First, Joaquim Miranda Sarmento is not the Portuguese Prime Minister, but the Minister of Finance.
Second, the tax breaks were removed at the end of last year because of a widespread feeling in the general populace that these were deeply unfair policies that were understood at the root cause of gentrification and unreasonable real estate valuations. The median house price in Lisbon and Porto metro areas, are now above what the p95 Portuguese salary can pay. So yes, speculation and wealthy foreigners are an issue, as it's not Portuguese salaries propping these values.
Third, the party in power does not have a majority in parliament. This means they'll need support from other parties to approve this deeply divise tax break. While I'm sure they'll get the support from the Liberal party, I'm seriously doubtful they'll get it from the other parties. It's also quite likely that we'll have new elections in the next 12 months and the party in power, despite many populistic policies in the last 4 months since they won by a few thousand votes the election, has not yet been able to gain a wider trust from the voters since then. I doubt this tax break will see the light of day anytime soon.
Fourth and finally, there has been zero talks about this in Portuguese media. I feel this is more of a politician talking out of his ass without double/triple checking with the prime minister.
> The median house price in Lisbon and Porto metro areas, are now above what the p95 Portuguese salary can pay. So yes, speculation and wealthy foreigners are an issue, as it's not Portuguese salaries propping these values.
The second sentence doesn’t necessarily flow from the first. The same is true in major cities in Canada, New Zealand, England, etc etc, and this has little to do with foreign visitors and much to do with interest rates and availability and quantum of credit.
Canada first massively disincentivized foreign investment and the. limited it altogether because, like Portugal, foreigners were the scapegoats for wildly increasing housing prices. Turned out they had almost nothing to do with it and it was all poor government monetary and lending policy. Governments will do everything they can to deflect blame.
I don’t have direct experience but I have a good friend from New Zealand who says the situation there closely mimicked what he has seen in Canada. Easy to blame foreign money, hard to look in the mirror.
Also, as a side note: “rich person” immigration is absolutely unequivocally not the reason for house prices skyrocketing in places like Moncton, New Brunswick or Campbell River, BC. No one from Monaco or Hong Kong is clamouring to buy houses at 5x historical average valuations compared to income.
I suspect in 5 years it will become obvious that in Portugal the situation had to do with monetary policy and not foreigners as well. Time will tell.
Mostly false. Theyve been trying to attract foreign ”investors" for quite some time. Expo 86, 2010 Winter Olympics. What the clowns didnt realise was all the ”investment” would just go into housing. Nothing else
Every country tries to attract foreign investment. It’s a major component of GDP. And the difference between Canada ca. 1986 and 2010 versus 2018-2024 is… monetary policy! (Though admittedly 2010 looks pretty similar to 2018, house prices were already starting their insane run up).
It’s monetary policy. Housing prices are the fault of governments of various levels (constrained supply at the municipal levels, easy credit at the national levels). It isn’t foreigners, at least not in Canada, NZ, England, etc. and I’d bet money it isn’t in Portugal either.
Sure, but that isn’t the assertion I was replying to!
My personal opinion is the wealthy gravitating to a spot are as much about it being a useful ‘nutrient gradient’ on the monetary policy front, after the primary places are exhausted (like the big US cities) or because those places were less accessible now.
But the original assertion I was replying to was that those places never had the rich foreign investor thing happen - when they absolutely did!
Wealthy foreigners bring money from the outside into Portugal, so they are net positive. And not only money, but also knowledge, culture and diversity. Local restaurants are happy, local landlords are very happy, who is not happy is local renters. Maybe the tax should be imposed on the landlords' windfall profits instead?
I cant help but laugh at the simplification. Net positive for whom?
Landlord and restaurants are happy vs the rest of the population (99%). Its a monstruous policy, considering wealthy nomads pay way less tax than locals.
30% of working people don't pay income tax because they are on the first income bracket (minimum wage or less), but they still pay VAT, 23% in the highest rate. The deductions don't come into play if you don't pay tax at all.
The injustice is simple: "digital nomad" earning pays VAT and minimum income tax, but leeches off roads, socialized healthcare, our nice climate. A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech. Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax!
Why should a poor country like Portugal subsidize immigrants from rich countries, but punish those from poor countries? The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here.
> That's a bold face lie, unless by majority you mean less that 50%.
Ok, fair, I mis-spoke. It was not intentional. What I meant is that taxes on goods and services take a largest absolute % of government revenue. Which is was 37.8% in 2020.
The point I am trying to make is that no matter who is living in the country, they'll be using goods and services, which are taxed, and then the revenue flows to the government coffers. Arguably, people with more money, will spend more money on goods and services, and thus pay more into the coffers in absolute terms.
Meanwhile personal taxes made up just 19.8% of the government revenues.
> The injustice is simple: "digital nomad" earning pays VAT and minimum income tax
1. It is not "minimum", but a flat 20% rate.
2. In absolute terms they pay more though, than the average Portuguese citizen. Public goods are paid for, by the governmetn, in absolute fiat amounts (EUR), not in the percentage of income paid to the government.
> but leeches off roads
How are they leeching off the roads? They paid their share of the tax, and even more (in absolute amounts) as income tax.
> socialized healthcare
The vast majority of expats and digital nomads that I know have private insurance, which is also taxed, and goes back into the coffers, and provides jobs.
And besides, again, they have paid already more in absolute terms, than an average citizen.
> our nice climate
How can you leech off of a nice climate? If a digital nomad (with NHR) enjoys the climate, does it become less joyful for you?
> A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech.
A person NHR status pays VAT and income tax too. Just income tax is capped at 20%.
> Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax!
I think this is not on topic.
Anyone who fits into the NHR classification can claim NHR. It's not limited to "expats" or "wealthy" or "immigrants" or "non-immigrants" some limited class of people. In fact, even a Portuguese citizen could have claimed it, if they have not been a tax payer for the past 5 years (e.g. living elsewhere and returning).
The classifications are wide and abundant. Anyone with a profession in demand could have gotten the status.
Immigrants or not, people with no education or experience cannot expect to get the same treatment. Why would that be fair? You can extrapolate the same arguemnt then and say that anyone should be getting the same salary, no matter your education or qualification. That's not how the market works. There's the basic law of supply and demand.
What NHR was doing is simply incentivizing (with a temporary tax break) professional people the government deemed the country needed at the time. I also think this list has been adjusted multiple times, as requirements changed. If you know a better ways of incentivizing people to move to Portugal, I'd love to hear them and perhaps propose this to Portuguese government.
> Why should a poor country like Portugal subsidize immigrants from rich countries
I don't think Portugal is a poor country by any stretch of imagination. It might be "poor" in relative terms to other countries in Europe, but it's not poor in absolute terms.
Should or not, is entirely up to the citizens of Portugal to decide. In the past the citizens have elected officials that represented them and have made that decision, because, perhaps there was a benefit at the time. Then the decision was reversed, because, perhaps it no longer benefits the country?
> The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here.
