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Wealthy foreigners bring money from the outside into Portugal, so they are net positive. And not only money, but also knowledge, culture and diversity. Local re

Wealthy foreigners bring money from the outside into Portugal, so they are net positive. And not only money, but also knowledge, culture and diversity. Local restaurants are happy, local landlords are very happy, who is not happy is local renters. Maybe the tax should be imposed on the landlords' windfall profits instead?

leononame 2y ago
They might or might not be a net positive. I think it's more complicate. It's not just money, but also where the money is going and what it is achieving. E.g. a lot of wealthy foreigners will increase the rent, prices for restaurants and services. Oftentimes, the quality of restaurants/services might go down (because if you cater to a crowd that only stays a couple of months, there's not the same need to get these people to come back. That are changes that are often received negatively by the locals. Foreigners also make use of public services like streets, public transport etc., often without paying income tax.
kranke155 2y ago
I cant help but laugh at the simplification. Net positive for whom? Landlord and restaurants are happy vs the rest of the population (99%). Its a monstruous policy, considering wealthy nomads pay way less tax than locals.
- deleted 2y ago
  [deleted]
- EVa5I7bHFq9mnYK 2y ago
  Sure about 99%? Tourism is 20% of Portuguese GDP. There are 66,000 real estate companies in Portugal. So many more than 1% benefit from wealthy foreigners. The reason there are many poor people has nothing to with techbros with laptops. Better fix your bloated and corrupt public sector.
  - JetSpiegel 2y ago
    The "corrupt public sector" has been focus of complaints at least since the 19th century, across three regimes, but the number of children living on their parents' homes increased after the foreigners with laptops bought the damn houses, either directly, or through real estate funds.
  - kranke155 2y ago
    Most people I know who work in real estate companies don't get rich.
- ithkuil 2y ago
  I feel you may be swinging the pendulum too far in dismissing the second order effects of money being spent. Do the landowners and restaurant owners not pay taxes in Portugal? Do they spend all they new income abroad?
  - ryandrake 2y ago
    It's somewhere in the middle, probably. People talk about wealthy foreigners, tourists and so on "bringing money to an area" as if that money is being uniformly dumped from a helicopter onto everyone. That's never what happens. It goes into the pockets of a relatively small handful of people/businesses, those people will spend a fraction of it, and downstream people will spend another fraction, and so on. It trickles a little, but the entire community is not benefiting uniformly.
    - EVa5I7bHFq9mnYK 2y ago
      That's what I suggested in my heavily downvoted comment - "Maybe the tax should be imposed on the landlords' windfall profits instead?"
  - EasyMark 2y ago
    There is rarely one solution or “cause” when considering something as complicated as the economy. It’s really easy for politicians to play on the fears of the masses. There seems to be a solid 20-40% of ANY country that is willing to place all blame on “the other” rather than realize it’s a complex situation. So foreigners are an easy thing to pin all issues on for a politician to gain power, and it takes a complete failure of their flawed theory to convince the population that “hmmm maybe there isn’t an easy fix” by blaming foreigners. I see this nonsense all the time in Texas.
  - kranke155 2y ago
    The biggest second order effect is Portuguese people can't afford to live in major cities anymore. Taking that into consideration the remainder is a bit academic.
    - 2y ago
- moltar 2y ago
  It’s absolutely not true. I spoke to a very well informed and educated tax lawyer on this topic. The majority of taxes collected in Portugal come from VAT and not income taxes. Something like 30% of working Portuguese people don’t pay any tax especially when you factor in all of the various deductions and incentives. The rest pay some but not much in absolute terms. A remote digital nomad will pay more in absolute terms even with the 20% cap. So all in all it’s an absolute gain to a Portuguese economy.
  - JetSpiegel 2y ago
