Portugal is finally reducing corporation tax and income tax to stimulate the economy, heading in the opposite direction to the UK.
Corporation tax will be reduced from 21% to 15% over 3 years.
The new government has the intention of Income tax with a maximum rate of 15% for most people under the age of 35, and the majority of people will see reduced income tax.
But, to be fair, this is addressing the very high tax burden in Portugal that has been strangling growth for years. And there is no mention of a reduction of social taxes (the equivalent of National Insurance).
As an example, I currently pay around 30% social taxes, with a total tax burden of 51%. Dividends have a flat 28% rate, compared to a sliding scale of 8.75% to 39.35% in the UK.
It's been much more difficult to do business in Portugal compared to the UK (I run companies in both countries); these moves to reduce tax are good news for Portugal, and I hope this trend continues, so companies here become more competitive.
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