Lisbon The Portuguese government has announced that it will no longer grant tax exemptions to foreign pensioners from 2024 PortugalAntonio Costa, the measure is necessary to prevent the increase in property prices amid the country’s housing crisis.
“Maintaining such a program in the future would prolong an unjustified level of fiscal injustice and would be an indirect path for a further increase in real estate market prices,” the head of the socialist government said on Monday in an interview with CNN Portugal on the night of March 2. The exemptions already granted would remain in force in December.
This exemption, introduced in 2009 for foreigners living in Portugal at least half the year, was valid for ten years and was valid until 2020. Since then, new arrivals have been able to benefit from a reduced tax rate of 10%.
The measure, which came into effect after simplifying the procedure in 2012, was aimed at attracting foreign capital to the country, which was in a debt crisis.
Around 10,000 people benefited from this, most of them French, British or Italian pensioners, who settled primarily in the Lisbon region or in the seaside resorts of the Algarve (South Algarve) and contributed enormously to the revival of the real estate market.
The provision has regularly been cited as one of the factors behind rising property prices “Golden Visas” Residence permits for wealthy investors or tax advantages for “Digital Nomads”.
Portuguese took to the streets to protest against rising property prices. Photo: Patricia de Melo Moreira/AFP
According to a study by the Portuguese Francisco Manuel dos Santos Foundation, property prices increased by 78% in Portugal between 2012 and 2021, compared to 35% across the European Union.
Average rent rose 11% yearonyear in the second quarter of 2023, according to official data released last week.
Faced with this scenario, thousands of Portuguese took to the streets on Saturday in Lisbon and around 20 other cities in the country to demand tougher measures from the government.
“I cannot hide a certain frustration, not to say a great frustration, when I realize that the reality was much more dynamic than the ability to respond politically,” the Prime Minister admitted in the interview.
His government recently adopted a series of measures to curb property prices, including an end to “golden visas,” or forced rentals, of apartments that have been vacant in the most populous regions for more than two years.
And to help nearly a million families, he decided last week to give those who borrow money from the bank a reduced interest rate for two years.