To tackle the shortage of affordable housing, the government has decided to end a 10-year tax relief scheme for new residents
ADVERTISEMENTPortugal will end its special tax regime for new non-habitual residents next year, Prime Minister António Costa has announced.
The measure in question offers tax benefits for 10 years for people who move to the country, with income earned in Portugal being taxed at a rate of 20%. Income from abroad is generally exempt, except for pensions, which are taxed at a rate of 10%.
By comparison, Portuguese citizens who don't benefit from the scheme can be taxed up to 48%.
The Portuguese government announced on Monday that it has decided to discontinue this regime, with Costa telling CNN Portugal that the scheme is one of “fiscal injustice”.
“It is no longer justified and is a biased way of inflating the housing market, which has reached unsustainable prices," he said in the interview.
House prices in Portugal recorded the fourth highest increase (8.7%) in the European Union in the second quarter of 2023, according to the latest numbers from Eurostat.
And last Saturday, the Portuguese took the demand for the right to housing to the streets. Tens of thousands of people protested in 24 cities against the property market crisis.
In February, the government stopped granting residence permits for investment, commonly known as “golden visas”.
Over 90% of the golden visas issued between 2012 and 2023 were granted due to property acquisitions, according to the latest data from the Portuguese Immigration and Borders Service.
