(Bloomberg) -- Portugal plans to end the non-habitual resident regime that offers lower tax rates during 10 years for some people who move to the country as Prime Minister Antonio Costa takes further steps to face the country’s housing crisis.
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The regime will end for new residents in 2024 and will remain in place for those who already benefit from it, Costa said in an interview with CNN Portugal on Monday evening.
Earlier this year, the government also approved a plan to end its golden visa program for foreign property buyers as it tries to address the lack of affordable housing in one of Western Europe’s poorest economies following a surge in home prices.
“It doesn’t make sense to continue to keep a tax level for non-habitual residents,” Costa said. That measure “once made sense. Keeping that measure for the future is extending a measure of tax injustice that isn’t justified, and is also a way of continuing to inflate the housing market. It shouldn’t be inflated, quite the opposite, as prices that are absolutely unsustainable have been reached.”
Housing prices in Portugal have continued to rise as demand from international buyers helps the market defy pressure from higher interest rates. The golden visa program and other incentives have helped attract property buyers from countries including China and the US.
The finance ministry said in July that a total of 89,000 people have so far benefited from the non-habitual resident regime. Those who qualify can get tax rates of 20% on income and 10% on pensions.
(Updates with details on housing prices in fifth paragraph, tax regime in sixth.)
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