Portugal has announced a series of measures aimed at attracting foreign investment and stimulating economic growth. These include a reduction in corporate tax rates and plans to expand the list of eligible professionals that may benefit from the new Non-Habitual Resident (NHR) personal tax program.
Corporate Tax Reduction
The headline news is a decrease in Portugal's corporate tax rate. The current rate of 21% will be gradually reduced by 2% a year to target a 15% rate by 2027. A reduction of 12.5% will apply for the first €50,000 of taxable income for small, medium-sized, and mid-capped companies. This positions Portugal as a more competitive destination for businesses, particularly multinational corporations looking to establish a European base. Additionally, these tax reductions are expected to ease the burden on local businesses, fostering entrepreneurship and innovation within the country.
NHR for Individuals
The new NHR program, which was previously narrowed to specific individuals in certain activities, is expected to be expanded to cater for a broader number of eligible professional activities. Individuals who have not been tax resident in Portugal in the last 5 years will be able to benefit, provided they fall into the list of activities or professions that will qualify. Over the coming weeks, further information will be provided. The NHR program offers significant tax benefits, such as a flat 20% tax rate on Portuguese-source income derived from specific professions and the possibility of tax exemptions on foreign-source income, making it an attractive option for expatriates.
Portugal Seeks to Capitalise on Advantages
The Portuguese government believes these measures will make the country a more attractive proposition for foreign investors and residents. Portugal boasts a number of advantages, including a skilled workforce, strategic location within Europe, and a relatively low cost of living. The country's rich cultural heritage, high quality of life, and excellent healthcare system further enhance its appeal. Moreover, Portugal's robust infrastructure, including modern transportation networks and advanced telecommunications, supports business operations and connectivity.
The government is also investing in education and training programs to ensure the workforce remains competitive and well-equipped for the demands of the global market. These initiatives, coupled with a business-friendly environment, are expected to drive economic growth and create new job opportunities.
Conclusion
By cutting corporate taxes and expanding the NHR scheme, Portugal is positioning itself as a prime destination for businesses and professionals alike. These strategic measures are designed to boost foreign investment, stimulate economic growth, and enhance the country's competitive edge on the global stage. Investors and individuals looking for opportunities in Europe should consider Portugal's evolving landscape as it becomes increasingly conducive to business and quality living.
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