And I think they do. Portuguese people, represented by the officials they have elected, have decided that 20% is a fair share for new or returning residents to pay, so incentivize them to move to the country.
Otherwise, these people had many other opportunities and would not want to move to Portugal.
I don't know historically why this has been decided, but my speculation was that perhaps aging population and younger population moving away from the country was a big factor. This kind of outflow is simply not sustainable for long term. Who's going to pay the taxes needed to sustain aging population?
Why do you sound like a western neoliberal politician? There are trillions of ways to fight immigrant outflows. The one the government choose to do in Portugal is blatantly unfair towards its own population.
But why is it capped? Are they refugees? Do they need help? Do they have families?
The income tax law is clear, we have progressive taxes. From each according to its ability. The party that proposed flat taxes ammended it's program to remove it when it would result on a tax increase on workers earning less than 1000€. It's immoral and violates the constitution.
> It's not limited to "expats" or "wealthy" or "immigrants" or "non-immigrants" some limited class of people.
> And besides, again, they have paid already more in absolute terms, than an average citizen.
It's both an incentive and they pay more, a magical elastic number, both high and low.
Can a Uber driver claim that? Or a guy delivering food for Uber Eats? Or a dude working on a grocery store? Because those immigrants are already here, contributing to the economy even when treated like criminals, some have their families even. They don't get any tax breaks because they barely pay income tax, their wages are not high enough (bit still better than their native countries).
This is embedded on the proposal, it's for relatively rich people only, because it affects income tax.
I don't see any justification other than tautology "it's legal because the government decreed it". I'm not contesting the legality, just show the receipts. This was implemented before, and it only increased the housing prices.
> Anyone with a profession in demand could have gotten the status.
And work for a foreign company, interacting professionally with zero natives? How does this improve the local economy? Unless their jobs are barista, barman, chef.
I could even accept getting tax breaks for opening a company employing humans, even though it is unfair to existing companies. But it's not even that, it's tax breaks for living in a resort.
> I don't know historically why this has been decided
I do: a minority government flush with cash from the previous government (another faction of neoliberals) will be voted out at the end of the year, so they are pissing away that money to remain in power. There's no time to evaluate the proposals, they just repeat what was done before and reverted for good reasons.
There's no population outflow, we have positive net migration.
The outflow was during the austerity years, that's why there are less doctors, nurses.
The aging population cannot afford medicine, they are not leaving either. These kind of policies drive the young people away, why subsidise some rich expat to live in my own country? It's better to move to a high CoL area, pay more taxes, but earn much more money anyway. Why don't these countries implement NHR schemes too, don't they want those coveted high earners.
> Who's going to pay the taxes needed to sustain aging population?
Not the expats, if they have tax breaks. They will cost money!
There is a way to make the expats become a net positive, but not when they are allowed to go to Lisbon and Porto and wipe out the real estate market for locals.
Likely could've worked if - they had to pay to access health care and other benefits, plus they could only live inwards in places where the population is decreasing like Castelo Branco etc. And if the distortions in the real estate market became too big in any particular place, they would be banned from that district. That would cut down on work-tourist types who just come for the beach and sun, and it would contribute to actual de-desertification of the interior of the country.
Agreed, but regular immigrants would be a better fit I think, can you imagine the culture shock of some white collar laptop worker to live in Castelo Branco?
I'm a laptop worker and wouldn't want to live in some rural area, I left for the big city on purpose!
If the immigrant comes for a rural area, the adaptation would be simpler, I guess.
That would require supporting people with brown skin, so it won't happen.
It's somewhere in the middle, probably. People talk about wealthy foreigners, tourists and so on "bringing money to an area" as if that money is being uniformly dumped from a helicopter onto everyone. That's never what happens. It goes into the pockets of a relatively small handful of people/businesses, those people will spend a fraction of it, and downstream people will spend another fraction, and so on. It trickles a little, but the entire community is not benefiting uniformly.
gentrification is a problem. But it's hard to truly understand a problem if all sides try to make it extreme.
What does "Portuguese people can't afford to live in major cities anymore." actually mean? Does it mean that major Portuguese cities are no longer inhabited by a majority of Portuguese citizens? Or does it mean that there are some Portuguese people who no longer cannot afford to live there and that the blame for that is the few foreigners who contributed to raising prices in such a way that the those portugues who were already poor now crossed the line and couldn't affort to live in major cities, and joined the other portuguese who already couldn't afford to live there because of other causes of wealth inequality?
EDIT: It's not just mere nitpicking; I really think actual magnitudes are important in in discussions around these topics but the public debates I see often present the problem in very broad strokes and thus inevitably end up in shouting contests by people who have very strong opinions and the rest of us just looks the other way no longer believing what is being said. I know for a fact that that gentrification is destroying europeans city centres. It's very hard to afford to live in other places like Florence, Italy too. But is it really so clear cut that it's because of tax cuts for expats? Or it's just a result of a bimodal distribution of wealth including native wealth?
There is rarely one solution or “cause” when considering something as complicated as the economy. It’s really easy for politicians to play on the fears of the masses. There seems to be a solid 20-40% of ANY country that is willing to place all blame on “the other” rather than realize it’s a complex situation. So foreigners are an easy thing to pin all issues on for a politician to gain power, and it takes a complete failure of their flawed theory to convince the population that “hmmm maybe there isn’t an easy fix” by blaming foreigners. I see this nonsense all the time in Texas.
Sure about 99%? Tourism is 20% of Portuguese GDP. There are 66,000 real estate companies in Portugal. So many more than 1% benefit from wealthy foreigners.
The reason there are many poor people has nothing to with techbros with laptops. Better fix your bloated and corrupt public sector.
The "corrupt public sector" has been focus of complaints at least since the 19th century, across three regimes, but the number of children living on their parents' homes increased after the foreigners with laptops bought the damn houses, either directly, or through real estate funds.
They might or might not be a net positive. I think it's more complicate. It's not just money, but also where the money is going and what it is achieving.
E.g. a lot of wealthy foreigners will increase the rent, prices for restaurants and services. Oftentimes, the quality of restaurants/services might go down (because if you cater to a crowd that only stays a couple of months, there's not the same need to get these people to come back. That are changes that are often received negatively by the locals.
Foreigners also make use of public services like streets, public transport etc., often without paying income tax.
What I see in comment sections of articles like this is a perfect example of why EU is set to lose in the coming decades: mindset.
I’d say most Americans understand the value of highly skilled migration. It’s how America stays #1, it’s how they have the best companies, and bring the most value to their nation.
Meanwhile in EU, any move to attract talent is seen as net-negative, unfair and detrimental to the culture and livability. Their negativity is a self fulfilling prophecy, but it will be a very costly and hard pill to swallow, just like the UK is seeing after Brexit.
It's a complex issue. When so many "skilled workers" move to your neighborhood that your rent doubles and that you can't afford to do grocery shopping in your neighborhood, it makes sense to be angry.
The US top 1% are number 1, the US bottom 10% have it worse than most or even almost all people from western Europe.
