Under 35? Portugal’s Massive Tax Breaks Are Calling You! -

Portugal calls to many expats already with its beautiful coastlines, safe communities, and attractive cost of living. However, this country is pulling out all the stops to attract top young talent from around the world. They are also trying to keep their younger generation IN Portugal, which has been a huge problem in the past as the younger working class goes elsewhere in Europe and worldwide to find higher wages.

As someone who has been through the process of moving to Portugal myself, I’m excited by the new “IRS Jovem” (Young IRS) tax program. My heart aches for Portugal to improve its economy and attract more talent. This new program is quite revolutionary! The Portuguese government is practically rolling out the red carpet for folks under 35, showering them with some generous benefits.

Disclaimer: Tax laws can change pretty fast. Always check with a qualified tax professional for the most up-to-date information.

Chapters

1 Massive Income Tax Reductions
- 1.1 Benefits for First-Time Home Buyers in Portugal
2 Retaining Talent and Attracting Global Innovators to Portugal
3 Your Bright Future Awaits in Portugal
4 Pathways To Move to Portugal
5 How To Deal with the New IRS Jovem Program?
6 Additional Reading
- 6.1 Share this:
- 6.2 Like this:

Massive Income Tax Reductions

Starting in 2025 (pending parliamentary approval), anyone under 35 will pay a minimum tax rate.

Let’s start with the big one – income taxes. Under the new IRS Jovem program, anyone under 35 will only pay a maximum 15% tax rate on their first €81,199 of income. That’s a 66% reduction from the regular brackets! And get this – for the first €28,000 you earn, you won’t pay a single cent in taxes for the first five years. After that, the benefits gradually phase out over the next 5 years, but you’re still looking at a full decade of hugely reduced tax burdens.

Considering wages in Portugal are quite low (the wages here are some of the lowest in Europe and also generally lower than in the US), this may leave some prospective ex-pats wondering why they should move to Portugal. However, keep in mind that the cost of living can be much lower in Portugal, depending on the region.

We live in an outskirt region of Lisbon along the coast to Cascais, and the cost of living, especially the cost of housing, is higher than I expected for Portugal. However, just one hour from Lisbon you can find very affordable housing and cost of living. If you can commute, work remotely, or work in a smaller city, the average income can afford a good standard of living.

Imagine the financial runway this new law offers, especially if you’re an entrepreneur or freelancer. You could reinvest so much more of your income back into your business or your dreams. Or you could live an amazing lifestyle for less. The possibilities are endless! If you are looking for a California-type lifestyle at a fraction of the cost, Portugal could be for you!

It gets even better for the self-employed under 35. Only 75% of your income up to €200,000 will be taxable. Plus you get a 50% tax relief in year one and 25% in year two. Talk about a game-changer!

Benefits for First-Time Home Buyers in Portugal

Lisbon, Portugal.

On top of the mind-blowing tax breaks, Portugal is also showering young first-time Portuguese home buyers with some incredible perks. If you’re under 35 and purchasing your first property in Portugal, you’ll be exempt from the real estate transfer tax (IMT) and stamp duty – that’s a savings of up to €316k!

And get this – the government is also offering a loan guarantee program that can cover up to 15% of the home value for properties up to €450,000. This removes much of the barrier to entry, the down payment and taxes, that keep current young Portuguese from buying. This encourages young Portuguese buyers to get into the housing market, which can be such a huge challenge for young people these days.

Even better, if you’re buying with a partner and one of you is under 35, you can still qualify for 50% of these benefits. Or if it’s just one person under 35 in the household, you can still get partial exemptions. Talk about a sweet deal! Anyone out there dating a young Portuguese national? 🙂

Retaining Talent and Attracting Global Innovators to Portugal

Porto, Portugal.

This all sounds pretty good, but what is the catch?

Truth is, Portugal has been struggling with brain drain for years. Too many of their brightest young minds have chosen to seek opportunities elsewhere in Europe for better wages. But with these incredible new tax breaks and home-buying incentives, the government is making a bold play to not just retain local talent, but also attract top global innovators and entrepreneurs to their shores.

