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The Portuguese Government vowed to improve the patent box regime in the proposal of the State Budget recently presented in October 2021.

The so called “patent box” is a regime designed to reward innovative companies by providing tax reliefs, namely a reduction of the corporate tax on profits resulting from qualifying IP income.

The Government general proposal for 2022, is to increase the non-taxation limit for industrial property income covered by the patent box regime from 50% to 85%.

According to the proposal “the Portuguese regime becomes one of the most attractive of the European Union in this domain”, by “exempting from IRC [Corporate Income Tax] 85% of royalties and any income from the exploitation of intellectual property, including the sale of software” and “serving as a relevant fiscal instrument in attracting investment in technology and innovation”.

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