IRS Jovem is open to foreign young taxpayers who want to move to Portugal. This personal income tax benefit applies to both Portuguese nationals who are returning to the country and foreign individuals who choose to make Portugal their home.
It’s already in place but the new government will introduce changes to make it more inclusive. These changes will be voted on October 31 and finalised by the end of November.
The goal is to attract foreign talent and investment to Portugal and retain local talent. But the rules for foreigners to prove their eligibility are still unclear.
Currently the tax benefit lasts 5 years and is decreasing. The program offers a partial tax exemption so participants are tax exempt on a portion of their income.
To qualify you must meet the following criteria: you must have completed secondary education or higher between 18 and 26 or have a PhD (eligibility extends up to 30) and file separate tax returns from your parents.
You can benefit from this program until 35. The first year is crucial as it starts a 10 year period during which young people can benefit from these tax exemptions.
The new government will introduce 3 main changes to the regime:
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Extend the benefit period to 10 years.
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Widen the eligibility age to 35 regardless of education.
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Increase the income threshold.
We’ll wait until the end of November to see the changes to this tax regime.
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What is IRS Jovem?
IRS Jovem is a tax benefit introduced by the Portuguese state budget to support young people in their early careers.
This program offers a partial exemption on income from dependent work (category A) and independent work (category B) for a limited period.
The main goal of IRS Jovem is to reduce the tax burden on young people’s income so they can study and enter the job market smoothly.
By reducing some of the financial pressure this benefit allows young people to focus on their career and contribute to the economy.
Eligibility and Requirements
To be eligible for IRS Jovem young people must meet certain criteria. Firstly they must be under 35 years old. Secondly they must have income from dependent work (category A) and/or independent work (category B).
They must not be dependent on others for their living. Eligibility also requires that they have started working after completing their higher education studies or double certification courses.
They must not have previously benefited from the IRS Jovem scheme.
Young people who meet these requirements can benefit from IRS Jovem for a maximum period of 10 years or until they are 35 years old, whichever comes first.
This extended period gives them time to establish themselves professionally while enjoying the tax benefits of the program.
