Portugal Ends Tax Breaks for Expats Amid Housing Crisis

Portugal Tax Break End during Housing Crisis

Prime Minister Antonio Costa has declared that the tax breaks previously extended to foreign residents in Portugal are no longer deemed justifiable. He has pledged to terminate the program for new applicants in 2024, citing its role in driving up housing prices in one of the economically challenged nations in western Europe.

Introduced in 2009, the program enables individuals to qualify for a special 20% tax rate on income derived from “high value-added activities” within Portugal if they become residents by spending more than 183 days annually in the country.

Portugal Tax Updates

These high-value activities encompass professions such as doctors and university educators. The program was initially implemented to attract investors and skilled professionals during Portugal’s economic struggles caused by the financial crisis.

The Non-Habitual Resident program, often referred to as the scheme, offers additional advantages such as tax exemptions on nearly all foreign income when already taxed in the country of origin. It also provides a flat 10% tax rate on pensions originating from foreign sources. Furthermore, Portuguese citizens who have lived abroad for five years or more are eligible to apply for these benefits.

The announcement comes in the wake of mass protests in Lisbon and other cities across Portugal, with thousands of people expressing their dissatisfaction with the surging rental and housing prices driven by increasing gentrification and record levels of tourism.

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