In summary, salaries need to rise (and they are), and the tax system needs to raise its thresholds accordingly (and it hasn't yet?). Note that the increase in housing costs has been largely driven by AirBnB etc, like much of the more desirable to tourists parts of Europe. Digital nomads (working remotely, almost by definition, and not getting paid that much in the grand scheme of things, again almost by definition) a…
Portugal is broke, there is no easy solution, they need their taxes (actually even more than now).
Shift burden from income tax -> property tax. My country (Croatia) has a similar issue and the finance minister even said he thinks this is the correct move but there's no "political will" to do this.
As I wrote elsewhere, paying into the social security in Portugal with a salary of 80.000 Euros means paying 88% in taxes and social security. Do you think that is reasonable? Additionally everyone I know has their own insurance and pays for all of their health bills. And that‘s only for urgent things, planned surgeries are usually done in the home country anyway.
88% being the marginal rate? I’m assuming if you’re paid €80,000 in a year you take home more than €9,600 The way you wrote this makes it sound like people only take home €9600 on €80000 and thats rather misleading.
> Digital nomads (working remotely, almost by definition, and not getting paid that much in the grand scheme of things what are you talking about?? to be a digital nomad, you have to spend significantly more to sustain traveling and the added expenses of short term rentals. I could cut my costs in half if I just stayed in one spot for a few months. A typical apartment is going to cost half of an equivalent airbnb and…
> you have to spend significantly more to sustain traveling and the added expenses of short term rentals my understanding is that digital nomads pay LESS than they would in their home country by choosing cheap CoL countries
There is a limited supply of apartments. If a digital nomad lives in one, then a native portuguese can't live there. This is basic math.
What limits the supply? Are they not allowed to build new apartments in Portugal?
I don't know the answer to that exactly, suffice to say that I'm all in favor of building apartments, but there is no obvious limit to how many people might want to live in a city. If Lisbon is a global city, there's no amount of apartments they can build to ensure that there are enough for natives.
88% being the marginal rate? I’m assuming if you’re paid €80,000 in a year you take home more than €9,600 The way you wrote this makes it sound like people only take home €9600 on €80000 and thats rather misleading.
I'm not sure I quite understand the structure, but it does look relatively high: https://en.wikipedia.org/wiki/Taxation_in_Portugal The calculator here shows it's not anywhere near 88% though in most cases: https://investomatica.com/income-tax-calculator/portugal Income Before Tax 80 000 € Income Tax - 25 472 € Solidarity Rate Tax 0 € Social Security - 8 800 € Total Tax - 34 272 € Take Home Pay 45 728 € Total Deducti…
Because the calculator does not really take into account the 35% social security if the money is paid by a foreign entity to the foreigner directly.
@binarycrusader: I can‘t reply below. It‘s not 35% but 34,75%. It‘s easy to find that online and this rate is not depending on the person. A foreigner or nomad does by definition not have a Portuguese employer. They have to pay the employer part themselves. It‘s that simple.
@binarycrusader: It‘s mentioned on countless sites related to the NHR and Golden Visa and all of these things. I talked this through with two Portuguese accountants. Is that enough?
I'm not sure I quite understand the structure, but it does look relatively high: https://en.wikipedia.org/wiki/Taxation_in_Portugal The calculator here shows it's not anywhere near 88% though in most cases: https://investomatica.com/income-tax-calculator/portugal Income Before Tax 80 000 € Income Tax - 25 472 € Solidarity Rate Tax 0 € Social Security - 8 800 € Total Tax - 34 272 € Take Home Pay 45 728 € Total Deducti…
Because the calculator does not really take into account the 35% social security if the money is paid by a foreign entity to the foreigner directly. @binarycrusader: I can‘t reply below. It‘s not 35% but 34,75%. It‘s easy to find that online and this rate is not depending on the person. A foreigner or nomad does by definition not have a Portuguese employer. They have to pay the employer part themselves. It‘s that sim…
Sure, but the social security contributions and tax rates vary wildly based on who your employer is, etc. so it's misleading to claim it's 88% without specifying the specific conditions. Also, according to the WikiPedia page, none of the Social Security Contribution rates are exactly 35%. Would you care to share the exact conditions? I don't read this the same way: can you point to which "Social Security Regime" on the WikiPedia page you believe this falls under?
I'm not sure I quite understand the structure, but it does look relatively high: https://en.wikipedia.org/wiki/Taxation_in_Portugal The calculator here shows it's not anywhere near 88% though in most cases: https://investomatica.com/income-tax-calculator/portugal Income Before Tax 80 000 € Income Tax - 25 472 € Solidarity Rate Tax 0 € Social Security - 8 800 € Total Tax - 34 272 € Take Home Pay 45 728 € Total Deducti…
Because the calculator does not really take into account the 35% social security if the money is paid by a foreign entity to the foreigner directly. @binarycrusader: I can‘t reply below. It‘s not 35% but 34,75%. It‘s easy to find that online and this rate is not depending on the person. A foreigner or nomad does by definition not have a Portuguese employer. They have to pay the employer part themselves. It‘s that sim…
88% being the marginal rate? I’m assuming if you’re paid €80,000 in a year you take home more than €9,600 The way you wrote this makes it sound like people only take home €9600 on €80000 and thats rather misleading.
It‘s not misleading. You take home 9600 in my opinion. What you call the marginal rate is applied to the full salary as far as I know. And the social security is also applied to the full amount unless the person is employed by a Portuguese company that would pay half. Even the most optimistic tax accountants say around 70% minimum is to be paid with various options applied. That would leave 24.000. Portugal has many…
3 words make your argument smell: "in my opinion". Are we talking facts or your opinion being represented as facts?
"digital nomads" are normally looking for location arbitrage, so they are not high earners, normally cheap-skates. Remote workers might be more likely to create inequality, but seriously how many are they? If they create price pressure then it means there s very little housing stock in the first place.
My back of the envelope estimate is that the nomads make up around 1-4% of the Lisbon population. That‘s certainly not insignificant. On the other hand, the young Portuguese have been leaving the country since 2009. Millions of them earn salaries in central and northern Europe. They left without any nomads coming to Portugal. Shouldn‘t these millions benefiting from european freedom of movement justify a mere 20k nom…
> Shouldn‘t these millions benefiting from european freedom of movement justify a mere 20k nomads in Lisbon?
Portugal is making very little money from its emigrants anyway. I doubt they have more than 100k nomads, i suppose most of them would live in the biggest cities, and while they make the housing problem worse, most likely the problem would exist without them because portugal has the same structural problems with other southern eu countries. (Plus nomads by definition move elsewhere over a short time)
> Digital nomads (working remotely, almost by definition, and not getting paid that much in the grand scheme of things what are you talking about?? to be a digital nomad, you have to spend significantly more to sustain traveling and the added expenses of short term rentals. I could cut my costs in half if I just stayed in one spot for a few months. A typical apartment is going to cost half of an equivalent airbnb and…
> you have to spend significantly more to sustain traveling and the added expenses of short term rentals my understanding is that digital nomads pay LESS than they would in their home country by choosing cheap CoL countries
certain things are cheaper compared to what they were paying at home. but you're still going to be spending more than a local would for the same amenities.
Case in point, I can spend $2400 for a basic 1 bedroom apartment in San Francisco or nyc or I can spend $1000 to live in a luxury villa in Bali or a nice furnished apartment in medellin colombia.
so yes they are spending less. but they are hardly low income by any stretch.