Portugal's Tax Break Plan for Young Workers

Portugal's center-right government has introduced a decade-long tax incentive plan aimed at retaining young professionals and curbing the brain drain. The plan offers a 100% income tax exemption for the first year for individuals under 35, earning up to €28,000, with the exemption decreasing progressively over the next nine years. This initiative, part of the 2025 budget, also targets young foreigners to encourage them to settle in Portugal. The government estimates that between 350,000 and 400,000 individuals will benefit from the tax breaks, costing approximately €650 million. Despite these efforts, the minority government faces uncertainty in passing the proposal through parliament, with concerns from the IMF about its long-term efficacy. The plan is an attempt to address high youth unemployment, low wages, and a challenging housing market, aiming to make Portugal more attractive to its young talent.