State Budget 2024 – Key measures on Income Taxation

RETURN TO PORTUGAL TAX RELIEF EXTENDED 

Return to Portugal tax relief program – 50% tax break on employment or self-employment income for 5 years – is extended until 2026, but now with the added limitation that the eligible income cannot surpass € 250.000 per year.

As a reminder, here are the main requirements to be eligible for this tax relief:

1 – Become a tax resident in Portugal until 2026;

2 – Not have been tax resident in Portugal in the last 5 years;

3 – Have been a tax resident in Portugal in any year prior to that 5 year absence;

4 – Have its tax affairs in order.

YOUNG WORKERS TAX RELIEF 4.0

The Young Workers Tax Relief Program (which provides for a partial tax exemption of the first years of income after graduation) is further enhanced as follows:

IAS 2024: € 509,26

NEW REPORTING 

Tax payers will now need to report two additional items in their yearly tax return:

1 –  Income subject to final withholding tax or exempt from PIT (when greater than € 500);

2 – Assets held in countries, territories or regions with a clearly more favorable tax regime.

BALANCE SHEET BONUS

Balance sheet bonuses (meaning profit distribution in favor of employees) are now exempt from PIT up to a monthly salary – as long as it does not surpass 5 x RMMG [ 5 x € 820]. However, in order for the employee to be eligible for this tax break, the employer needs to conduct a nominal increase in fixed remuneration of all employees in 2024 equal to or greater than 5%.

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