Impacts of Portugal's New Budget Proposal on Digital Nomads: What to Expect in 2025

Portugal's New Budget Proposal: what can digital nomads expect in 2025?

Recently, the Portuguese government presented its budget proposal for 2025, bringing with it economic measures that will affect companies, workers and the country as a whole. For digital nomads who already consider Portugal an attractive option, these changes could make the country even more competitive as a destination. In addition to the reduction in corporate income tax (IRC) from 21 per cent to 20 per cent, other measures influence the tax and economic landscape, directly impacting digital nomads and freelancers looking for fiscal stability in a welcoming environment.

The proposal is expected to be voted on by the Portuguese Parliament at the end of November 2024.

Reducing Corporate Income Tax and Attracting Companies

One of the main measures announced is the reduction in corporate income tax from 21 per cent to 20 per cent. This measure aims to further stimulate business growth and Portugal's competitiveness on the European stage. For digital nomads who own companies or provide services from the country, this change could result in considerable tax savings, reinforcing Portugal's appeal as a hub for startups and digital businesses.

In addition, the economic growth projection of 2.1 per cent for 2025 demonstrates that the government is committed to keeping the country on a development path, which is a positive point for professionals looking for economic stability in their global journeys.

IRS Jovem: Incentives for Early Career Professionals

Another important issue addressed in the 2025 budget proposal is the IRS Jovem, a tax scheme that offers advantages to young people between the ages of 18 and 35 who are at the start of their careers. This scheme allows a portion of young people's income to be exempt from tax, rising from 50 per cent exemption in the first year to 10 per cent in the fifth year of application.

The Budget proposal sent by the government proposes extending the benefit from 5 to 10 years, and 100 per cent exemption in the first year of the benefit.

For young digital nomads who are starting out on their career paths and are looking for advantageous tax opportunities, the Young IRS can be a valuable opportunity. It encourages entry into the labour market with a reduced tax burden, enabling greater savings and, consequently, more financial freedom to invest in travel and new experiences. At the same time, it creates an attractive scenario for those who are considering taking up residence in Portugal, even temporarily, while they develop their careers.

This incentive demonstrates Portugal's effort to maintain a dynamic and young economy, promoting international mobility and attracting young talent, something that can be particularly interesting for digital nomads in the early stages of their careers, who often opt for countries that offer favourable tax conditions.

Valorising Wages and Combating Tax Evasion

In addition to fiscal issues and economic growth, the government has proposed a plan to increase salaries in the public and private sectors. This may have an impact on the cost of living in the country, but it also reinforces Portugal's commitment to providing a more equitable economy. For digital nomads, the increase in salaries can mean an environment with greater purchasing power, which, added to the tax benefits, makes the country more attractive.

Combating tax evasion was also highlighted as a priority. The government wants to strengthen inspection and ensure that all companies and professionals fulfil their tax obligations. For digital nomads, this means the need for greater attention to tax planning, as the new measures could result in greater control over the declaration of income and activities carried out in Portugal.

Opportunities for Digital Nomads in an Attractive Tax Scenario

With the introduction of measures such as the reduction in corporate income tax and the IRS Jovem incentive, Portugal is positioning itself even more attractively on the global scene for digital nomads. Professionals who are looking for a country that offers both tax advantages and quality of life can find an environment in Portugal that fulfils these expectations.

The combination of more favourable tax policies and stable economic growth reflects Portugal's commitment to maintaining its international competitiveness. For digital nomads, this means the opportunity to operate in an advantageous tax environment, while enjoying the welcoming culture and opportunities that the country offers. The proposed tax measures indicate that the government is attentive to the needs of a diverse public, including young professionals and global entrepreneurs.

Future Reflections

With the set of measures proposed for 2025, it is expected that Portugal will continue to attract companies, start-ups and self-employed professionals in search of a fiscally advantageous environment. The projected economic stability and investments in policies aimed at young people are important factors for digital nomads looking for a destination that is not only fiscally attractive, but also offers quality of life.

Portugal is increasingly well positioned to be one of the top global destinations for these professionals, offering the perfect balance between economic incentives and a welcoming environment.

However, even with the prospect of a more advantageous and less bureaucratic tax scenario, it is essential to carry out tax planning in order to avoid double taxation and tax evasion.

If you are interested in hiring professional legal services related to Tax Planning, we are a law firm specialising in the subject. To do so, please contact us by e-mail: contato@trpuppioadvocacia.com.br