You are correct that most of Western Europe is ahead at the first decile, but you are incorrect to imply that it’s at the top 1% that the advantage goes away. In fact, the US meets the richest EU countries at the 50th percentile (meaning the median person is equally better off) and at the 90th percentile, you are much much better off in the US - it’s not comparable. The fact is, for everyone middle class (not by a local definition of middle class - literally middle) or above, the US will have you significantly better off. https://www.ft.com/content/ef265420-45e8-497b-b308-c951baa68...
And it's hard to get this data for Europe but looking at the "Median" column for this https://en.wikipedia.org/wiki/Wealth_distribution_in_Europe it looks like the US middle class would slot into fourth place, just below Denmark which is at 165k, and far ahead of say, Germany, which is at 65k.
Through the argument here is more about living standards then how "well of" someone is from a materialistic POV.
Like one thing I realized is that it seems that you need to earn way more in the US to have a similar level of living quality/standard compared to the EU. As far as I can tell I probably would need to earn ~50% more to have the same quality of live level in the US compared to where I live now. Through it probably depends a lot on where you are in the US/EU.
Isn't the USA middle class shrinking though? We're quickly bifurcating into a "really better off" group and a "really worse off" group, with little in the middle.
Supply. The answer is and has always been to build more housing. NIMBYs around the world are the primary force stopping that from happening, that is why there are housing crises everywhere in the world. Contrast that with somewhere like Singapore where government housing is pretty good and plentiful in supply, they do not have such issues.
> Supply. The answer is and has always been to build more housing.
IMHO not really
The supply of affordable housing in the place where it's needed often can not be increased due to physical limitations and building luxury flats being more profitable. And the "demand" is often not driven by people living there, but investment stuff.
I.e. if we purely look at "supply of housing" (ignoring price) and "demand of housing" (to live in) there isn't a problem at all in most cases.
Through I agree with NIMBY making it worse, especially given that it's often not even their backyard. But the neighborhood of properties/land bought as investments and them blocking things for investment reasons.
Through the main reason is IMHO still housing being used roughly "like stocks".
that would only happen if the demand is based on people who want to move there
but if it is based on interest/dynamics more similar to stock markets like we currently have then there isn't a physical limit on (artificial) demand as such local housing gets bought up first (to potentially be upgraded to luxury flats) and then they still build more luxury flats
It's been statistically shown that any type of housing reduces market pressures simply because it is more supply in the market and over time that makes a difference.
Here, the county owns some land that it is going to put 100 houses on. They are going to put houses that cost 3x more than the locals can afford. Why? More money from property tax, and to hell with the average person.
The knock on effect is that regular houses will become more expensive, and in 10 years, only the top 10% of earners will be able to live here.
The downstream issues are not related to immigration, otherwise house prices would have fallen in Lisbon.
Look at examples such as Singapore, Dubai and many others that adopted an entrepreneurial attitude and figured out the infrastructure to support that growth.
When will they blame when the immigrants don’t come but the problems remain?
Yes, Dubai figured their infrastructure so well, their airport was closed for days when it rained.
Singapure is a dictatorship fuled by Chinese money, should a NATO country be supported by them? Will the US invade if we sold them the abandoned American base in the Azores?
more relevant is if your country can capitalize on the workers
like if a lot of skilled workers move over but
- they (mostly/majorly) don't settle, just stay for a few years
- they don't create companies in your country
- they don't work for companies in your country
- the companies they work with might directly compete with your local companies and now with having local representatives can do so better
Then if the tax breaks are worth it is solely a question of taxes they pay + money they spent vs. implicit cost of disruption they cause. Which might not be always worth it.
On the other hand the US doesn't focus on attracting digital nomads, they focus on their biggest/best companies attracting intelligence for themself. Which has a high chance of profiting the US especially given that they also tend to attract young talent which then build their business network in the US making it quite likely that they if they found a company they do so in the US.
> the US bottom 10% have it worse than most or even almost all people from western Europe
America’s bottom 10% are absolutely comparable to Europe’s bottom 10% when one considers actual access to services and material standards of living. (I’m assuming you mean EU’s, not Europe’s, because as terrible as being homeless in America may be, it sure beats being bombed.)
> benefits you get in western Europe are 10x better than what you get anywhere in the USA
Benefits you’re entitled to. France, for instance, has put a lot of services behind an internet portal. Add to that the stigma of utilising them in many villages and you get low utilisation rates.
I would imagine the poor in Europe are a bit better off. (If we limit ourselves to the coastal states, the answer may be surprising.)
I live in a plain Portuguese neighborhood of Porto. There are virtually no foreigners. At least I never see any when walking around or going to a grocery store. I maybe see one a day out of 100s of Portuguese people.
Yet my local Portuguese landlord keeps jacking my rent every year by a huge margin way exceeding the government norms.
Who forces them to do that?
They don’t even live in the city. They live outside in the Douro valley.
It’s just pure greed.
It’s a self fulfilling prophecy. They see average values went up and they adjust accordingly.
And why did the values all of a sudden go up on my neighbourhood with no foreigners?
Why would you compare bottom US to only Western Europe? Also, do you have a source on your claim? I’m skeptical that the US bottom 10% have it worse than “most or even almost all people from Western Europe”
I don't have the exact metrics, but free healthcare, free education, and enough benefits to not be homeless and hungry seems like more than what poor Americans get.
America has lots of programs that assist poor and/or disabled people: SNAP, Unemployment, VA, SSI, SSDI, TANF, Section 8, Childcare Assistance etc. Some people don’t want to bother to apply/jump through hoops to get them but they exist.
> It’s how America stays #1, it’s how they have the best companies, and bring the most value to their nation.
As always, it's relative. Granted, I'm one of these loser EU residents who has a different mindset, that chasing #1 position in terms of GDP generated per resident isn't the be all end all. Instead, people's happiness is on the top of my mind, and taking care of as many people as possible.
And with that mindset, the US is very far from the top, and there are so many countries that are better for "living", but maybe not the best if your entire life revolves around finding the best place for "working".
We all have different focuses in life, and that's OK. But to say that some places are "better" on a absolute scale feels like a mindtrap if anything.
> I'm one of these loser EU residents who has a different mindset, that chasing #1 position in terms of GDP generated per resident isn't the be all end all. Instead, people's happiness is on the top of my mind, and taking care of as many people as possible.
It's not an all or nothing dichotomy.
Social services get dramatically more expensive if you don't have as robust a local economy. All governments borrow money and need to service debts in order to pay for their social safety net, and that's much more expensive now due to higher interest rates and economic convergence.
And it's not like Eastern European EU member states are poor chumps anymore - they're fairly business friendly and some like Czechia have already caught up to Western European (Italy/France) level living standards.
This means you can't play wage arbitrage anymore by getting an underpaid janitor or nurse from Croatia or Poland to work at your local hospital like you could 10 years ago.
No I think most countries value high skilled migrants. In most countries its the only way you can migrate. The difference is whether they should get tax breaks.
