The country’s centre-right government is set to slash taxes for people aged 35 and under in a measure aimed at dissuading them from emigrating and also encouraging foreigners to settle in Portugal.
In a move designed to encourage young Portuguese from leaving the country, the centre-right government suggested tax breaks for young people in the new budget for 2025, which was presented to the Parliament on Thursday.
The new policy would also apply to foreigners, as the Government aims to attract young people to move to Portugal.
According to the initiative, those aged 35 or younger would pay no taxes on income up to €28,000 in the first year.
The tax burden would then progressively increase over ten years. In the following years, they would be exempted from 75 then 50 and then 25% of tax, progressively lowering the tax breaks for a period of the following 9 years, making it a ten-year program altogether.
Finance Minister Joaquim Miranda Sarmento said on Thursday that the tax break is a fundamental tool to keep young people in the country, estimating that between 350,000 and 400,000 young people could benefit from the tax breaks, according to the FT.
Portugal has one of the lowest average salaries in Europe. It has seen 30% of young people, between 15 and 39 years old, approximately 850,000 leaving the country, according to data from the country’s Emigration Observatory.
The tax break for young people is expected to cost around €650m or almost 0.2% GDP.
The country’s centre-right government has made pledges already to keep young people in the country.
In June an exemption from the Real Estate Property Tax (IMT) and Stamp Duty (IS) came into effect for the purchase of primary residences by young people up to 35 years old.
A failure to pass the budget would lead to the collapse of prime minister Luís Montenegro’s government, which only came to power in April after the third snap election in three years.
The parliamentary vote on the budget is due to take place on 31 October.
