Portugal to reinstate tax breaks to attract skilled foreigners

Portugal’s new government is set to reintroduce tax incentives aimed at attracting highly skilled foreigners, part of a comprehensive strategy involving 60 measures to stimulate economic growth.

The tax incentives will offer a 20% flat rate of income tax specifically on salaries and professional income, explained Joaquim Miranda Sarmento, the Finance Minister, emphasizing that “dividends, capital gains, and pensions” will not be eligible for this tax break.

“We need skilled workers and economic growth. We will have to balance that with more affordable houses. Obviously, if we have just one side of the policy, there will be more affordable houses but less economic growth. So we have to balance these two parts.” Sarmento said.

This adjustment comes after criticism during the previous administration, which initially exempted pensions from taxation but later implemented a 10% flat rate, drawing objections from Nordic countries concerned about tax avoidance.