In fact the USA is probably the hardest country in the world to work as a digital nomad - you can only work legally here if an employer sponsors you. And you definitely wont get a tax break.
It's not just that but also the mindset of entrepreneurship and growth versus stagnation and la dolce vita, which, while nice in the short term, is untenable in the long term.
Pieter Levels of NomadList fame talks about this often [0][1][2], he is Dutch, not American, so it's not like he's biased for America but he notes that it is disheartening for him to see Europe slip into mediocrity over time.
Ah I didn't see his latest reply, he normally lives in Asia, I thought he was still there. Regardless, he can live there and still want to improve his continent, as he mentions. Your comments remind me of this meme.
Europe has been mediocre for the entire modern times. France’s Haussmann marks the end of it with the Exposition Universelle of 1889 (Eiffer Tower) which really attracted people. Since then, we had to be rescued by Americans every time we went into war (even in Vietnam) and the art capital of the world is NYC. Maybe De Gaulle revived France a little (and he leveraged the UK/US help for that), but nowhere near what Shanghai or San Francisco did.
Europe is fine as a former success. Happiness has been high, life expectancy too.
Except it is now being ruled over by people who will neither bring it to the sky again, nor will keep the existing inhabitants.
Maybe this approach would have made sense if the area were an established hub in whatever craft those immigrants are specializing in, but in case of Portugal what I can see is a country with (formerly?) cheap CoL trying to attract immigrants who keep working remotely, paying taxes elsewhere and contributing whatever little consumption tax they pay into the local economy. There's no established competitive IT industry or academia. This isn't how you build high-tech economy, it's how you become a suburban wasteland for rich people.
That is why they did make that law in the first place.
The problem is what they expected was something like "highly skilled migration contributing directly or indirectly to Portugal".
But that isn't exactly how it played out, which is why they removed tax brakes. I mean think about it. Just attracting talented people to be in your country and paying some tax isn't enough. You also need to be able to capitalize on them. E.g. by them working for your companies, them creating companies in your country, them settling in your country, etc. But AFIK that didn't really happen in case of Portugal.
> any move to attract talent is seen as net-negative,
not really
moves to attract talent are very common, through often focused with different dynamic then the US
through you might confuse the sentiment with the negative sentiment wrt. people coming as refuges instead of immigrants which are often perceived as not being skilled and just taking advantage of social systems etc., the same way it's commonly the case in the US (e.g. wrt. people from Mexico). Just to be clear I say perceived, because enough refuges are quite skilled/qualified just their qualifications are often not recognized due to bureaucratic reasons
---
As a side not IMHO/AFIK the huge raise on apartment rent/buy cost in Lisbon is likely _not_ majorly related to the previous tax break programs. Mainly such raises can be observed in most relevant western (and beyond) Capitals around the world, driven by the most wealthy of mainly the western world (but also beyond, e.g. Saudi Arabia) using them as money banks and very term investments. The moment many do it will (did) also drive speculative investment. Which can lead to somewhat of a looping effect. Or in other words it's a side effect of the past ~10 years of (especially western) world economics.
When the americans will be displaced by the skilled migrants, it will be an even harder pill to swallow. And it will be too late too. This movie it's not done yet.
Any kind of forced population relocation, it's bad. Before, it was done with guns, now it's done with money. The results are the same.
Current day skilled migration is popular today, because companies get fully educated people, without having to pay taxes for education, day care, health. You get only the best, whithout having to paying anything. Not even parental leave for their parents.
The question is, should the people let companies, aka the rich, decide how the country will look like in 50, 100 years?
Also skilled migration is very bad for origin countries too. They loose all the best while having to suport all the liabilities. Like the pensions of the parents of the skilled labor that left and now it's not contributing anything.
You are comparing two things that are not actually the same. America is the top destination by far for actually skilled migrants who can pump up the economic engine and build highly profitable businesses. America has fine-tuned its entire system to integrate and take advantage of skilled migrants, its tech/research industry being built on this, and its reputation, physical and logistical infrastructure helps to take the cream from the crop.
It's easy to talk about highly skilled immigration when you are the one taking all the best part of it. Those highly skilled productive individuals who can move to America will.
Mass import of unskilled migrants, especially young military aged men, is indeed net-negative, unfair and detrimental to the culture and livability.
Ridiculous. This is not a "friendly to migration" policy but a welcome mat to wealthy nomads to move to Portugal and pay less tax than the locals. That's not even being welcoming, it's throwing your own population under the bus.
Most EU countries have no issue with skilled migration when needed. Denmark has a solid migration policy and thus relative consensus on keeping it as it is. Other EU countries have passed policies that ruined their own local population in favor of low skill migration or in this case, high skill migrants hoping to avoid high taxes. This not attracting "the best", it's attracted a lot of amoral individuals who just want to move to Lisbon to party and enjoy the weather.
> any move to attract talent is seen as net-negative, unfair and detrimental to the culture and livability
The biggest barrier to attract talent in the EU is language. It's not culture, it's not incentives, it's not tax breaks... it's language. The US only needs to learn a single language, english. For Europe you would need at least 3 languages to be marketable since EU citizens are learning multiple languages since born in most cases.
There's a difference though between importing talent to work for the local economy and having people who work for foreign companies. Maybe some digital nomads transition from the latter to the former, but given local wages it must be rare.
Then it's a tradeoff between whether the extra tax revenue/spending is worth the potential social issues those rich foreigners can bring.
I agree with you but I will also add that the “new world” is much more geared towards turning those immigrants into actual Americans, Canadians, and Australians than the EU is turning the nomads into Europeans.
But that’s just one more contributing factor to what you described.
I agree with you on that one; I am still in favour of the EU and one of the last countries I would want to live is the US (it's a nice country (parts of it) to vacation in though), but yes, the EU has issues (in my opinion) that would be good and positive for 'the people' IF there would be an abundance of money coming from somewhere (there isn't); a) language (let's ffs speak english everywhere; I'm dutch, i speak dutch, german, french, portuguese and spanish, but it's just easier to have english as the first language, as as the common high value business language in the world) b) regulatory; small companies should be exempt from regulations and that should change per milestone the company reaches c) make it easy, cheap and attractive to start a company; as point b), start getting annoying when it grows beyond certain milestones, but not too annoying so it will leave d) make taxation so that it's attractive to invest in here e) boost our electronics, military and space faring research/development/manufacturing across the board; that brings jobs, money, investment and innovation.
But it's hard to balance with culture and liveability; I would never live in the US for fear of dropping from the few top % by some accident getting into extreme poverty. Here i'm not really scared of that (and i've been there in the distant past).
There’s a long way to drop between the 90% and the 10% in America. If you’re starting from a position of privilege with a personal savings safety net, you’d have to really F things up for yourself (drugs, gambling, over leveraging) to find yourself in extreme poverty.
What I find odd, is that moving between states in the US is relatively easy. Find a job and go.
But if a skilled English speaker wants to move to the Netherlands (whose population is smaller than Florida) or virtually any other European country, they’d have to be fluent in the local language. That’s a really high bar.
