The Incentive for the Capitalisation of Companies (ICE), provided for in Article 43-D of the Portuguese Tax Benefits Code, was introduced by the 2023 State Budget Law with the purpose of encouraging companies to strengthen their equity through a deduction from taxable profits.<\/p>\n
The incentive is calculated by reference to the so-called \u201cnet increases in eligible equity\u201d, which take into account not only certain eligible increases in equity but also specific outflows in favour of shareholders.<\/p>\n
It is therefore particularly important to determine which transactions may reduce the amount of eligible net equity increases and, consequently, the tax benefit available to the company.<\/p>\n
Binding Ruling no. 27875, issued on 22 March 2026, concerned a company which had supplementary capital contributions recorded as other equity instruments and whose repayment to the shareholders had been approved by the General Meeting.<\/p>\n
The question was whether such repayment should qualify as an \u201coutflow\u201d when calculating net increases in eligible equity and therefore reduce the ICE tax incentive.<\/p>\n
The Portuguese Tax Authority firstly acknowledged that supplementary capital contributions are capital instruments and form part of the company\u2019s equity.<\/p>\n
However, the ICE rules do not provide that every reduction in equity automatically constitutes a negative variation relevant for the purposes of the incentive.<\/p>\n
This is the key conclusion arising from the Tax Authority’s interpretation.<\/p>\n
For ICE purposes, only the negative variations expressly identified in Article 43-D of the Portuguese Tax Benefits Code are taken into consideration. These include cash or in-kind outflows to shareholders resulting from a reduction of capital or distribution of assets, as well as distributions of reserves or retained earnings.<\/p>\n
The repayment of supplementary capital contributions does not fall within any of these categories.<\/p>\n
Accordingly, although the transaction represents a reduction in the company’s equity from an accounting perspective, the Portuguese Tax Authority concludes that it does not affect the calculation of net increases in eligible equity and therefore does not reduce the ICE tax incentive.<\/p>\n
This interpretation is particularly relevant when planning corporate financing structures.<\/p>\n
Supplementary capital contributions are frequently used by shareholders to strengthen a company’s equity without immediately carrying out a formal share capital increase. The Tax Authority’s clarification means that the subsequent repayment of such contributions should not, in itself, neutralise or reduce the ICE tax benefit by being treated as a relevant outflow.<\/p>\n
The application of the regime must nevertheless be assessed in light of the specific circumstances of each company, including the period in which the contributions were made, the applicable transitional provisions and any other equity transactions carried out during the relevant periods.<\/p>\n
The Tax Department<\/a> of Belzuz Abogados, S.L.P.<\/a><\/strong> has extensive experience in the analysis and application of corporate tax incentives, including the Incentive for the Capitalisation of Companies, as well as in the tax planning of corporate capitalisation, financing and restructuring transactions, and can advise companies and investors on the tax implications arising from these operations.<\/p>\n","protected":false},"featured_media":12436,"template":"","categories":[514],"area-de-practica":[223],"publicaciones":[122],"idioma-publicacion":[71],"areas-practica-publicacciones":[],"class_list":["post-21785","publicacion","type-publicacion","status-publish","has-post-thumbnail","hentry","category-sin-categorizar","area-de-practica-fiscal-and-tax-law","publicaciones-miguel-paixao","idioma-publicacion-ingles"],"acf":[],"_links":{"self":[{"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/publicacion\/21785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/publicacion"}],"about":[{"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/types\/publicacion"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/media\/12436"}],"wp:attachment":[{"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/media?parent=21785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/categories?post=21785"},{"taxonomy":"area-de-practica","embeddable":true,"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/area-de-practica?post=21785"},{"taxonomy":"publicaciones","embeddable":true,"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/publicaciones?post=21785"},{"taxonomy":"idioma-publicacion","embeddable":true,"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/idioma-publicacion?post=21785"},{"taxonomy":"areas-practica-publicacciones","embeddable":true,"href":"https:\/\/belzuz.com\/en\/wp-json\/wp\/v2\/areas-practica-publicacciones?post=21785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}