Portugal‘s center-right minority government has proposed a 100 percent tax break for individuals aged 35 and younger in an effort to discourage emigration. The measure, introduced as part of the government’s first budget bill on October 10, would grant a full tax exemption to those earning up to €28,000 ($30,500) per year in their first year of work. This exemption would gradually decrease to 25 percent between the eighth and tenth years. It is estimated that over 300,000 people will be affected by this plan.
According to the Emigration Observatory, approximately 850,000 people between the ages of 15 and 39 have left Portugal due to poor working conditions and low wages. Finance Minister Joaquim Miranda Sarmento stated that this budget aims to lower taxes for families, youth, and companies while promoting economic performance and investment.
The Democratic Alliance coalition narrowly won the March election over the outgoing Socialist Party but requires their support to pass legislation. Failure to pass the budget could lead to a collapse of the government. The Democratic Alliance has ruled out working with Chega, an anti-immigration populist party that has become Portugal’s third-largest political force.
Prime Minister Luís Montenegro previously proposed this tax cut in May as a means of encouraging young Portuguese individuals to settle in Portugal instead of emigrating. He estimated that this tax cut would cost about €1 billion ($1.09 billion) annually.
Portugal is considered one of Western Europe’s poorest nations with many workers earning less than €1,000 ($1,090) per month according to Eurofound statistics. In addition, Lisbon has become financially unviable for many young Portuguese due to low wages and high rents.
In terms of immigration policies under previous socialist governments from 2015-2023 allowed illegal immigrants opportunities for regularization through work offers resulting in Portugal’s foreign population surpassing one million in 2023—more than double its figure from just five years prior.
In June this year Prime Minister Montenegro announced new immigration rules aimed at prioritizing qualified professionals along with students from Portuguese-speaking nations seeking family reunification or employment contracts before moving into Portugal.