Pedro Garcia
Report in technology, Lisbon
Duarte dias
Lisbon, Dublin and Seattle – like many Duarte Dias have moved to move upwards
In 2020, Duarte Dias, Portuguese software engineer, accepted a job offer to work in the Microsoft Dublin subsidiary.
A little over a year later, he joined a team at Microsoft headquarters in Seattle, where he still works.
Even if the Portuguese casual approach is missing from life, and the family team spirit of work environments there, he does not regret, for a second, his choice to pursue an international career.
Mr. Dias’s decision was more easily taken by the financial impact of the move.
The verdict of the spreadsheet was clear: staying in Portugal would be financially ruinous.
“I made simulations of the quantity of money that I would save per year in Portugal, and I quickly realized that I would not be able to have a financially comfortable life, even if I got the “One of the most well -paid engineering jobs for my level of experience,” explains.
A two -year professional experience in Portugal while Mr. Dias concluded his master’s degree at the Lisbon Institute Técnico cemented his conviction: his annual income amounted to € 35,000 ($ 36,000; £ 29,000).
But his wages to take away was a lot, even less.
His income placed him in a tax bracket which meant that up to 40% of this gross salary had gone to the state.
“Financially, it was bad. It would be very difficult to save money if I did not live with my parents,” he recalls.
Moving to Ireland meant an immediate hike from its salary prospects, doubling almost € 60,000.
The money is even better in the United States, where it now earns more than $ 160,000 before a tax rate of 20%, much lower than at home.
Mr. Dias intends to return to Lisbon in two years with “with many other savings”.
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Portugal is an attractive place to live, but many young people still go abroad
Keeping qualified workers like Mr. Dias in Portugal has been a concern for recent governments.
In 2020, the administration led by the Socialist Party Antonio Costa launched Irs Jovem, a tax reduction program for workers under the age of 30 and leveled by the level of education.
In 2022, 73,684 taxpayers benefited from this incentive, according to official data.
After an early election in March, the new Portuguese government of center-right led by Luis Montenegro doubled the idea and extended it from five to 10 years, and to all workers under 35 years old regardless of their level D ‘education.
The proposal, adopted by the Portuguese Parliament at the end of November, should benefit up to 400,000 workers, according to the Portuguese Ministry of Finance.
But specialists say that it will probably not be enough to prevent young people from going abroad.
“It is unlikely that, in itself, the tax regime will make young workers in the country, whether because professional opportunities are more abundant in foreign countries, or due to the fact that this tax advantage does not apply that at annual income of less than € 28,000, “said Sérgio Vasques, professor of tax law at the Católica Lisbon School of Law.
He stresses that the Portuguese government has more wages of the average worker than most richer nations.
Known as the tax gap, the ratio between the amount of taxes paid by a single single worker without children and the total cost of the corresponding workforce for the employer, is 42.3% in Portugal.
It is the highest 8th among the 38 OECD member countries.
“This is a tax regime which is an enemy of qualified work and professional success. This regime will not solve this problem,” adds Vasques.
Mr. Vasques, also former Secretary of State for Tax Affairs in the early 2010s, adds: “I cannot imagine a young professional deciding to move to Portugal just because of a few hundred euros additional at the end of the ‘year.
“Even an unskilled worker will not make a decision on the basis of this. Portuguese food probably works better as an incentive to move here than this tax regime.”
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Poland also has measures in place to prevent young people from heading abroad
Rita de la Feria, president of tax law at the University of Leeds, recalls that the exodus of young people is not only a Portuguese problem and that Europe is struggling with the challenges of young emigration.
According to a study requested by the Portuguese Parliament, in July, in the European Union of Portugal, Poland and Croatia had special tax regimes based on the age of taxpayers.
“The challenges are very obvious: workers’ mobility is higher. The problem is that the country spends very large quantities for training to leave for other countries as soon as they enter the labor market” , she said.
Mme de la Feria, who moved to the United Kingdom at a young age, told BBC that when she had left Portugal, she did not intend to “leave for good: many leave their countries Originally thinking that they will come back at some point.
Antonio Almeida
“Low salary” The problem in Portugal dit Antonio Almeida
Antonio Almeida, a software engineer like Mr. Dias, left Portugal during the pandemic at the end of 2020 for a job in Berlin, just after finishing his diploma. He would change the German capital for Brussels two years later. All his work experience was done abroad.
“In 2020, we were offered monthly wages of € 1300, gross, in Lisbon. Berlin offered me € 4,200 for a junior role.”
Even with a tax rate of 40% in Germany, there was a considerable net gain. “It was not a difficult decision,” said Almeida.
Now in Belgium – where the taxes are higher, he underlines – going back to his homeland is not a priority. “I finally think of coming back, mainly for family reasons.
“But for the moment, my life standards are very high and I like the lifestyle of central Europe. And the main problem in Portugal is low wages, not taxes.”
Mr. Almeida does not consider Portuguese tax changes as a major factor when considering the advantages and disadvantages of going home.
“Until today, I never thought about it.”
Mr. Dias agrees: “Wages outside Portugal will be always higher, and all those who have no personal or family ties to the country will have no financial incentive or career to stay there”.
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