The tax regime for former residents under the “Programa Regressar” was extended until 2026 with the 2024 State Budget, although including some changes. 

The tax benefit, created in 2019, is aimed at former residents who return to Portugal and it entails a personal income tax rate (IRS) exemption of 50% on labour income for a period of five years.

However, the 2024 State Budget provides for some changes to the regime, namely regarding the access requirements. Therefore, to benefit from the exemption, it is now necessary for the taxable person not to have been resident in Portugal for the previous five years, instead of the three years formerly required.

Additionally, the income covered by the regime will be capped at €250.000 which is the upper limit of the first income bracket subject to the additional IRS solidarity rate.

The latest amendments to the 2024 State Budget also clarified that only those who have been tax residents in Portugal for any period prior to the last five years can benefit from the regime.

This tax benefit remains applicable to income from the following categories:

• Dependent work
• Business income, inherent to the pursuit of a commercial, industrial, agricultural, forestry or livestock activity
• Professional income resulting from a provision of services activity.

The new access conditions only apply to taxable persons who become tax residents between 1^st January 2024 and 31^stDecember 2026.