On 10 April 2024, the Portuguese Government approved a government program incorporating several measures related to corporate and individual income taxes. The program covers the following topics:
- Corporate Tax Rate Reduction: A planned reduction of the corporate tax rate from 21% to 15% over three years, with a reduction of 2 percentage points annually.
- Youth Tax Incentives: A significant reduction of two-thirds in personal income tax for young individuals, with a maximum rate of 15% applicable to those up to the age of 25, excluding the highest income bracket.
- Personal Income Tax Cuts: Marginal rates for personal income tax will be reduced by 0.5 to 3 percentage points across the first eight brackets.
- Elimination of Short-Term Rental Tax Penalties: The recent decision by the current government involves the removal of tax penalties on short-term rental activities, which were introduced by the former administration.
- Real Estate Acquisition Exemption for Individuals Under 35: Individuals under the age of 35 will be exempted from real estate transfer tax and stamp duty when acquiring property intended as their permanent residence.
- Inflation-Adjusted Tax Brackets: Introducing a mandatory update of tax brackets and withholding tables to align with inflation and productivity growth.
The implementation of these measures depends on the Government obtaining adequate support from opposition lawmakers.
