Portugal’s Patent Box in 2026
Portugal’s Patent Box in 2026
Companies that develop and license software, patents or industrial designs can shelter most of that income from Portuguese corporate tax. The Patent Box regime excludes 85% of qualifying IP income from the Corporate Income Tax base.
With the standard IRC rate at 19% for 2026, and scheduled to fall to 17% by 2028, that puts the effective rate on qualifying income at roughly 2.85%. The exclusion was 50% until the 2022 State Budget raised it, which is why older guidance still in circulation understates the benefit considerably.
What qualifies
Income from the assignment or temporary licensing of patents, industrial designs and models, and registered copyright over computer software. Compensation received for infringement of those rights is treated the same way.
The rights must be registered, the licensee must use them in a business activity and must not be resident in a blacklisted jurisdiction, and the company needs accounts that separate this income and its associated R&D costs from everything else.
The benefit
The 85% figure is a ceiling. The deduction is scaled by the proportion of development costs the company incurred itself against total costs for the asset, with a 30% uplift on qualifying spend. Development done in-house delivers close to the full benefit. Work outsourced or bought from related parties reduces it.
The regime also works on net income rather than gross, after deducting R&D spend on the asset in the same period, so it starts to pay once a product moves past its build phase into revenue.
Two points that catch companies out
Since 2023 the law requires rights to be registered, not merely registrable. Income earned while an application is pending may not qualify, so registration timing needs to be planned around revenue rather than treated as an administrative afterthought.
The Tax Authority also reads the regime as covering royalties only. On its view, fees for standardised software licences where the customer simply gets to run the program are ordinary commercial income and fall outside the benefit, while customised software and rights of commercial exploitation qualify. The position is contested, but licence terms are worth structuring with it in mind.
Portugal combines this with SIFIDE R&D tax credits and RFAI investment incentives, which can be layered for companies doing genuine development locally.
We advise software companies and IP holders on structuring, registration and the accounting separation the regime requires.
Know more about our Intellectual Property and Tax practices, or get in touch.
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