Caiado Guerreiro’s Tax and Social Security team has analyzed the proposed State Budget 2024. It presents a summary of the most impactful measures in the field of taxation, with emphasis on the IRS, Non-Habitual Residents, the Return Program, goodwill amortization, companies and, very notably, indirect taxes.
1. Updating IRS rates for the first five brackets
The 2024 State Budget proposal stipulates that personal income tax rates up to a taxable income of €27,146.00 will be reduced by between 1.25% and 3.5%, and the limits of the personal income tax brackets will be updated by around 3%.
2. Non-Habitual Residents Regime
The 2024 State Budget proposal confirms that the Portuguese state will no longer accept new registrations under the tax regime for non-habitual residents from 2024.
Creatively, a new regime is enshrined in the Tax Benefits Statute, which grants similar conditions to those who, meeting the exact requirements, have their activity directed towards:
* Teaching in higher education and scientific research.
* Qualified jobs with contractual benefits enshrined in the Portuguese tax system.
* Post-doctoral jobs in R&D under the Portuguese tax incentive system.
3. “Return Program”
The application of the regime is extended to people who become tax residents in Portugal in the years 2024, 2025 and 2026, provided that they have not been residents in Portugal in the previous five years. However, this exclusion from taxation is limited to €250,000.00.
4. Young IRS
Higher tax exemption percentages have been introduced for the Young Personal Income Tax (IRS Jovem), thus further strengthening the tax regime applicable to income earned by young workers between the ages of 18 and 26 (or up to 30 in the case of completing a doctorate), corresponding to:
* 100% in the first year, with a limit of 40 times the IAS;
* 75% in the second year, with a limit of 30 times the IAS;
* 50% in the third and fourth years, with a limit of 20 times the IAS;
* 25% in the fifth year, with ten times the IAS limit.
5. Change in the amortization period for goodwill
The cost of acquiring goodwill obtained in a business combination will now be accepted as a tax expense, in equal parts, during the first 15 tax periods (5 less than currently).
6. Start-ups
Entities qualified as start-ups will now be subject to corporate income tax at 12.5% on the first €50,000.00.
7. Reduction in autonomous taxation
A reduction of around 2.5% in the rates of autonomous taxation on charges for light passenger vehicles, certain light goods vehicles, motorcycles or motorcycles.
Charges related to vehicles powered exclusively by electricity under certain conditions are excluded from autonomous taxation.
8. Stamp Duty Exemption on Housing Loans
An exemption from stamp duty is established for using credit within the scope of operations to temporarily fix the instalment and capitalize the amounts deferred in the loan’s value.
9. Vehicle circulation tax
The rates applicable to vehicles in categories A, B and C are increased by around 3%. The IUC for vehicles registered before 2007 will be increased from 2024.
10. Contribution to light and very light plastic bags; contribution to single-use packaging
The contribution on plastic bags has been extended to include very light bags, now costing €0.04 per bag. In addition, a contribution to the introduction into the consumption of single-use packaging is established, with a value of €0.10 per package, which must be passed on to the final purchaser, plus an amount of no less than €0.20 – thus totalling €0.30.
For further support, please contact Ana Castro Gonçalves or Laura Gaudêncio Borges.
The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.