With Portugal’s low cost of living, stunning natural beauty, and vibrant urban hubs like Lisbon and Porto, it’s already an incredibly appealing destination. Add in these financial perks, and the country is positioning itself as one of the most enticing places in Europe for anyone under 35.

In all fairness, the bureaucracy of Portugal is still a major drag on new business. Getting any paperwork done in Portugal can be nightmarish. We have wondered many times if we should put our entrepreneurial brains to work in our new home country to then look at each other and say, “No thanks!” I’m hopeful, however, that Portugal is moving in the right direction with these incentives. They desire to bring in young, fresh talent and fully expect them to fall in love with Portugal along the way.

Your Bright Future Awaits in Portugal

Lisbon streets, Portugal.

If you’re in that age group and have even the slightest inkling to relocate, I’m telling you – Portugal needs to be at the top of your list. These new IRS Jovem incentives and first-time buyer benefits are unmatched anywhere else. You’re looking at a full decade of massively reduced tax burdens, plus tons of help getting into the housing market. It’s a recipe for financial freedom and an incredible quality of life.

I know the visa process can be a pain, but trust me, it’s worth it. I have some recommendations to help you as well. Portugal is rolling out the red carpet and making it crystal clear – your bright future is here. So what are you waiting for? Your new adventure in Portugal is calling!

Pathways To Move to Portugal

Of course, I have to mention the nitty-gritty details of actually getting to Portugal. As an EU citizen, the process is pretty straightforward – you just need to register at your local town hall. But for non-EU folks, there are a few different visa options to consider:

D2 visa is for entrepreneurs nationals (non-EU/EEA/Swiss) who wish to set up a business in Portugal, either as sole traders, freelance workers, or by incorporating a company.
D7 visa is for passive income earners like retirees or investors, and you’ll need a minimum monthly income of €820€ in 2024 / €870 in 2025
- Primary Applicant: €820 per month (€9,840 annually).
- Spouse: Additional 50% of the primary applicant’s requirement.
- Dependent Child: Additional 30% per child.
D8 visa is for remote workers, with a minimum monthly income of €3280 in 2024 / € 3480 in 2025
- Primary Applicant: Minimum monthly income of €3,280, equivalent to four times the Portuguese minimum wage.
- Spouse: Additional 50% of the primary applicant’s requirement.
- Dependent Child: Additional 30% per child.
D3 visa is for highly qualified professionals, which requires a job offer and a minimum monthly income of 1.5 times the average gross annual salary or three times the Social Support Index (IAS), which, for 2024 is €509,26, then the total is €1.527,78. In 2025 the government expects an increase of 3.10% which brings the IAS to 525,05 totaling €1.575,15 for 2025.

Before you get your visa, you’ll need to register for taxes in Portugal. The good news is that the government reviews applications within 60 days and will schedule an appointment with immigration to get you all set up.

Note: It’s important to note that while the D8 visa is tailored for active income earners working remotely for non-Portuguese entities, the D7 visa remains an option for those with passive income streams.

How To Deal with the New IRS Jovem Program?

You get beautiful sunsets in Portugal!

Seek Professional Advice: Now more than ever, it’s crucial to chat with a tax professional who knows the ins and outs of expat taxes in Portugal.

There’s this awesome company called Moviinn that can be your personal moving hero. They’ll help you tackle all the tricky stuff like:

Visas (because nobody likes paperwork)
Taxes (ugh, am I right?)
Real estate (finding your perfect new place)
Essential services (getting you hooked up with all the basics)
Business incorporation (for you entrepreneurial types)
Investment advice (making your money work for you)
Citizenship (if you’re planning to stay for the long haul)
Employment (because we all need to pay the bills)

Just fill out this super easy form. You’ll get personalized guidance and assistance tailored just for your move. Feel free to email me at leslie@americanfamilyinportugal.com if you have any questions.

Stay Informed: Keep an eye out for any transition periods. These could give you some breathing room as you adjust to the new system.

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So if you’re ready to supercharge your finances, career, and quality of life, Portugal is making a seriously compelling case. With unbeatable tax savings, home-buying assistance, and a welcoming environment for global talent, your bright future may be in the Iberian peninsula (but personally, we like Portugal more than Spain, no offense!). What are you waiting for? Let’s do this!