abandoned approaches can be part of an R&D process, provided the work done and the knowledge produced are properly documented.

How much can the benefit be worth?

The SIFIDE calculation combines two components:

• a base rate of 32.5% of the eligible expenses for the period;
• an incremental rate of 50% of the increase in those expenses over the average of the two previous years, up to the legal cap of 1.5 million euros.

References to a deduction of up to 82.5% should be read with care. That percentage is the sum of the base and incremental rates and corresponds, above all, to the potential marginal rate applicable to the increase in expenses. It does not mean that 82.5% of the total investment is normally deductible.

Consider a company with 400,000 euros of eligible expenses in 2026 and an average of 250,000 euros over the two previous years. The base rate would amount to 130,000 euros and the incremental component to 75,000 euros. The potential tax credit would be 205,000 euros, subject to validation of the expenses, the tax payable available and the remaining legal conditions.

Where the tax payable is not sufficient, the unused credit can be carried forward up to the twelfth subsequent tax period.

Which expenses can be eligible?

The main categories include:

• new tangible fixed assets, excluding buildings and land, in proportion to their allocation to R&D;
• costs of staff with at least a level 4 qualification in the National Qualifications Framework who are directly involved in the activities;
• operating expenses, up to 55% of the eligible remuneration of that staff;
• R&D activities contracted from eligible entities or entities of recognised standing;
• costs of registering and maintaining patents;
• R&D audits and certain demonstration activities.

Costs of staff with a level 8 qualification can be counted at 120% of their value. An invoice, contract or cost centre is not enough: each expense must be linked to the tasks performed, the resources involved and the project's technical objectives.

Prepare during the year

Trying to rebuild the application only after the year has closed increases the risk of missing timesheets, test results, prototype versions, technical decisions or evidence of how resources were allocated.

Preparation should follow execution: identify the projects, document the uncertainties, keep technical evidence, track team involvement and reconcile the technical information with the accounts.

More than filling in a form, a robust application requires consistency between the projects described, the work carried out and the expenses claimed.

Act in 2026

The extension creates a concrete opportunity to obtain value from the R&D investment made in 2026. The absence of a framework for 2027 makes it all the more important to identify potentially eligible projects now and organise the documentation, without assuming that the regime will continue on the same terms.

Is your company developing new products, processes, materials, software or technology solutions in 2026? Contact our team to assess the potential to qualify for SIFIDE, identify eligible expenses and prepare a consistent technical and financial file, from the initial diagnosis through to submission and follow-up of the application.

This article is for information only and does not replace an analysis of the legal, tax and technical framework applicable to each company and project.