The measure, which grants advantages for ten years to persons who move to the country while money generated in Portugal remains subject to a 20% tax rate, was announced by Portuguese Prime Minister Antonio Costa. According to EU Helpers, foreign income is often free from this type of taxation.
Portuguese nationals who do not take advantage of the program, however, may be required to pay up to 48% in taxes. The plan was dubbed a "fiscal injustice" by PM Costa.
"It is not any longer justified and is a biased way of inflating the housing market, which has reached unsustainable prices," Vice-President António Costa
The program was first put in place to draw tourists and businesspeople to Portugal, but because of its popularity, locals are now experiencing a housing and financial crisis.
According to a Eurostat analysis, Portugal has the fifth-highest house price index in Europe, at about 190.17, after only Lithuania, Iceland, Czechia, and Hungary.
The Harmonized Index of Consumer Prices (HICP), a measure of inflation in the European Union (EU), is also low for Portugal, according to statistics from Eurostat. It refers to the measure of inflation in the EU and represents change over time in the prices paid by households for a representative basket of goods and services.
Portugal generally has the sixth-cheapest HICP prices of about 113.03 for 2022, trailing only Switzerland, Iceland, Ireland, Greece, and Cyprus.
Portugal placed eighth in Europe with an HICP rate of 119.79 according to the most recent statistics, which was collected in June.
According to a study by the Faculty of Economics of Porto, taxation is one of the main reasons why living standards have decreased relative to the average of the European Union.
In contrast to the EU, the study also reveals that "the weight of wealth-generating forces in GDP has shrunk in favor of taxes and contributions, also contributing to the explanation of our poorer economic growth. Porto University's Economics Faculty
The same study showed that the state's share has been rising, reaching a maximum tax burden of 36.4% of GDP in 2022, which, when adjusted for standard of living, results in a tax effort that is 17% higher than the EU average and puts the nation in fifth place overall in the region.