SIFIDE II – the Tax Incentive System for Corporate Research and Development has been extended to the 2026 tax period.
But the extension comes with a structural change: it ends the possibility of obtaining new tax benefits by subscribing to units in SIFIDE investment funds.
The regime now more clearly favors companies’ direct investment in research and development (R&D), while also creating transitional rules designed to ensure that capital already placed in the funds can still be deployed.
The changes were introduced by Decree-Law No. 170/2026, of August 21, under the legislative authorization granted by Law No. 13/2026, of April 16.
What is SIFIDE II?
SIFIDE allows companies to deduct part of their expenses on research and development activities from their corporate income tax (IRC), making R&D investment more tax-attractive.
Until now, the regime also allowed for an indirect route: a company could make certain contributions to investment funds, which in turn would invest in companies carrying out R&D activities.
It was mainly this second route that the legislator decided to revise.
1. SIFIDE II is extended to 2026
The first change is positive for companies that directly carry out R&D projects: SIFIDE II now also covers tax periods beginning on or before December 31, 2026.
This means companies with eligible research and development expenses incurred in 2026 can continue to benefit from the incentive, provided they meet the other legal requirements.
2. Indirect SIFIDE ends for new investments through funds
The most significant change is the elimination of the possibility of using new investments in SIFIDE funds as a way to generate a tax deduction.
Article 37 of the Investment Tax Code no longer includes the subscription of units in these funds among the eligible investments.
The transitional regime approved by the Decree-Law applies to contributions made in tax periods beginning on or before December 31, 2025. In practice, new subscriptions made in 2026 no longer qualify for this indirect form of SIFIDE.
An important distinction should be made here: SIFIDE Funds do not cease to exist. They can continue operating and investing in R&D companies. What ends is the ability for new subscriptions to generate the tax benefit that was previously associated with them.
3. What happens to investments already made in SIFIDE Funds?
The legislator created a transitional regime to prevent capital already placed in the funds from being left without a way to be deployed.
Among other rules, the new regime generally provides for a five-year period for SIFIDE Funds to make investments in eligible companies, and also a five-year period for those companies to demonstrate that the capital has been applied to R&D activities.
As a rule, the fund must invest at least 85% of the capital in eligible companies within that period, under penalty of a proportional clawback of the tax benefit. The existing rule on disposing of fund units before ten years have elapsed also remains in place, which can trigger a proportional repayment of the benefit plus compensatory interest.
There is, however, a specific transitional rule for certain contributions made between January 1, 2021, and December 31, 2023, for which the previously applicable minimum percentage continues to apply.
In other words, anyone who has already invested in SIFIDE Funds should not assume that nothing has changed: it is necessary to identify when the contribution was made and which deadlines and percentages specifically apply.
4. Productive innovation: an important but limited possibility
The new decree allows part of the capital already placed in SIFIDE Funds to be channeled toward productive innovation expenses that directly result from, and are functionally complementary to, R&D activities completed in the preceding three years.
This possibility is subject to significant limits.
Investment in productive innovation cannot exceed *20% of the contributions covered by each SIFIDE Fund, and the total amount invested this way in each investee company cannot exceed *€20 million.
Furthermore, the expenses must not have been financed, directly or indirectly, through other national or international public support. This rule applies to productive innovation expenses incurred from January 1, 2026 onward.
An essential distinction applies here: Decree-Law No. 170/2026 does not turn productive innovation into a new general category of SIFIDE expense available to any company.
In the final wording of the decree, this possibility is incorporated into the transitional regime for companies receiving investments from SIFIDE Funds set up with earlier contributions, and requires a direct, functional link to previously completed R&D activities.
5. Strengthened prohibition on double funding
The new regime also establishes that R&D expenses cannot benefit from the SIFIDE deduction if they have been financed, directly or indirectly:
- by SIFIDE Funds; or
- through other public support from national or international funds.
This rule reinforces the need to precisely identify the funding source of each expense before including it in a SIFIDE application.
A company combining R&D projects, European funds, Portugal 2030, and other tax incentives should therefore ensure sufficiently clear documentary separation between expenses and funding sources.
6. Changes for corporate groups
For companies covered by the *Special Regime for the Taxation of Corporate Groups (RETGS), the incremental rate, the corresponding limits, and the increases are now determined based on the increase in the *combined R&D expenses of the companies within the group.
The calculation is, therefore, no longer assessed on a company-by-company basis for these purposes.
This change calls for more centralized management of SIFIDE within corporate groups.
7. More oversight, reporting, and monitoring
The Decree-Law also strengthens monitoring obligations.
Beneficiary entities must report annually to the Agency for Research and Innovation on the results of the supported activities during the five years following approval of the incentive.
The annual publication of information on financial execution, R&D intensity, productivity, participation in European programs, and the growth of higher-value-added exports is also planned.
At the same time, the decree clarifies that the responsibility of certified accountants is limited to the existence, accounting regularity, and payment of the expenses. The technical classification of an expense as R&D or productive innovation is the responsibility of the competent authority, not the certified accountant.
What should companies do in 2026?
Companies carrying out research and development activities should start by mapping the R&D expenses incurred or planned for 2026 and confirming whether they meet SIFIDE’s requirements.
Those who previously invested through SIFIDE Funds should carry out an additional review: subscription date, holding period, the percentage actually invested by the fund so far, the status of the investee companies, reporting obligations, and any possible application to productive innovation.
For corporate groups, it is also advisable to review the incentive calculation model in light of the new RETGS rules.
Finally, projects that benefit simultaneously from public funding and tax incentives should be reviewed with particular care, given the strengthened rules aimed at preventing overlapping support.
Frequently Asked Questions about SIFIDE II in 2026
Does SIFIDE end in 2026?
No. Decree-Law No. 170/2026 expressly extends SIFIDE II to the 2026 tax period.
Can a company benefit from SIFIDE for its own R&D expenses incurred in 2026?
Yes, provided the other eligibility requirements are met.
Is it still possible to invest in a SIFIDE Fund in 2026 and obtain the tax deduction?
The new regime no longer allows this route for new contributions. The transitional regime applies to investments made in the periods legally covered up to 2025.
Does someone who already invested in a SIFIDE Fund lose the benefit?
Not automatically. A specific transitional regime was created, but there are deadlines, investment percentages, and obligations that must be met.
Can any company now include productive innovation expenses under SIFIDE?
No. The possibility created by Decree-Law No. 170/2026 is tied to the transitional regime for investments made by SIFIDE Funds in eligible companies, and is subject to its own requirements and limits.
How can we help?
URB Law Services provides tax advisory services to companies on structuring and reviewing investments, tax benefits, corporate income tax, and research and development incentives.
We can support companies in the Algarve and throughout Portugal in assessing the eligibility of SIFIDE expenses, coordinating with other public incentives, reviewing investments already made through SIFIDE Funds, and evaluating the tax implications of the new rules introduced in 2026.
For companies seeking support from a tax lawyer in Almancil or the Algarve, a preventive review of how investments are framed can help avoid losing the benefit or facing future tax corrections.
Contact us to learn more.
31st of August, 2026.