Seems like even for multi-lingual Europeans in the EU, this would still be challenging, especially for families. (Asking kids to suddenly attend school in a different language???)
Seems like Europe is the modern day Tower of Babel story.
I am a fluent English speaker who spoke not a word of Dutch for my first few years in the Netherlands. Got contract work, friends, and in the end language and citizenship.
One example is anecdote, not data, but I know an awful lot of EU and non-EU people both in the big cities and more regional places who landed without any local language and made successful lives and integrated effectively here.
There are harder places to do this but it’s getting easier by the year, especially in the countries that need people who speak other languages for global trade.
It is a massive problem and all under the guise of ‘our culture’. I get it somewhat but equality won’t happen if you keep it this non equal on the basic level. I get that you learn a language when you move (I did a bunch of times), but it will never get better than my english or of course dutch (my native tongue, although I am starting to forget words after having been abroad over 20 years); all my colleagues do speak english but refuse because of culture they say. I feel this is a pretty basic issue and a massive problem.
The EU does not have the cultural means to adapt to immigration the way the US does. The US removed the native population, so all cultural in the US is adaptation; adding more into the mix isn't such a problem.
There are many things were America is not number one. Provide living wages and Universal Health care and you will be at the baseline at least 80% of European countries achieved 50 years ago...
So are you saying what USA and states should do is to give very large tax breaks for H-1B visa holders to make them more competitive against native and allow them higher living standards?
I dislike these policies (despite benefiting from the Dutch equivalent for a short time). Why should existing tax payers effectively subsidise lower taxes for new arrivals? Both receive the same state benefits and both earn the same income.
Also, I'm not sure they're actually effective overall. For every tax break you give to a new arrival earning say over 100k, there's surely an existing resident earning the equivalent whom you are effectively encouraging to leave with such a discriminatory policy.
And indeed, according to headlines like this "As Digital Nomads Flock to Lisbon, Portugal’s Youth Are Leaving in Droves"[1], it seems to be playing out this way.
Like the annoying business practice of offering steep discounts for new customers, it relies on the inertia of your existing customer base (in this case citizens). The problem is that the "digital nomads" you are trying to attract are the least "sticky" type of resident (after tourists) and are far less likely to fully engage is civil society and contribute at that level (often never bothering to even speak the local language). While if you drive one of your own citizens to relocated in another EU country, the net loss is greater.
Having lived and worked in Dublin for a long period, I was interested when a Dutch-style seven year rule was proposed by the government a few years ago. There was immediate, widespread vocal opposition and the proposal was dropped quickly.
While I agree with your comment I'd like to point out that the reason the youth is leaving is not this policy, but that there are no jobs for them. At least none that you really want to live on. That's a problem "digital nomads" are expected to not have: They have their job somewhere else, so who cares if the local job market is garbage? Though I don't think this will work out in the long term.
> Why should existing tax payers effectively subsidise lower taxes for new arrivals?
Because new arrivals inject new money into the local economy. A new arrival buys products, pays for services etc. Their foreign dollars often also go further - meaning they can inject more vs a local, who - by nature of the problem - can't hence the need.
You could argue a tax break for locals would do the same thing, but it's not quite the same, as locals paying less tax may tend to choose saving any extra cash rather than change their spend-habits. Foreigners are bringing new money with existing habits.
Digital nomads don’t settle but other digital nomads will take their place if the country has enough on offer. When a city is able to attract educated, intelligent and motivated people through a simple tax policy change you can expect all sorts of positive downstream externalities. Ambitious people don’t want to live in dying cities. Anything that stops brain drain is good. Whatever politicians can do to attract talent is going to be net positive, even when that means tax cuts for digital nomads who don’t employ anybody and who have no loyalty to their host country.
It's the same rational companies apply when they pay new hires more than existing staff for the same job.
Both the governments and the companies are counting on the underlings to stay put.
While it is harder to switch country than it is to switch employer, the optimal strategy for the citizen/employee is the same in both cases:
Hop to the better deal as soon as there is one available - show no loyalty, you'll never get any in return.
How does this make any sense in light of Lisbon being now "one of the world’s most unlivable cities"? Seems like it can't possibly be good for the native Portugese.
Economic stagnation and population decline is bad too. Highly skilled immigrants are especially good for the economy and for the tax base, which pays for social services. Rising housing costs are indeed a problem. Is there a part of town that can accommodate sky-scrapers?
> Highly skilled immigrants are especially good for the economy and for the tax base
I don't think that this is especially true of the digital nomad laptop tribe. It is, perhaps, true of traditional skilled immigration that's tied to opening a business or working in a target profession.
Portugal, however, is going to get a lot of the former and probably rather little of the latter.
>Highly skilled immigrants are especially good for the economy and for the tax base, which pays for social services.
Except they're getting tax breaks, it's in the title of the article. The only winners from this will be landlords and property owners.
This bullshit trickle down from well-off tourists with laptops we keep getting parroted is a scam, that doesn't benefit the average joe there who now has to deal with even more expensive housing.
Why do you think all countries whose economies profit the most from tourists and "digital nomads" (most of Southern Europe), also have the highest wealth inequality, crappiest wages and most unaffordable housing for the locals causing all their youth to emigrate? Where are all those benefits for them you keep talking about? Their economies should be booming by now, and yet they aren't.
If you wanna improve your economy you want to attract companies and investors who fund companies and create well paying jobs in the country for the locals, not techbros who can outspend the locals, as that's just economic colonialism that only benefits the asset owning class. Turning your country into a coworking space for remote workers to party, won't fix your economy or benefit the average locals.
Whether foreigners are income-taxed at 20% or 48% cannot be the answer¹. Clearly Portugal's problems are much deeper than that, going back to 1974 and beyond.
To name one, Portugal's bureaucracy is legendary. The Portuguese are not called "Honorary East Europeans" for nothing.
The red tape creates a complex system of inefficiency and corruption. It's like a cauldron – you (the government) plug one obvious hole, only to find the pressure found another, "unexpectedly".
And yes, young people run away in droves from Portugal, leaving entire industries back home chronically understaffed. Construction & health being two prominent examples that need foreigners to keep the lights on. This shortage of labour drives commercial prices up higher still, contributing to the death spiral.
¹ Leaving aside that both numbers are high to begin with; 48% ridiculously so (for anyone above €82k/year). That's no way to treat your productive population. And that's just income; there's additional health and social taxes, some masquarading as "insurance" or "employer contribution". Would you blame the young for leaving?
> That's no way to treat your productive population.
Seeing a single number and coming to that conclusion is very reductive, imo. What I believe matters is if the population feels like they are getting value for money. Income tax is higher than that here in Austria but we are broadly satisfied with what is done with that tax. Very much so in Vienna. Income tax is lower than that in Ireland, where I originally come from, and people are broadly unhappy with how tax is spent and don’t trust the government to tax more to implement the services they say they want.
You’re right about Vienna - it’s clean and wonderful.
Some governments do offer much better value for money than others.
