Wanna pay less tax? Move to Portugal [T's & C's apply]
In April, Portugal swore in a new center-right government. It inherited a huge problem, namely: how do you stop a brain drain that’s seen thousands of young people leave your country, at a time when your population is naturally aging and birth rates are hitting record lows?
The new prime minister, Luís Montenegro, has a radical proposal — a decade of super low taxes for people under 35.
Under the proposed scheme, young workers who earn less than €28,000 ($30,650) would enjoy a completely tax-free first year. They would then be exempted from 75% of tax until the fourth year, enjoy a 50% exemption in years five to seven, and a final 25% in years eight to ten.
The initiative is part of the country’s ongoing efforts to “retain talent” by facilitating a “tax system that is more youth friendly,” said Montenegro. Since 2008, more than 360,000 young people aged between 15 and 35 left the country, many because of Portugal’s high taxes, poor working conditions, relatively low wages, and rising housing costs. Data from Eurostat reveals that for a single person without children, annual net earnings in Portugal are typically just under €17,000 (~$18,500).
The IMF has raised questions over this unprecedented fiscal policy, noting the €650 million annual cost of the scheme, and warning that the impact of any such financial incentive is “uncertain.” The budget proposal still awaits approval from an opposition-led parliament on October 31.
Under the proposed scheme, young workers who earn less than €28,000 ($30,650) would enjoy a completely tax-free first year. They would then be exempted from 75% of tax until the fourth year, enjoy a 50% exemption in years five to seven, and a final 25% in years eight to ten.
The initiative is part of the country’s ongoing efforts to “retain talent” by facilitating a “tax system that is more youth friendly,” said Montenegro. Since 2008, more than 360,000 young people aged between 15 and 35 left the country, many because of Portugal’s high taxes, poor working conditions, relatively low wages, and rising housing costs. Data from Eurostat reveals that for a single person without children, annual net earnings in Portugal are typically just under €17,000 (~$18,500).
The IMF has raised questions over this unprecedented fiscal policy, noting the €650 million annual cost of the scheme, and warning that the impact of any such financial incentive is “uncertain.” The budget proposal still awaits approval from an opposition-led parliament on October 31.
