"Full Tax Exemption for Under 35s for One Year"... 30% of Youth Emigrate from 'I Nara'

Portugal Announces Tax Reduction Policy for Youth Population
100% Tax Exemption in the First Year... Spending 960 Billion Won

Portugal is making every effort to attract young talent. Over the next 10 years, it plans to offer tax reductions to both domestic and foreign youth.

On the 10th (local time), British broadcaster BBC and financial media Financial Times (FT) reported that the Portuguese government included a policy to ease the tax burden on 'youth under the age of 35' in the 2025 budget.

The policy applies to those earning an income of 28,000 euros (approximately 41 million KRW) or less. In the first year, taxes will be fully exempted, then the exemption rate will gradually decrease to 75% (years 2-4), 50% (years 5-7), and 25% (years 8-10). It is estimated that about 350,000 to 400,000 young people will benefit from this policy.

Portugal. Photo is not related to any specific expression in the article [Image source=Pixabay]

Joaqim Sarmento, Portugal’s Minister of Finance, explained the significance of the policy as "a measure to attract young talent to Portugal and enable them to stay."

The Portuguese government introduced this policy to reverse the country’s chronic 'brain drain' problem. According to the Portuguese Immigration Observatory, about 850,000 young workers live abroad, accounting for 30% of the population aged 15 to 39.

FT pointed out that "Portugal is among the countries with the highest emigration rates within the European Union," and that "Portugal has suffered economic difficulties due to the outflow of young talent." The main cause of the brain drain is known to be low wages compared to high housing costs. While real estate values have surged, increasing housing expenses, the average monthly salary in Portugal is only 1,640 euros (approximately 2.42 million KRW).

The Portuguese government plans to allocate a budget of 650 million euros (approximately 960 billion KRW) for this youth tax reduction policy. However, for the budget to be realized, it must pass the final vote in parliament. The budget proposal also includes a corporate tax cut, and it is uncertain whether the largest opposition party, the Socialist Party, will agree. FT observed that "if the budget does not pass, the future of the current center-right government led by Prime Minister Luis Montenegro will be uncertain."