Portugal is to abolish the favourable tax regime for foreigners

Portugal is set to abolish the favourable tax regime for foreigners, which currently provides a special tax rate for those engaged in scientific, technical or artistic activities with high added value. This includes architects, doctors, engineers, artists, managers, self-employed and technicians. Their income is taxed at a rate of 20 per cent in Portugal.

The current regime also grants full tax exemption on foreign income such as labour earnings, rents, dividends and others if they are taxed in another country under a double tax treaty or in a low tax country. The tax on pensions from abroad is 10 per cent.

However, this regime may soon be abolished. Prime Minister Antonio Costa has expressed fears that this tax regime encourages speculation in the property market and has an impact on house prices.

Full details of the proposed changes are expected in the 2024 budget. In the event of a full cancellation, existing participants and those who manage to join the regime before the end of 2023 may retain the benefits. However, specific details are not yet known.


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