CFEI II – A new tax benefit

CFEI II – A new tax benefit

Within the scope of the supplementary State Budget, a new tax benefit was approved, called Extraordinary Tax Credit for Investment II (abbreviated as CFEI II), whose outlines are set out in Annex V of the law.

This new benefit comes in competition with the DLRR and the RFAI, and cannot be combined with these, so it is important to evaluate well what is the best way forward.

Who can benefit from CFEI II

IRC taxpayers who are primarily engaged in a commercial, industrial or agricultural activity and cumulatively fulfill the following conditions can benefit from CFEI II:

  • Have regularly organized accounting, in accordance with accounting standards and other legal provisions in force for the respective sector of activity;
  • Your taxable profit is not determined by indirect methods;
  • Have their tax situation regularized;
  • Do not terminate employment contracts for three years, counted from the date on which this benefit takes effect, under the terms of collective dismissal or dismissal due to the extinction of the job, provided for in Articles 359 and following and 367, respectively. And following of the Labor Code, approved in annex to Law no. 7/2009, of 12 February.

In a first analysis, it appears that the conditions are the usual ones, with the exception of the last one, which obligates the taxable persons who come to use the benefit, to keep their jobs for a period of three years.

Tax incentive characterization

The tax benefit to be granted to taxable persons, corresponds to a deduction from the collection of IRC in the amount of 20% of the investment expenses in assets related to the exploration, which are made between July 1, 2020 and June 30, 2021.

For the purposes of this deduction, the maximum cumulative amount of eligible investment expenditure is 5,000,000 euros, per taxable person.

The deduction is made in the settlement of IRC for the taxation period starting in 2020 or 2021, up to 70% of the collection of this tax, depending on the relevant dates of the eligible investments.

In the case of taxable persons who adopt a tax period that does not coincide with the calendar year and beginning after July 1, 2020, these are relevant expenses for the purposes of the aforementioned deduction, those incurred on eligible assets from the beginning of that period until the end the following twelfth month.


Application in the special tax regime for groups of companies

Applying the special tax regime for groups of companies, the deduction for collection:

  • It is made at the amount determined under the terms of paragraph a) of paragraph 1 of article 90 of the IRC Code, based on the taxable amount of the group;
  • Up to 70% of the amount mentioned in the previous paragraph is made and cannot exceed, for each company and for each tax period, the limit of 70% of the collection that would be determined by the company that made the eligible expenses, if it did not apply the special tax regime for groups of companies.

Benefit reporting

The amount that cannot be deducted under the terms mentioned, can be deducted, under the same conditions, in the subsequent five tax periods.

Unlike DLRR, this new CFEI II has a reporting period.


Benefit transferability

For taxable persons who reorganize themselves, as a result of any operations provided for in article 73 of the IRC Code, the provisions of paragraph 3 of article 15 of the Tax Benefits Statute apply.

It is recalled that this rule determines the transferability of the right to tax benefits granted, by tax act or contract, to natural or legal persons, as long as the assumptions of the benefit are verified and the protection of public interests pursued with it is ensured .

However, it is strange that the legislator made reference to this article, when the IRC Code has its own rule for these situations, which is set out in article 75-A, although this is directly applicable only to Fusion.


Eligible investments

For the purposes of the present regime, investment expenses in assets related to exploration are considered those related to tangible fixed assets and biological assets that are not consumable, acquired in new condition and that come into operation or use until the end of the tax period. beginning on or after 1 January 2021.

We note this important point. Although expenditure on investment in assets related to exploration, which are carried out between 1 July 2020 and 30 June 2021, is eligible, the legislator was careful to specify that the assets may become operational until the end of 2021.

Expenditure on investment in intangible assets subject to depreciation made in the referred periods is also eligible, namely:

  • Expenditure on development projects;
  • Expenses with elements of industrial property, such as patents, brands, permits, production processes, models or other assimilated rights, acquired against payment and whose exclusive use is recognized for a limited period of time.

Eligible investment expenses are also considered those corresponding to the additions of assets verified in the periods referred to above and those that, not referring to advances, translate into additions to the investments in progress initiated in those periods.

However, and as is already the case with investment benefits, contained in the Investment Tax Code, asset additions resulting from ongoing investment transfers are not considered.

Ineligible investments

All expenses for investment in assets that can be used in the personal sphere are excluded, considering as such:

  • The grounds;
  • Light passenger or mixed vehicles, pleasure boats and tourism aircraft, except when such goods are used for the operation of the public transport service or are intended for rental or for the transfer of the respective use or enjoyment in the normal activity of the taxable person ;
  • Furniture and comfort or decoration items, except when used for productive or administrative activities;
  • Those incurred with the construction, acquisition, repair and expansion of any buildings, except when related to productive or administrative activities;
  • Expenses incurred on assets related to activities under concession or public-private partnership agreements entered into with public sector entities;
  • Those related to intangible assets, whenever they are acquired as a result of legal acts or business of the beneficiary taxpayer with entities with which he is in a special relationship, under the terms defined in paragraph 4 of article 63 of the CIRC.

The assets underlying the eligible expenses must be held and accounted for in accordance with the rules that determined their eligibility for a minimum period of five years or, when lower, during the respective minimum period of useful life, determined pursuant to Regulatory Decree no. 25/2009, of 14 September, or until the period in which the respective physical slaughter, dismantling, abandonment or destruction occurs, in compliance with the rules provided for in article 31-B of the CIRC.


No accumulation of benefits

CFEI II is not cumulative, in relation to the same eligible investment expenses, with any other tax benefits of the same nature provided for in other legal instruments.

This rule precludes, in practice, the possibility of accumulating CFEI II with DLRR and RFAI, which is why it is important for each taxpayer to assess which is the best benefit for their particular situation.


Accessory obligations

The deduction of CFEI II is justified by a document that is part of the tax documentation process referred to in article 130 of the IRC Code, which identifies in detail the relevant investment expenses, the respective amount and other elements considered relevant.

This may be one of the advantages of CFEI II, in view of its “competition”, as it is not required to prepare a specific dossier as it happens in RFAI and DLRR, due to the application of Ordinance No. 297/2015 , of September 21.

The benefit documentation process is thus made much simpler.


Without prejudice to the provisions of the General Regime of Tax Infractions, approved in annex to Law no. 15/2001, of 5 June, non-compliance with the rules for the eligibility of investment expenses implies the refund of the amount of tax that is no longer paid. due to the application of CFEI II, plus the corresponding compensatory interest increased by 15 percentage points.



As already mentioned, CFEI II cannot be combined with DLRR or RFAI.

However, the possibility of accumulation can occur in the same tax period as long as different investments are involved.

It should be remembered that CFEI II includes investment expenses made between 1 July 2020 and 30 June 2021.

We are available to assist you in making the best decision.

CFEI II will also be one of the topics to be analyzed in our next training action, whose registrations are in curse.


– Information by our tax consultant –


Abonnez-vous à notre Bulletin