But I think high taxes are a very risky bet on the idea that the government will stay competent long-term: bureaucracies are almost never cut down when they grow too large; thus taxes almost never come down significantly over the long term.
> Seeing a single number and coming to that conclusion is very reductive, imo.
That's not what the parent post was about, at all. Or did you only read its footnote?
Whether the Portuguese population "feels like they are getting value" is best observed in how they vote. Both during elections (Chega), and most directly and loudly, in how they vote with their feet. Opinions of Irishmen in Vienna notwithstanding.
I only objected to the fixation on taxation levels and assumption that a particular rate is morally bad as if they capture much about anything. If I wasn’t clear enough I hope I am now.
I'm afraid "much about anything." is still too vague to tell :)
No need to bring out the "immoral" card – yes, there definitely exist gvt policies (incl. tax) that tip a critical number of that country's skilled workers over into emigration. We're not talking Depardieu or "laptop tourists", we're talking local construction workers FFS.
Observing the tug-of-war HN votes on my post, some people must have taken that footnote as a cue for their ideological warfare du jour. Poor-vs-rich! Pitchforks now!
- "Fixation on taxation levels"… from my "whether [tax is] 20% or 48% cannot be the answer"? How?
- "loves to see low income taxes fore them as an universal band aid for the entire economy"… from my "Clearly Portugal's problems are much deeper than that, going back to 1974 […] Portugal's bureaucracy is legendary"? How?
With all due respect I think the fixation is yours. I have lived in Austria (my sister still lives there) and I have lived in Portugal. There are a lot of issues under the surface in both. Different histories, different trajectories. No need to attack strawmen.
If you have specific insights on the situation in Portugal (beyond Rinzler89's "just create jobs and spend existing taxes more wisely" :eyeroll:), I'd love to hear them. This is a topic close to my heart, I still love Portugal.
But you don't fix that by offering tax breaks to well off laptop tourists from abroad. You fix that by investing in those construction workers and giving them tax breaks.
>Observing the tug-of-war HN votes on my post, some people must have taken that footnote as a cue for their ideological warfare du jour. Poor-vs-rich! Pitchforks now!
You seem to be victimizing yourself over nothing as people are allowed to have diverging options. It's not due to poor vs rich ideology as you imagine, is that those rich people you root for and the ones Portugal attracts don't contribute much to Portugal's economy or success but on the contrary help cause gentrification.
Investing in those construction workers that left might be better than investing in some foreign web devs who are here just for the partying and tax breaks.
>¹ Leaving aside that both numbers are high to begin with; 48% for anyone above €82k ridiculously so. That's no way to treat your productive population.
Most EU countries (where Portuguese also happen to emigrate to) also tax their high earners equally high: France, Belgium, Austria, Germany, Sweden, even Romania lol. and people there aren't rioting because of it. Only few countries have low-ish taxes or offer tax breaks to immigrants: Luxembourg, Netherlands are the ones that come to mind.
I doubt lowering the taxes for high earners is the solution that will fix all of Portugal's problems, as much as HN loves to see low income taxes fore them as an universal band aid for the entire economy, as if the entire economy is just tech workers and nothing else.
Maybe Portugal should first make itself more attractive to investors to come and create jobs, and spend its existing taxes more wisely at making life bearable for local low earners to stay and work there especially healthcare workers, before trying to become a tax heaven for high earning laptop tourists who will only spend money on nice rent and expensive cocktails but will fuck off the moment the gravy train stops.
Exactly. Corruption and efficiency of government are much more important as far as I can see. But they can’t be expressed easily in single numbers like tax or gdp so few seem to be great at campaigning on changing them and then actually changing them.
Taxes for rich are never any significant contribution to economy, not for places we talk about. They please poorer voters though, some sort of schaden freude that keeps the focus away from corruption, inefficiencies and massive structural problems in economies and lack of will or skill to tackle them by politicians (and lets be honest, 4-year election cycle ain't enough to fix big problems anywhere even for the best ones, especially if next voted government wipes it clean).
But what taxing rich accomplishes is that all those investors and high flying managers who are very smart and well educated in tax systems avoid such place as much as they can. Thats why Depardieu run off to Russia from France and its draconic system. And so did many others, ie to Switzerland, one of most famous is Alain Delon. And thousands of other, less known or unknown yet rich names.
It may be un-intuitive for unaware, but really don't punish your wealthy too much, they can leave almost anywhere and they often do to protect their wealth. Punish them just enough that masses are happy and rich don't leave. Its a fine balance that is unique for each nation and changes over time.
I don't have simple easy recipe for this, nobody has. But seeing a lot how rich actually think and behave, simple knee-jerk reactions almost never achieve intended effects down the line, state fights uphill battle with often smarter and better equipped folks.
>Taxes for rich are never any significant contribution to economy, not for places we talk about
Where was I talking about taxes for the rich?
>Thats why Depardieu run off to Russia from France and its draconic system.
Yeah, I'm sure the average French working class citizen suffered a lot from loosing Dépardieu to Russia, let them play you the world's smallest violin for that tragic loss.
Pretty sure the French citizen cares way more about retaining and attracting the likes of Datadog, Airbus and Renault who actually create skilled well paying jobs, than a entitled fat cats like Dépardieu who don't create any jobs.
> Most EU countries (where Portuguese also happen to emigrate to) also tax their high earners equally high: France, Belgium, Austria, Germany, Sweden, even Romania
Until about €10 to 25mm, at which point the tax shenanigans the EU affords would make the Congress blush. (I’ve seen exemptions that couldn’t apply to more than one family, and that was in Sverige.)
the median salary in Portugal is about 30k per year. Given that the tax break only applies to skilled workers that still has to bring in a ton of money. What's the average salary of an American software engineer working remotely from Portugal, 150k+?
How does the quote go, fifty percent of something is better than 100% of nothing? I don't see the harm in this, these people easily bring more in than they cost
>How does the quote go, fifty percent of something is better than 100% of nothing? I don't see the harm in this, these people easily bring more in than they cost
That's incredibly simplistic and reductionist way of thinking. That would mean that the most touristic places in Europe should see the most benefits because tourists leave a lot of money and 50% of that is better than 100% of nothing according to you, but the result is the opposite: those places have the crappiest jobs and wages and the most overpriced housing, resulting in the biggest wealth gaps nation wide.
If average workers gets nothing from that 50% of that something, as it all goes in the pockets of landlords, then they're better off with 100% of nothing as at least that will not cause their rent prices to spike. Because doing what you're advocating for, all you'll have is a large pool of wealthy foreigners spending their money raising property prices and the only jobs they create are low income ones like bartenders, maids and pool cleaners, not something you can improve an economy on. Welcome to places like Greece.
Like I said, you want to attract investors who create jobs for the locals, not more tourists who just raise living costs and only enrich a few asset owners while the locals stay even
poorer as they don't benefit from that 50% of that something.
