Portuguese emigres offered 50% tax incentive to return

 In News

In a bid to attract talented young Portuguese living overseas back to Portugal, the Government is offering a 50% income tax incentive for three to five years.

During the economic crisis between 2008 and 2015 thousands of well-qualified young people abandoned Portugal to go and work in other European Union countries like France, the United Kingdom, Germany, Luxembourg and Belgium.

The Government is to include the measure in the State Budget of 2019  including travel, moving and setting up costs to be offset against taxes.

According to the newspaper Expresso, over 100,000 young entrepreneurs and highly-qualified young people left Portugal with nearly 50,000 leaving at the height of the crisis in 2013.

The incentives would come into force in 2019 and 2020 providing that the emigres were registered for tax purposes in Portugal up to 2015.

The measure is aimed essentially at qualified young people, but will be open to everyone regardless of qualification, age or nationality.

It means that Spanish or French or other EU nationals that were registered for tax purposes in Portugal in 2015 or before will also have the right to the 50% income tax discount.

The tax measure follows another tax incentive introduced by a past Portuguese government — the Non-Habitual Residents regime aimed at EU citizens who relocate to Portugal as their main tax domicile and spend 180 days or more in the country and which has been particularly popular with French pensioners.

Introduced in 2009 to attract ‘high value’ industries and individuals, NHR is according to financial advisers and tax consultants Blevins Franks “effectively a tax holiday for your first 10 years living in the country.”

Non-habitual residents can benefit from a flat 20% income tax rate — a significant reduction on the usual scale rates that reach up to 48%. Those who work in one of the pre-defined ‘high-value-added’ scientific, artistic or technical professions are also eligible.

The NHR regime is also beneficial for retirees and other expatriates as it offers the opportunity to receive foreign income, including pensions, completely tax free.