Portugal is set to end its tax breaks for expats in an attempt to bring down property prices in the country.
The Prime Minister Antonio Costa has declared that its low-tax scheme is “no longer justified” for foreign residents.
He has pledged to close the scheme for new applicants for 2024 after wealthy residents living in Portugal have sky-rocketed the housing prices in the country.
The scheme was launched in 2009 and allows people who spend more than 183 days a year in the country to enjoy a 20 per cent tax rate on Portuguese-sourced income from “high value-added activities”.
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Expats can also enjoy a 10 per cent flat tax rate on pensions from another country.
The scheme – known as Non-Habitual Residence – was launched to attract foreigners to the country to stimulate economic growth, after the financial crisis hit.
Portuguese citizens who have lived out of the country for over five years can also apply.
Costa said to CNN Portugal that the scheme had “inflated the housing market”.
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Protestors have swarmed Portuguese cities
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“To keep this scheme in the future would prolong a fiscal injustice that is not justified, and would continue to inflate the housing market in a roundabout way,” he said.
The scheme will remain in place for those who already benefit from it, however, no new applicants will be eligible from 2024.
About 42,000 Britons currently reside in Portugal, but new additions to the country will not benefit from the low-tax scheme.
Official figures show that the amount of foreign income not taxed because of the policy was approximately £1.3billion.
Housing prices in Portugal soared between 2012 and 2021
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Costa’s announcement came two days after thousands protested across the country about the soaring property prices.
Housing prices in Portugal soared between 2012 and 2021, increasing by 78 per cent.
In Lisbon, a rent rise of 65 per cent has made property unaffordable for many residents.
Earlier this year, the Portuguese government approved a plan to end its golden visa programme, which issues a visa to non-EU nationals who have made a significant investment in the…
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