Portugal to Let More New Residents Be Eligible for Tax Break

(Bloomberg) -- Portugal plans to allow more new residents to be eligible for an income tax break as it tries to attract skilled workers to the country.

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The government wants a broader set of qualified professions and companies to be able to apply for the tax incentive, it said in a statement on Thursday. At the end of 2023, the previous government had narrowed the set of people who could benefit from the flat income tax rate of 20% over a 10-year period, saying it would be available for new skilled residents working in areas including scientific research and certain investments.

The tax break applies to income from work, and doesn’t apply to pensions, dividends or capital gains, Finance Minister Joaquim Miranda Sarmento said at a press conference on Thursday. Sarmento is part of a center-right minority government that was sworn in after an election held in March.

The finance ministry said in July 2023 that a total of 89,000 people had so far benefited from what was then called the non-habitual resident regime, which offered a 10% tax rate on pensions. In 2023, the previous government also approved a plan to limit Portugal’s golden visa program as part of its broader effort to address the lack of affordable housing in parts of the country.

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