Portugal knew how to ride the wave of remote work like few others in the immediate aftermath of the pandemic. As soon as restrictions were lifted, the Portuguese government launched a series of fiscal measures to attract highly skilled digital nomads who would act as a pole for local growth by stimulating consumption.

On paper it was a good plan. The problem is that the local market has adapted to the economic capabilities of these new neighbors, forgetting the very low wages and purchasing power of Portuguese who cannot afford to rent or rent a house. And it happened: Young Portuguese are leaving Portugal.

Digital nomads and tax privileges. In 2022, Portugal introduced a “digital nomad visa.” This visa allows remote workers from countries with stronger economies. One of the few requirements to obtain this visa was to have an employment income of at least four times the Minimum Interprofessional Wage in Portugal. Accordingly, Portugal NewsAs of January 2024, this figure has increased to 820 euros, leaving the salary for digital nomads to access the digital nomad visa in Portugal at 3,280 euros.

To encourage the arrival of digital nomads with pockets full of cash, Portugal implemented a series of tax breaks. But the measure widened the gap between newcomers and locals, who not only pay less for goods but also pay more in taxes. Portugal froze the tax break at the beginning of 2024, as did Spain and other European countries.

Flight of Portuguese talents. Efforts to attract foreigners to Portugal have caused major collateral damage: Portugal now faces a serious brain drain among its youth, according to data published by the Lisbon Migration Observatory Schengen News25% of the Portuguese population lives outside Portugal.

According to data, almost 40% of young Portuguese graduates emigrate each year in search of better job opportunities. Portugal Business Roundtable. Vítor Ribeirinho, CEO of KMPG in Portugal, told the media: “We are reducing the capacity to retain the best. The government and everyone must understand that something must be done with young people. If we do not do it, we risk them starting their careers abroad. The decisive factor to stop the situation is salaries, the manager stated.

Reason: low wages, expensive housing. According to Euronews, the minimum monthly wage in Portugal is €820, with 50% of the population earning less than €1,000 per month. This confirms estimates of average salaries in Europe, placing Portugal just ahead of Greece, Slovakia and Hungary in terms of European salaries. The average monthly salary in Portugal is €1,289.50, according to consolidated data from the National Institute of Statistics (INE) for 2021. Provisional data for 2024 shows an average salary increase of 4.3% compared to 2023, reaching €1,463. Portugal News.

According to INE data, rental prices in Portugal increased by an average of 10.5% last year. This increase in the cost of living is severely affecting local residents who cannot access the affordable housing market and is intensifying the migration of young people in search of better conditions.

Squaring the nomads’ circle. The Portuguese government is trying to balance attracting foreign investment with improving local conditions. Luck Portuguese Prime Minister Joaquim Miranda Sarmento has announced the reintroduction of tax benefits for foreigners. These measures aim to restore the 20% reduced tax rate on salaries and income for certain “high value added” jobs, excluding exemptions for dividends, capital gains and pensions.

The withdrawal of this exemption aims to represent Portugal as an attractive destination for digital nomads, striking a delicate balance between attracting qualified foreigners and looking after the well-being of the local population.

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