    > The majority of taxes collected in Portugal come from VAT and not income taxes. That's a bold face lie, unless by majority you mean less that 50%. https://info.portaldasfinancas.gov.pt/pt/dgci/divulgacao/estatisticas/Pages/default.aspx https://info.portaldasfinancas.gov.pt/pt/dgci/divulgacao/est... For 2020, IRS+IRC 13B+4B IVA 16B. --- 30% of working people don't pay income tax because they are on the first income bracket (minimum wage or less), but they still pay VAT, 23% in the highest rate. The deductions don't come into play if you don't pay tax at all. The injustice is simple: "digital nomad" earning pays VAT and minimum income tax, but leeches off roads, socialized healthcare, our nice climate. A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech. Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax! Why should a poor country like Portugal subsidize immigrants from rich countries, but punish those from poor countries? The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here.
    - moltar 2y ago
      > That's a bold face lie, unless by majority you mean less that 50%. Ok, fair, I mis-spoke. It was not intentional. What I meant is that taxes on goods and services take a largest absolute % of government revenue. Which is was 37.8% in 2020. The point I am trying to make is that no matter who is living in the country, they'll be using goods and services, which are taxed, and then the revenue flows to the government coffers. Arguably, people with more money, will spend more money on goods and services, and thus pay more into the coffers in absolute terms. Meanwhile personal taxes made up just 19.8% of the government revenues. > The injustice is simple: "digital nomad" earning pays VAT and minimum income tax 1. It is not "minimum", but a flat 20% rate. 2. In absolute terms they pay more though, than the average Portuguese citizen. Public goods are paid for, by the governmetn, in absolute fiat amounts (EUR), not in the percentage of income paid to the government. > but leeches off roads How are they leeching off the roads? They paid their share of the tax, and even more (in absolute amounts) as income tax. > socialized healthcare The vast majority of expats and digital nomads that I know have private insurance, which is also taxed, and goes back into the coffers, and provides jobs. And besides, again, they have paid already more in absolute terms, than an average citizen. > our nice climate How can you leech off of a nice climate? If a digital nomad (with NHR) enjoys the climate, does it become less joyful for you? > A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech. A person NHR status pays VAT and income tax too. Just income tax is capped at 20%. > Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax! I think this is not on topic. Anyone who fits into the NHR classification can claim NHR. It's not limited to "expats" or "wealthy" or "immigrants" or "non-immigrants" some limited class of people. In fact, even a Portuguese citizen could have claimed it, if they have not been a tax payer for the past 5 years (e.g. living elsewhere and returning). The classifications are wide and abundant. Anyone with a profession in demand could have gotten the status. Immigrants or not, people with no education or experience cannot expect to get the same treatment. Why would that be fair? You can extrapolate the same arguemnt then and say that anyone should be getting the same salary, no matter your education or qualification. That's not how the market works. There's the basic law of supply and demand. What NHR was doing is simply incentivizing (with a temporary tax break) professional people the government deemed the country needed at the time. I also think this list has been adjusted multiple times, as requirements changed. If you know a better ways of incentivizing people to move to Portugal, I'd love to hear them and perhaps propose this to Portuguese government. > Why should a poor country like Portugal subsidize immigrants from rich countries I don't think Portugal is a poor country by any stretch of imagination. It might be "poor" in relative terms to other countries in Europe, but it's not poor in absolute terms. Should or not, is entirely up to the citizens of Portugal to decide. In the past the citizens have elected officials that represented them and have made that decision, because, perhaps there was a benefit at the time. Then the decision was reversed, because, perhaps it no longer benefits the country? > The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here. And I think they do. Portuguese people, represented by the officials they have elected, have decided that 20% is a fair share for new or returning residents to pay, so incentivize them to move to the country. Otherwise, these people had many other opportunities and would not want to move to Portugal. I don't know historically why this has been decided, but my speculation was that perhaps aging population and younger population moving away from the country was a big factor. This kind of outflow is simply not sustainable for long term. Who's going to pay the taxes needed to sustain aging population?

