Under the final version of the 2020 State Budget, pensions will no longer enjoy full exemption from taxation in Portugal. Instead, pensions will be subject to a flat tax of 10%. A minimum levy of €7,500 had been proposed, but this measure was eliminated in the final version of the Budget.
The national minimum wage in Portugal rises from €600 to €635 in 2020, a measure that should benefit 720,000 workers. The modification translates into a net salary increase of €31.13 per month (in 14 payments per annum). This basic salary is tax-exempt from Individual Income Tax (IRS). Workers pay only 11% in Social Security contributions. In the EU, the monthly national minimum wage ranges from a high of €2,090 in Luxembourg to a low of €312 in Bulgaria.
The Government is studying incentives for migrating short-term local lodging to affordable long-term leases. It is not yet known how the Government plans to accomplish this objective. It may become possible to change the fiscal regime that requires the payment of capital gains when the property is no longer assigned to a professional activity and returns to the sphere of the owner.
In all, Brexit is set to cancel eight million tourists travelling in 2021. In Spain alone, there should be 1.3 million fewer UK nationals travelling according to projections of the European Travel Commission. Without a Brexit agreement, British travel should fall by 7% by 2020 and 8% the following year.
Beginning in January of 2020, a modified catalogue of business activities comes into force, benefiting a favourable tax regime aimed at attracting professionals with diverse skills to Portugal. These occupational profiles are now extended in light of the difficulties experienced by employers in various sectors in hiring workers since the inception of the Non-Habitual Residency Regime 10 years ago. Continue reading
Location coefficients will be updated this year. ASAVAL (Association of Professional Appraisers), the Association that represents real estate evaluators, recognises that the market has gained stability, but reminds the public that the coefficients have to continue to reflect the dynamics of the market. The last revision of the Location Coefficient occurred in 2015 and had an impact on tax assessments for 2016, 2017 and 2018.
The “AT” (Tax Authority) has revealed plans to review the Location Coefficient (“CL”) of immovable properties by the end of August. The new localisation factor will be approved by the end of the year, coming into effect in January 2020. Finanças targets updates to the Ratable Value of real estate (“VPT”) at 85% of average property prices in each location.