Portugal is making waves with its bold new proposal to become a low-tax haven for young professionals, both local and international. In a bid to retain homegrown talent and attract foreign workers, the government of Prime Minister Luís Montenegro is rolling out ambitious tax breaks and housing incentives aimed specifically at people under 35. These game-changing measures could offer substantial financial relief for young earners and make Portugal one of the most attractive countries in Europe for young professionals.
10 Years of Tax Benefits for Young Workers
The core of the new proposal is a progressive income tax scheme that grants up to ten years of tax breaks to individuals aged 18-35. Under the plan, young professionals earning up to €28,000 per year will enjoy a complete exemption from income tax in their first year of employment. From there, the tax burden will gradually increase over the following decade:
- Years 2 to 4: 75% exemption
- Years 5 to 7: 50% exemption
- Years 8 to 10: 25% exemption
This staggered approach aims to make it easier for young workers to build their careers, save money, and invest in their futures. According to government estimates, this initiative could benefit up to 400,000 young people struggling with rising living costs in cities like Lisbon and Porto.
Housing Incentives – Easier Access to Home Ownership
In addition to the tax breaks, Portugal is addressing one of the most pressing challenges for young people today—affordable housing. A new ordinance introduces a groundbreaking housing incentive, offering State guarantees for young people purchasing property. Under this plan, individuals with incomes up to the 8th income tax bracket can benefit from a 15% State guarantee on property purchases. This allows banks to finance up to 100% of the value of a property, as long as the transaction does not exceed €450,000.
This measure is designed to give young people better access to home ownership, helping a generation that faces significant challenges in Portugal’s competitive real estate market. Along with the Public Guarantee, other benefits include:
- Exemption from Municipal Property Transfer Tax (IMT)
- Exemption from Stamp Tax (IS)
These measures dramatically reduce the costs associated with purchasing a first home, providing much-needed financial relief and making home ownership more accessible for young people across the country.
Foreign Workers Welcome
What’s especially enticing for international talent is that these tax reliefs and housing incentives are also open to foreign workers. Whether you’re a Portuguese national returning home after a stint abroad or an expat considering a move to sunnier shores, you’ll be eligible for the same tax breaks and property benefits. With the combination of lower taxes, housing support, and Portugal’s growing reputation as a hub for remote work, the country is set to become an even more attractive destination for young professionals from around the world.
This move follows on the heels of earlier initiatives like the “golden visa” program, which attracted high-net-worth individuals through property investments, and the non-habitual residency scheme, offering tax advantages to foreign nationals. However, these programs have also been linked to rising property prices, sparking protests over affordable housing. With this new tax relief plan and housing support, the government hopes to strike a balance between attracting foreign talent and addressing the concerns of its younger population.
A Response to Rising Costs and Emigration
Portugal’s youth face significant challenges, from climbing rent prices to a shortage of well-paying jobs. With an average annual salary of around €20,000 and tax rates as high as 48%, many young professionals have felt the pull to emigrate for better opportunities abroad. Prime Minister Montenegro’s new proposal is a clear response to these pressures.
The proposed budget for 2025 allocates €645 million to fund these tax initiatives and housing incentives, with the ultimate goal of retaining young talent and encouraging them to contribute to Portugal’s economic growth.
A Political Tug-of-War
Despite its promise, the tax and housing plan has yet to pass through parliament. Prime Minister Montenegro remains confident that the budget will be approved, even as negotiations with the Socialist Party remain tense. With a critical vote looming on October 31, the government is pushing hard to secure the necessary support to ensure the future of Portugal’s next generation.
A Bright Future for Young Professionals
Portugal’s new tax incentives and housing measures mark a significant step towards making the country more competitive on the global stage. With attractive tax breaks, easier access to home ownership, and a welcoming attitude towards foreign workers, the country is positioning itself as a hub for young talent. Whether you’re a local looking to stay or an international professional seeking new horizons, Portugal might just be the place to build your future.
