November 24, 2023
Ricardo Marvão, director of the Portuguese innovation consultancy firm Beta-i, reflects on the remarkable transformation within Portugal’s technology sector since 2010, highlighting its remarkable growth and competitiveness in the international market.
Foreign founders began viewing Portugal as an attractive location, bringing expertise, establishing innovation centers, investing in local industries, and constructing collaborative workspaces, all contributing to the nation’s technological advancement.
Aside from its picturesque coastline, Portugal’s appealing tax policies have drawn tech workers and entrepreneurs. The non-habitual resident (NHR) statute offers foreign individuals a fixed 20% income tax rate for a decade, notably lower than the 15% to 48% range for locals.
Golden visas also played a role, allowing foreigners to obtain a Portuguese passport in exchange for investment, fostering an influx of professionals and retirees into the country. Court of auditors data noted a 28% increase to 74,258 individuals under this regime in 2022.
Despite a decade of rapid expansion, Portugal’s favorable tax regime is facing change. The government plans to discontinue this scheme for new participants from 2024 while safeguarding existing beneficiaries’ 20% tax rate for the duration of their 10-year period.
The government aims to implement a more targeted program aimed at attracting overseas scientists and researchers, though specifics remain undisclosed.
Ricardo Marvão received concerns from friends benefiting from the tax scheme after the government’s announcement, reflecting widespread apprehension despite assurances of non-interference for existing beneficiaries.
He underscores the significance of the NHR regime in attracting highly qualified individuals to Portugal, crucial for the country’s tech surge, as it enabled the recruitment of experienced professionals in a fledgling ecosystem.
However, criticisms tie these tax schemes to escalating housing prices, leading to protests against soaring rents and property values in cities like Lisbon.
Tax expert Rita de La Feria supports the government’s decision, highlighting the impact of such tax benefits on revenue depletion and strained public services, potentially impeding European cohesion efforts.She questions the necessity of the NHR regime for attracting professionals, citing Portugal’s other competitive advantages as potential draws for skilled workers.An anonymous tech worker, in favor of ending the tax break, believes that Portugal’s allure doesn’t necessarily hinge on tax incentives anymore, expressing concerns over income disparities and tax burdens.
Source: BBC NEWS
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