Portugal – Tax Incentives for the Movie Industry

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Tax incentives for film production in Portugal

Portugal, a country with several types of landscapes, ambiances and home to a cost effective acting and production industry should rank higher in the global filming locations ranking. The country is artistically and economically attractive destination for film companies, but in recent years demand of Portugal as a filming location has decreased.

A recent tax law was enacted to attract foreign film crews. It will also necessarily foster the film industry in Portugal through constant interaction between local companies and foreign ones. This regime offers cost reduction to producers through a tax credit.

The credit

Resident corporate companies and non-residents with a permanent establishment (such as a branch) are entitled to deduct 20% or 25% of eligible expenses for tax assessment purposes.

The 20% deductibility of expenses is the rule, with a 25% deduction of expenses reserved for expenses:

  • incurred in low population density areas (specific requirements apply); and/or
  • incurred with disabled actors and technicians.

Furthermore, a 25% deduction is also applicable to expenses related to:

  • Portuguese language movies; or
  • Movies with special cultural relevance; or
  • Movies with a significant impact on Portuguese cinematography.

The new incentive can be accumulated with other governmental incentives (restrictions apply).

Please note that global annual limits to tax credits are as follows:

  • 2017 – EURO 7,000,000;
  • 2018 – EURO 10,000,000;
  • Until 2021 – EUR 12,000,000 per fiscal year.

There is a Euro 4,000,000 cap per project.


The goal of fostering international film production in Portugal is indeed safeguarded by way of a carryover mechanism and a reimbursement mechanism.

Any excess expenses may be carried forward to the next fiscal years until the shooting of the movie is concluded. Finally, after that period any yet to be deducted amount will be reimbursed. A special 60-day period for reimbursement of the tax credit by the Portuguese Tax Authorities was provided.

Eligibility of expenses & Accreditation

The Portuguese Cinema and Audiovisual Institute (Instituto do Cinema e do Audiovisual – ICA) is the sole accrediting entity. Provisional accreditation must precede the expense and will necessarily cover the promoter, project and the type of expenses. Accreditation may be reviewed if the project deviates from its course.

The process is finalized after filming activities are completed. ICA will provide final accreditation of the project and decide on all aspects leading to the tax credit, within predetermined statutory deadlines.

Unfortunately, the concept of “expenses incurred in Portugal” is not clarified anywhere in the diploma. For this reason, advisory and planning is advisable because a restrictive interpretation of this concept would limit it to expenses related to amounts paid only to Portuguese companies and individuals.

Eligibility of the project itself is contingent on the following requirements:

  • Minimum production expenses in Portugal in the amount of Euro 1,000,000;
  • The movie must be destined for commercial distribution;
  • Its contents must not be pornographic, offensive to human dignity, abusive of freedom of speech, nor promote any form of discrimination, bigotry or xenophobia, promote political or religious intolerance or be in breach of any right or liberties promoted or protected by international law and the Portuguese Constitution


With a unique landscape, fantastic weather conditions and infrastructures that allows film crews to travel from snowcapped mountains to white sand deserted beaches, to castles and palaces all in less than 4h, Portugal has been known as a film industry best kept secret.

With these additional set of benefits, Portugal assumes a very competitive position when compared to other countries in the region.

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