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Government set to approve income tax cuts in Portugal

The package aims to establish a maximum tax rate of 15% for taxpayers up to the age of 35, except for those in the highest tax bracket.

 in Portugal

The Government in Portugal is expected to approve the reduction of the IRS Jovem at the Council of Ministers on Thursday, which will reduce the currently applied rates by two-thirds.


According to the newspaper ECO, the package should establish a maximum tax rate of 15% for taxpayers up to the age of 35, except for those in the highest bracket.


The measure is expected to come into force in 2025 as part of a youth-focused package that also includes exemptions from IMI and Stamp Tax for young people up to the age of 35 on the purchase of their first residence, for properties valued up to 316,000 euros. Additionally, the package will offer a public guarantee to help finance up to 10% of the acquisition cost.


Last week, Finance Minister Miranda Sarmento stated that the IRS reduction promised by the Government is "more ambitious" than the measure implemented at the beginning of 2024, but noted that it will amount to approximately 200 million euros.


In an interview with RTP, Miranda Sarmento clarified that the 1,500 million euros in IRS relief mentioned by the Prime Minister this Thursday at the beginning of the debate on the Government's program will not be in addition to the approximately 1,300 million euros of IRS reductions included in the State Budget for 2024 (OE2024) and already in force.


"Our proposal is for young people up to the age of 35, except for those in the highest income bracket," he said, specifying that it covers all young people up to the age of 35, regardless of their educational qualifications.


These young people "will pay a third of the IRS they currently pay," he added, noting that the regime applies whether they start working at 18 or 20 years of age.

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