Portugal seeks to become ‘tax haven for young’ in attempt to stop brain drain

An estimated 360,000 people aged 15 and 35 have left the country since 2008 financial crisis in order to find work

Portugal is planning to become a haven for young adults by giving them a decade-long tax break in an attempt to curb a brain drain.
Under plans proposed by the country’s centre-Right government, workers under 35 would be exempt from paying income tax for the first year of their careers before receiving progressive discounts for the next decade.
Luis Montenegro, the prime minister, said: “Our goal is to really increase our ability to retain talent, to keep our young people in Portugal, ensuring that fewer of them leave and that those who do can return.”
Portugal has struggled with a “brain drain” since the global financial crisis in 2008. In the period since, 360,000 young people between 15 and 35 have left in order to find work – one third of all emigrants during this period.
In a bid to prevent this, after a year of living income tax free young workers would receive a 75 per cent tax break for the next two years. This would be followed by a 50 per cent tax exemption in years five to seven, dropping to 25 per cent in years eight to 10.
But the scheme may not get off the ground because Mr Montenegro’s ruling alliance, led by his centre-Right PSD party, does not have a majority in Portugal’s unicameral parliament.
Mr Montenegro was elected in March after a narrow victory over the Socialist Party, which was called after Antonio Costa, the former prime minister, resigned over corruption allegations.
He has ruled out working closely with Chega, an upstart populist anti-immigration party that won 50 out of 230 seats in the Assembly of the Republic – a record for the far-Right. Andre Ventura, Chega’s leader, has expressed support for a low-tax regime for young people.
Pedro Nuno Santos, the socialists’ leader, has not yet revealed whether his party will back the budget, but it has negotiated changes to some of the government’s proposals, including bigger tax breaks for the lower earners.
Mr Santos is against the government’s plan to reduce corporation tax for businesses.