Portugal to Reintroduce Tax Breaks to Attract Foreigners

Portugal to Reintroduce Tax Breaks to Attract Foreigners

Key Takeaways

1. Portugal plans to reinstate tax incentives to attract highly skilled foreigners.
2. The new government will exclude foreign pensioners from these tax breaks.
3. Portugal’s golden visa program is set to end, confirmed by the Finance Minister.

Portugal’s new government is set to reinstate tax breaks for foreigners to attract skilled workers while addressing the housing crisis. This measure is part of a broader economic stimulus package of 60 initiatives.

Finance Minister Joaquim Miranda Sarmento announced that the tax incentives would exclude dividends, capital gains, and pensions. Instead, a flat income tax rate of 20% will apply to salaries and professional income.

"We need skilled workers and economic growth. We must balance this with affordable housing," the Finance Minister stated.

Taxes Will Apply to Foreign Pensioners

The government will continue to tax foreign pensioners after facing criticism in the previous administration. Initially, foreign pensions were tax-exempt, but a 10% flat rate was later introduced.

Nordic countries were among the main critics, arguing that tax breaks for retirees caused them to stop paying taxes in their home countries. Nuno Cunha Barnabé, a tax partner at Lisbon law firm Abreu Advogados, said including retirees in the previous tax regime was counterproductive, given Portugal's aging population. "We need to attract young people," Barnabé noted.

Large Companies in Portugal Welcome the New Measure

Many Portuguese companies are likely to support the new measure as it could help address the shortage of engineers, researchers, and managers. "This will attract some people. It’s not sufficient, but it’s something the government can do," the Finance Minister said.

The tax break will also benefit Portuguese citizens living abroad, who previously had to become tax residents by spending at least six months a year in Portugal or purchasing property worth a minimum of €500,000.

Miranda Sarmento confirmed that the government would not reverse the termination of the golden visa program, which has impacted the housing market.

Foreign, News, Global News, Politics, Society , Business, Schengen News, Immigration,

Disclaimer

The Think Europe Services website is owned and operated by Think Europe Services Sp. z. o. o., a private international company operating independently from the Polish government. Please note that the information on this website is not intended as professional or legal advice. We make every effort to maintain the accuracy of the content, but it's important to be aware that certain terms, like immigration eligibility criteria, may be subject to change without prior notification. ..see more

In reference to our Job Search Service, we specialize in Resume Crafting, LinkedIn Enhancement, and Resume Promotion. It's crucial to emphasize that we do not promote job opportunities on behalf of international employers or serve as agents for any foreign companies. Our Registration number is KRS 0001007806, our tax identification number is NIP 9512557041, and all our services are exclusively offered at our Registered Center.

Please bear in mind that the content provided here is meant solely for informational purposes and should not be regarded as legal or tax guidance. It is recommended that you seek advice from your own legal and/or tax consultant(s). We do not offer legal or tax advice, and the information we present is of a general nature, not customized for any particular company or workforce. Moreover, it does not represent how we operate in a specific jurisdiction. We do not assume responsibility for the accuracy or timeliness of this information, and we are not liable for any losses that may occur as a result of using or relying on it.