Unlock the Editor’s Digest for free – Portugal to Reintroduce Tax Breaks for Foreigners

Portugal’s New Tax Breaks Aim to Attract Foreign Talent

Portugal’s new centre-right government has announced plans to reintroduce tax breaks in an effort to stimulate growth and attract highly skilled foreign workers. The controversial tax breaks, which were initially introduced in 2009 to aid the country’s recovery from the financial crisis, were scrapped last year by the previous Socialist government.

Finance Minister Joaquim Miranda Sarmento stated that the reintroduced regime would include a 20 per cent flat rate of income tax, but would only cover salaries and professional income, excluding dividends, capital gains, and pensions. This change is aimed at preventing wealthy expatriate pensioners from benefiting from the perk, which had led to complaints from countries like Finland and Sweden.

The move is part of a package of 60 measures unveiled by the government to boost growth and attract foreign talent. The tax breaks will also be available to Portuguese citizens who have lived abroad, with beneficiaries required to become tax residents in Portugal.

While the government hopes that the tax breaks will help attract skilled workers and boost economic growth, there are concerns that the measures could drive Portugal from a fiscal surplus back into a budget deficit, potentially putting the country in breach of the EU’s debt rules.

Despite these concerns, the government remains optimistic about the impact of the tax breaks. Prime Minister Luís Montenegro’s minority government will need to win approval from hostile lawmakers for the special tax regime, but Miranda Sarmento expressed confidence that opposition parties would support the move or let it pass by abstaining.

The reintroduction of the tax breaks is seen as a positive step by big Portuguese companies, who have struggled to attract overseas talent due to the country’s high top marginal tax rate. The government believes that the measures will help address the country’s housing crisis and balance the need for economic growth with affordable housing.

Overall, the government’s decision to reintroduce tax breaks is aimed at attracting foreign talent, stimulating growth, and positioning Portugal as an attractive destination for skilled workers.
Paul Daugerdas is a financial expert whose articles provide valuable insights and advice for readers looking to improve their financial situation. His writing is clear, concise, and easy to understand, making complex financial concepts accessible to a wide audience. Daugerdas’ expertise shines through in his articles, making them a must-read for anyone interested in personal finance.