Politically and socially, you're better off doing something that increases the upwards mobility and quality of life of the bottom 20%, than boosting the wealth of the top 20% hoping for some trickle down from that to eventually reach the bottom 20% as well because that mostly never happens.
Money is more like mercury and less like gold: dynamic and quick rather than solid and permanent.
It doesn’t “land” anywhere. Landlords spend it and invest it. When they invest it it goes to some business who then spends it.
If the landlords are rich enough, they may consider wildly risky invesments like tech startups.
If there’s enough rich people investing in businesses - not just tech startups - you end up with a thick ecosystem of companies and thus US-level wages.
That's nice theory from someone working in the tech sector, but that rubber never hits the road in practice in the real world, where the higher rents we're paying here don't magically translate into more tech investments.
You need some high quality hopium to actually believe that would happen. Making my landlords wealthier hasn't resulted in any benefits to any society I know.
> you'll see that private capital formation always played a critical role
Portugal's previous economic successes have always been state-adjacent, as every single other place on Earth: CUF had state monopolies, EDP, PT (state monopolies), TAP (state owned). Just like Silicon Valley, there's nothing private about takin money or privileges from the state and selling it as "hard work".
> If you wanna improve your economy you want to attract companies and investors who fund companies and create well paying jobs
That takes effort, and within the EU all the major regional consultancies like KPMG, PWC, McKinsey, etc have already been hired by Czechia, Romania, Poland, Bulgaria, Estonia, Hungary, etc to build and manage a mixture of Tax Holidays and FTZs/SEZs for tech companies.
For example, if I as a foreign tech company open a tech hub in Prague that hires at least 10 employees and spends $200k on assets, the Czech govt gives me a $8k per employee and gives me a 10 year corporate income tax holiday (so I end up saving an additional $8-10k per employee).
Romania, Poland, Estonia, Bulgaria, Hungary, etc all have similar programs as well.
Eastern Europe also benefited from immigration from Russia, Belarus, and Ukraine - ime at least 30-40% of headcount in these EU CEE offices are from those 3 countries.
Portugal is too late in the game. It isn't attractive enough for white collar immigrants in the Lusaphone (they can always immigrate to higher paying Boston) nor can it compete with Spain's support for industrial and pharma manufacturing and R&D. Nor can they compete with the Eastern European programs above which are already extremely generous because they are trying to compete with similar Israeli and Indian programs from 20-30 years ago.
Yes but in Prague tech salaries are on par or sometimes even higher than most of western Europe. And they are still rising, faster than western Europe.
Don't get me wrong, folks there are smart and know how to work hard for Europeans (at least those I've worked with), but low cost paradise it isn't, by quite huge margin. Prices of properties often equal to smaller places in ie Switzerland (live/lived in both so easy to compare). If you move out of Prague (and second biggest city Brno) salaries drop significantly, but so does availability and often also quality of the talent.
When I'm making a decision, it's not UK vs Czechia - it's America vs Abroad.
Salary doesn't play a major role when I decide where to build a foreign office.
Developer Salaries at the 70th percentile and above have mostly converged all over Europe (the countries I listed), Asia (Israel, India, China, Singapore), and the Americas (Costa Rica) and that anyhow gets offset by around $20-30k in tax credits, as all the countries above will give 10-15 year tax holidays, subsidizes, free land, etc depending on the size of FDI.
The choice to open a foreign office is simply because it makes it easier for me to ship more features and products in parallel.
This isn't old school outsourcing anymore where you'd ship off back office - now mid-level management and product decisions are made at those offices abroad.
This means all I care about when deciding on a foreign location is good tax incentives, a large software talent base, and local administration that is extremely responsive.
> Salary doesn't play a major role when I decide to build a foreign office
Seconding this. A side effect of sky-high Bay Area developer salaries and tech’s gross margins is the difference between Prague, Portugal and Hyderabad cheap is not super relevant for the highest-calibre companies.
I can agree with the basic premise of rising housing costs, but still call out BS with colonialism or inequality.
First. This same effect is already happening in 1st class cities like NYC, Sf, Miami or Toronto. Chinese, Saudi, Latin and Russian oligarchs come and buy up the entire housing inventory, making locals feel the squeeze. Is that colonialism? No. That's just very poor local policy.
Second, inequality. Take the exact same situation. Inequality is extreme in these cities and they are mostly progressive bastions. Why? Could it be that rich cities ineviably end up unequal? But then why youbhave unskilled very poor undocumented migrants flowing in?
Could it be that inequality is not itself repugnant, but instead lack of dynamism in economic opportunity, the real problem, one which the US does not have (for now)? Unlike EU royalty, who seem able to hold on tontitles and riches inherited from a millennia ago?
Third , if there are no benefits, why is this allowed in cities anyway?
I posit thwt There are benefits, but the majority of benefits do not flow to the right parties (middle class) and instead flow to the elites, who pay themselves salaries off the permits, real estate and VAT taxes skilled migrants generate.
So you have a problem originated from the ruling class. Not with skill migrants. Open up urban development, completely. Then make tax flow downstream. Problem goes away. Yet the elite class is not going to let go their golden goose and fire themselves in the process.
>So you have a problem originated from the ruling class. Not with skill migrants.
Like I said also, the ruling class is at fault, but please don't gaslight me like I have something against skilled workers because I don't. I only said that due to Portugals problems, importing remote workers from abroad on tax breaks doesn't fix the issues created by their elite, it only makes life worse for the average workers who now see raising property prices due to increased wealthy competition.
That kinds of skilled workers they would need most would be those actually useful for society like health workers, teachers, construction workers, not laptop workers for foreign companies on tax breaks who contribute next to nothing to the host countries but increase prices for everyone. You're not saving their economy buying two lattes and a cocktail per day on their beach front while you build a next tech giant for the US/Swiss/Swedish economy.
It doesn't directly, on net though, the average tech nomad is coming in with a salary that's 4-5x the average domestic worker, so that 20% goes a lot farther. Add to that nomads are far more likely to need to buy crap (26% vat), and best of all, leave once full freight taxes hit avoiding any long term dependence on the state.
Sucks for housing prices, but it's not a giveaway that it often gets suggested as.
I don’t really get the rationale. You’re effectively pursuing longer term tourists who are cheaper in spending habits on average and presumably want non-hotel housing. Maybe that’s a win in Tokyo but it’s not obvious to me why.
I guess it’s about having some short-term tax revenue from younger foreigners to help the state deal with an aging population. Since nomads eventually move away, the state does not include them in any pension system.
I guess although I believe a tourist visa for the US and some other countries is 90 days so I assume the incentive is to fly under the radar for that period (eg no coworking space) and then go somewhere else.
Perhaps I left out "trying to".. But really it means they have to raise their salaries for all doctors less to bring their compensation for hiring in new foreign doctors up to an acceptable level for some nation's expat doctors.
>, housing supply issues will be solved in 10 years - baby boomers dying.
Dying baby boomers will spend their wealth in retirement (on pleasure and healthcare), and it will end up in the hands of large financial institutions, not the next generation. Do you think this will solve housing supply issues?
