Publication of a study commissioned by FNABA to Mazars on the impact on the State Fiscal Revenue of a tax incentive of 30% to be granted to investments made by Business Angels, similarly to what happens in the UK.
Main conclusions reached:
- The State always get back the amount of the tax incentive, without any loss of Fiscal revenue / increase in Fiscal expense;
- State’s payback is zero (0) months, i.e., the State receives in taxes and other charges from the start up more than the amount of tax incentive granted, before having to give relief or reimburse the Business Angel;
- State’s payback is similar in any of the scenarios, not being affected neither by the success or failure of the company in which the Business Angel invests, nor by the investment values;
- State’s payback is stable for any investment values;
- «Profitability» of the State varies from 108% to 6311%;
- Possibly, the expansion of this tax incentive will be one of the measures with greater return for the State in the recovery of the Portuguese Economy.
Lisbon (Portugal) – Portugal is in urgent need of measures to regenerate the economic activity and
promote the equilibrium of Fiscal Accounts. At a time when bank financing is scarce, the formal private equity industry has neither vocation, nor interest in financing start ups or seed projects, the foreign investment in these companies is almost non-existent and the State is highly constrained in its capacity to invest is these companies, solutions must be found in Portugal.
«The strong focus on creating a larger community of informal investors in companies at an early stage of development (Business Angels), by creating a real tax incentive of 30% of the investment made in a given year, will create hundreds of new companies. », says Francisco Banha, President of Portugal angel group FNABA- (Federação Nacional de Associações de Business Angels).
The British Government decided to increase the tax incentive for Business Angels from 20% to 30% in April this year and, in 2012, it is planned that it will increase the relevant maximum amount for each investor in a given year, raising it from £ 500,000 to £ 1,000,000, which shows that this is a mechanism to bear in mind in the economic recovery. The document with the amendments proposed in the UK may be read at: http://www.hmrc.gov.uk/budget2011/eis-vct-reforms.pdf.
«Mazars, organization specialized in audit, tax and advisory services across a range of markets and sectors, believes that the creation of a tax incentive for Business Angels similar to the UK’s may have a strongly positive impact on the rejuvenation of the Portuguese business.
More information about the FNABA’s commission study of the real impact that this measure will have to Portugal you can find on link below: