Lisbon has become a very important destination for digital nomads in Portugal, with tax exemptions that apply to foreigners, being another push factor for more people to come to this sunny European country.
However, the downside of this phenomenon is that Portuguese youngsters are increasingly fleeing the country, with data from the Emigration Observatory in Lisbon revealing that Portugal has the eighth highest emigration rate as a proportion of the population in the world, as 25 per cent of its population lives abroad.
The high tax burden, which to foreigners is an advantage, is weighing down on employees and employers in Portugal. The tax regime is progressively increasing, starting from 14.5 per cent to 48 per cent, highlighting that average salaries are the highest lows in Western Europe.
According to Rui Pena Pires, the president of Emigration Observatory, a person with qualifications is two or three times more likely to emigrate compared to someone who has a more limited skill set.
This phenomenon indicates that Portugal can be dealing with a brain drain, as skilled workers are headed towards the United Kingdom, Ireland, Belgium and other countries in northern Europe.
Tax Advantages That Are Attracting Foreigners to Portugal, Might Be Drifting Youngsters Away
On the other hand, tax incentives granted to digital nomads are considered some of the most favourable in the whole of Europe, as Lisbon is considered the European capital for digital nomads.
The Non-Habitual Residents (RHN) numbers peaked in 2022, which resulted in the Government having to decide to end the programme in 2024, as part of the State Budget for 2024 (OE2024) proposals.
The tax regime for non-habitual residents is a special tax status in Portugal that was created in order to attract more expatriates and retirees to live in European countries. Economists and professionals in Portugal have voiced their concerns regarding the Government warning the end of the current tax regime for non-habitual residents.
It is important to create a transitional regime that allows the legitimate expectations of people who have already made the decision to immigrate or return to Portugal to be safeguarded, under penalty of damaging the trust of those who made the same decision, with changing country naturally having a very material impact on anyone’s life.
The new measure could accelerate foreigners’ plans to move in 2023 so they can take advantage of the NHR scheme as starting next year, there will be significant changes for taxes regime that applies to foreigners.