leononame 2y ago

They might or might not be a net positive. I think it's more complicate. It's not just money, but also where the money is going and what it is achieving. E.g. a lot of wealthy foreigners will increase the rent, prices for restaurants and services. Oftentimes, the quality of restaurants/services might go down (because if you cater to a crowd that only stays a couple of months, there's not the same need to get these people to come back. That are changes that are often received negatively by the locals. Foreigners also make use of public services like streets, public transport etc., often without paying income tax.

kranke155 2y ago

I cant help but laugh at the simplification. Net positive for whom? Landlord and restaurants are happy vs the rest of the population (99%). Its a monstruous policy, considering wealthy nomads pay way less tax than locals.

deleted 2y ago
[deleted]
EVa5I7bHFq9mnYK 2y ago
Sure about 99%? Tourism is 20% of Portuguese GDP. There are 66,000 real estate companies in Portugal. So many more than 1% benefit from wealthy foreigners. The reason there are many poor people has nothing to with techbros with laptops. Better fix your bloated and corrupt public sector.
- JetSpiegel 2y ago
  The "corrupt public sector" has been focus of complaints at least since the 19th century, across three regimes, but the number of children living on their parents' homes increased after the foreigners with laptops bought the damn houses, either directly, or through real estate funds.
- kranke155 2y ago
  Most people I know who work in real estate companies don't get rich.
ithkuil 2y ago
I feel you may be swinging the pendulum too far in dismissing the second order effects of money being spent. Do the landowners and restaurant owners not pay taxes in Portugal? Do they spend all they new income abroad?
- ryandrake 2y ago
  It's somewhere in the middle, probably. People talk about wealthy foreigners, tourists and so on "bringing money to an area" as if that money is being uniformly dumped from a helicopter onto everyone. That's never what happens. It goes into the pockets of a relatively small handful of people/businesses, those people will spend a fraction of it, and downstream people will spend another fraction, and so on. It trickles a little, but the entire community is not benefiting uniformly.
  - EVa5I7bHFq9mnYK 2y ago
    That's what I suggested in my heavily downvoted comment - "Maybe the tax should be imposed on the landlords' windfall profits instead?"
- EasyMark 2y ago
  There is rarely one solution or “cause” when considering something as complicated as the economy. It’s really easy for politicians to play on the fears of the masses. There seems to be a solid 20-40% of ANY country that is willing to place all blame on “the other” rather than realize it’s a complex situation. So foreigners are an easy thing to pin all issues on for a politician to gain power, and it takes a complete failure of their flawed theory to convince the population that “hmmm maybe there isn’t an easy fix” by blaming foreigners. I see this nonsense all the time in Texas.
- kranke155 2y ago
  The biggest second order effect is Portuguese people can't afford to live in major cities anymore. Taking that into consideration the remainder is a bit academic.
  - 2y ago
moltar 2y ago
It’s absolutely not true. I spoke to a very well informed and educated tax lawyer on this topic. The majority of taxes collected in Portugal come from VAT and not income taxes. Something like 30% of working Portuguese people don’t pay any tax especially when you factor in all of the various deductions and incentives. The rest pay some but not much in absolute terms. A remote digital nomad will pay more in absolute terms even with the 20% cap. So all in all it’s an absolute gain to a Portuguese economy.
- JetSpiegel 2y ago
  > The majority of taxes collected in Portugal come from VAT and not income taxes. That's a bold face lie, unless by majority you mean less that 50%. https://info.portaldasfinancas.gov.pt/pt/dgci/divulgacao/estatisticas/Pages/default.aspx https://info.portaldasfinancas.gov.pt/pt/dgci/divulgacao/est... For 2020, IRS+IRC 13B+4B IVA 16B. --- 30% of working people don't pay income tax because they are on the first income bracket (minimum wage or less), but they still pay VAT, 23% in the highest rate. The deductions don't come into play if you don't pay tax at all. The injustice is simple: "digital nomad" earning pays VAT and minimum income tax, but leeches off roads, socialized healthcare, our nice climate. A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech. Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax! Why should a poor country like Portugal subsidize immigrants from rich countries, but punish those from poor countries? The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here.
  - moltar 2y ago
    > That's a bold face lie, unless by majority you mean less that 50%. Ok, fair, I mis-spoke. It was not intentional. What I meant is that taxes on goods and services take a largest absolute % of government revenue. Which is was 37.8% in 2020. The point I am trying to make is that no matter who is living in the country, they'll be using goods and services, which are taxed, and then the revenue flows to the government coffers. Arguably, people with more money, will spend more money on goods and services, and thus pay more into the coffers in absolute terms. Meanwhile personal taxes made up just 19.8% of the government revenues. > The injustice is simple: "digital nomad" earning pays VAT and minimum income tax 1. It is not "minimum", but a flat 20% rate. 2. In absolute terms they pay more though, than the average Portuguese citizen. Public goods are paid for, by the governmetn, in absolute fiat amounts (EUR), not in the percentage of income paid to the government. > but leeches off roads How are they leeching off the roads? They paid their share of the tax, and even more (in absolute amounts) as income tax. > socialized healthcare The vast majority of expats and digital nomads that I know have private insurance, which is also taxed, and goes back into the coffers, and provides jobs. And besides, again, they have paid already more in absolute terms, than an average citizen. > our nice climate How can you leech off of a nice climate? If a digital nomad (with NHR) enjoys the climate, does it become less joyful for you? > A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech. A person NHR status pays VAT and income tax too. Just income tax is capped at 20%. > Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax! I think this is not on topic. Anyone who fits into the NHR classification can claim NHR. It's not limited to "expats" or "wealthy" or "immigrants" or "non-immigrants" some limited class of people. In fact, even a Portuguese citizen could have claimed it, if they have not been a tax payer for the past 5 years (e.g. living elsewhere and returning). The classifications are wide and abundant. Anyone with a profession in demand could have gotten the status. Immigrants or not, people with no education or experience cannot expect to get the same treatment. Why would that be fair? You can extrapolate the same arguemnt then and say that anyone should be getting the same salary, no matter your education or qualification. That's not how the market works. There's the basic law of supply and demand. What NHR was doing is simply incentivizing (with a temporary tax break) professional people the government deemed the country needed at the time. I also think this list has been adjusted multiple times, as requirements changed. If you know a better ways of incentivizing people to move to Portugal, I'd love to hear them and perhaps propose this to Portuguese government. > Why should a poor country like Portugal subsidize immigrants from rich countries I don't think Portugal is a poor country by any stretch of imagination. It might be "poor" in relative terms to other countries in Europe, but it's not poor in absolute terms. Should or not, is entirely up to the citizens of Portugal to decide. In the past the citizens have elected officials that represented them and have made that decision, because, perhaps there was a benefit at the time. Then the decision was reversed, because, perhaps it no longer benefits the country? > The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here. And I think they do. Portuguese people, represented by the officials they have elected, have decided that 20% is a fair share for new or returning residents to pay, so incentivize them to move to the country. Otherwise, these people had many other opportunities and would not want to move to Portugal. I don't know historically why this has been decided, but my speculation was that perhaps aging population and younger population moving away from the country was a big factor. This kind of outflow is simply not sustainable for long term. Who's going to pay the taxes needed to sustain aging population?