Portugal wants to take advantage of the budgetary treatment to put an end to the flight of young talents. Portuguese Prime Minister Luís Montenegro wants to make the country a “tax haven” for young people by introducing a decade of tax exemptions so attractive that they will stay instead of looking for better-paid jobs in other countries.
The final draft budget for 2025 was supported yesterday by the minority government led by conservative Montenegro and today begins a parliamentary process which, at the moment, does not offer a guarantee of success before the vote on November 29; It is the socialists who will have the key if they abstain or vote for and it is with them that the executive has been negotiating for weeks.
One of the measures agreed with the Socialist Party (PS) is precisely that which involves tax changes for those under 35 in order to reverse the migratory flow of young people who are leaving one of Western Europe’s poorest economies in search of better-paid jobs abroad. Concretely, young people would not pay income tax during their first year of work and would benefit from a tax exemption of 75% between the second and fourth year, 50% from the fifth to the seventh and 25% from eighth to tenth grade. .
The agreement has reached an intermediate point on the initial bases and finally tax exemptions will be applied during the first 10 years of professional career, against the 13 that the Executive wanted and the seven on which the socialists bet.
The measure takes place in a particularly complicated economic context for young people due to the coexistence of high taxes, low salaries and exorbitant real estate prices. The truth is that this plan has few precedents in the fiscal policy of other countries and It is not viewed favorably by organizations such as the International Monetary Fund (IMF).who doubts tax incentives for young people and considers “uncertain” the impact on emigration that preferential tax rates based on age could have.
The previous socialist government, which lost elections this year, had already introduced tax exemptions for young people, but only university graduates could access them.
This agreement between the conservative executive and the socialists does not, however, guarantee that the budgets will be implemented because there are other unclear issues, notably concerning corporation tax, which the government wants to reduce but which the socialists ‘oppose.
Montenegro said this Tuesday, in an interview on the network CISwho will not accept the PS’s request not to lower the CRI in the budgets after those of 2025. Finally, the project considers, he assured, “all the bases of negotiation” that they had with the socialists, like the reduction of one percentage point in the CRI rate for this year, or half of what the government had initially proposed.