This is a fair argument that's often brought up but I never see actual raw data backing it up. Housing is fucked in several places around the world, including a bunch of countries in Europe that don't have any tax breaks for specialized labor. I would love to look at some metrics like
- How many units of housing are built each year
- How many units are rented and to what demography (Portuguese families, immigrants sharing rooms, students, etc)
- How many migrants (legal and ilegal)
- How many specialized migrants each year and the % of them that eventually buy a home
- How many units are bought up by funds and other financial entities
- How much taxes and social security contributions are collected per year for specialized migrants and how that money is reinvested
- etc
I known that's basically impossible to have an accurate picture since those numbers are way too "politically loaded".
Politics and facts don't mix very well so we just default to who yells the loudest (specially true in Portugal, unfortunately)
Of course it doesn’t benefit the Portuguese. That’s not how Portugal is governed. It’s cynical, but that’s really how it is; learned helplessness on a national scale.
nomads pay taxes, then they leave – Portugal gets extra money to provide social services and does not need to care for those nomads when they hit retirement – saving the state money in the future
“The country’s Prime Minister Joaquim Miranda Sarmento” he is not the prime minister. That’s Luis Montenegro. Sarmento is the economy/finance minister.
Portugal isn't (just) Lisbon. I'd be curious to know what the situation is in Porto, Lagos, and other areas further out. If I were a digital nomad I'd probably be living there now, but in Nazaré, or maybe Coimbra or Faro.
Because they're awesome? Nazaré is a little beach town that is where the super-big waves hit in the early part of the year -- you may have seen the picture of the lighthouse at the end of the peninsula with the enormous wave in the background. For the record, that was taken with a ridiculous telephoto lens to compress the distance; I have a photo I took with an iPhone and it looks nothing like that.
When we lived in Portugal we spent a time in a rental room in the middle of an olive farm, and my wife loved it there. It was super-quiet apart from the goats wandering about.
Faro I'm just throwing in as "somewhere along the southern coast" -- it was nice there when we stayed there.
Porto is a wonderful city, very pretty.
If you're asking why Portugal in general:
- The weather is awesome: pleasant, not too hot except in the height of summer, and not too cold
- The people are super-friendly
- The food is good, and one of my favorite memories is running to the Pingo Doce to grab something to make for dinner
- There's history there: you can check out actual castles built to defend against actual invaders, you can see where past kings that ruled over world-spanning empires gathered together everything they found.
- The scenery is beautiful -- lots of beaches, clear skies, natural beauty, etc.
- It's easy to get around -- transit is a thing, trains are a thing, cabs are affordable
- Health care is affordable. We had to fill some prescriptions while we were there, and the person we were staying with said to go to the ER. We were dubious, but we did, and we were in and out in under half an hour, for under $30. And the prescriptions cost less to buy outright than the co-pay was in the U.S. with full insurance.
Not that I know Portugal well but smaller cities have attractions in many countries. In SE Asia the big cities would have zero attractions to me—not that multi-months of living elsewhere interests me at all.
The article is about tax breaks in Portugal, the comment was that Portugal is not only Lisbon. I don't think Asian or African countries or Siberia qualify as Portugal.
If one wants to move to Portugal, then they could consider other cities than Lisbon as an alternative because the real estate market in Lisbon is quite intense.
Persuading 'digital nomads' with established businesses isn't the same as encouraging and promoting home grown Portuguese businesses.
Also non-English speaking countries that set up an internet-based business are at an immediate disadvantage to the US and UK, unless their business is English-first. The US immediately has a market of 300m. The UK, 70m. The enough-English-to-get-by speaking 'West' / Europe is about 350m (of 700m) people. So, 700m Western English speakers in 'first world' economies.
> countries with schemes are Austria (2 regimes), Belgium, Cyprus (3), Denmark, Finland (2), France, Greece
(2), Ireland (2), Italy (5), Luxembourg, Malta (2 in 1), Netherlands, Portugal (2), Spain, Sweden, United Kingdom.
4
Belgium: Foreign executives’ regime, Finland: 32% rule regime, Sweden: Expert tax regime, Ireland: Non-remittance regime.
Those are countries with _some sort_ of skilled immigrant tax relief scheme. I doubt many are even in the same ballpark as the Portuguese one. The Irish scheme, at least, is _far_ more limited; it applies only to existing employees of foreign companies (ie people who transfer), is time limited, and applies only to earned income over 100k (30% of which is disregarded for income tax, though not social taxes). So, for someone earning 200k, the tax on the upper 100k would be at 40% instead of 52% (normally composed of 40% income tax + 12% social taxes, 0.3*40=12, 52-12=40). That’s worlds away from a 20% flat tax, on all income, forever.
Spain has special tax regime applicable to high qualified workers (in any region) and nomads (in some regions currently) who haven’t been tax resident in Spain for last 5 years (ie relocated recently). It’s 24% flat (under 600k per year) IRPF tax for 5 years.
Also, capital gains outside of Spain sourced income are not taxed in Spain.
Social security contributions are paid in full same as usual tax residents.
Tax treaty doesn’t apply for such tax residents though and it complicates taxes in general.
The Netherlands have/had a tax-break for all expats, but it's going away (has gone away?) now.
Sadly even centrists are conservative now and destroying the country in the name of, what... preserving culture?
Examples: Attempts to limit the number of tourists. Limiting number of flights from Schiphol. A ban on building new hotels. Removal of the expat tax-break. Limiting the number of foreign student in the universities. Mandating that less university classes are thaught in English and the list goes on and on.
I mean who in their right mind would say yes to more skilled labor and cash inflow into the local economy. Surely no-one! :rolls-eyes:
Well, all the populist comments here above (but definitely on reddit) where people make you believe everything is going to shit (I am Dutch and live in PT) seem to stir to pot enough to take populist (read: not working or possible even short term, but definitely not long term) decisions. NL shouldn't, nor should PT; the populist are a minority and the people who shout loud with the same 'ideas', don't 'want the tourists/foreigners/expats out'; they want more equality. That's fine, let's talk about that.
Second, the tax breaks were removed at the end of last year because of a widespread feeling in the general populace that these were deeply unfair policies that were understood at the root cause of gentrification and unreasonable real estate valuations. The median house price in Lisbon and Porto metro areas, are now above what the p95 Portuguese salary can pay. So yes, speculation and wealthy foreigners are an issue, as it's not Portuguese salaries propping these values.
Third, the party in power does not have a majority in parliament. This means they'll need support from other parties to approve this deeply divise tax break. While I'm sure they'll get the support from the Liberal party, I'm seriously doubtful they'll get it from the other parties. It's also quite likely that we'll have new elections in the next 12 months and the party in power, despite many populistic policies in the last 4 months since they won by a few thousand votes the election, has not yet been able to gain a wider trust from the voters since then. I doubt this tax break will see the light of day anytime soon.
Fourth and finally, there has been zero talks about this in Portuguese media. I feel this is more of a politician talking out of his ass without double/triple checking with the prime minister.