José Pedro Silva @jpsfs - Twitter Profile

jpsfs retweeted

23 days ago

Portugal charges foreigners 20% and its own people 48% A $150,000 tech salary, run through 44 tax codes. Lisbon finishes 42nd. Only Helsinki and Brussels take more. I checked the arithmetic against the 2026 IRS schedule. It holds. On €129,904 the state takes €59,288. Effective rate 45.6%. I land within $18 of the chart. That is the flattering number. Add the 23.75% employer contribution. A Lisbon firm spends €160,756 to put €70,616 in an engineer's pocket. A 56% wedge. At the margin it is 64%. To give a senior engineer €1,000 more in net pay, a Portuguese company must find €2,810. Every formerly communist capital on this list takes less than we do. Tallinn 22.4%. Prague 27.9%. Budapest 33.5%. Warsaw 41.0%. Bucharest 41.5%. Madrid, one border away, takes 39.1%. One reason is a line nobody in Lisbon argues about. Spain caps the social security base at €5,101.20 a month — €61,214 a year. Germany caps it. The United States caps it. Portugal does not. A Portuguese worker on €130,000 pays €14,289 in contributions. A Spaniard on the same salary pays about €4,000. Same job, €10,000 apart, before a cent of income tax. Now the part that should embarrass us. Portugal already offers 20%. It is called IFICI, Article 58.º-A of the Estatuto dos Benefícios Fiscais. Move here from abroad, take a qualified job, and you pay a flat 20% for ten years. The state takes 31% instead of 45.6%. On this chart that is New York, not Brussels. The condition is that you must not have been a Portuguese tax resident in the previous five years. The state knows what a good engineer is worth. It has written the price into law. It just will not sell at that price to anyone in Coimbra. Two objections, and my answers. "Nobody in Portugal earns €130,000, so the chart is a fantasy." Correct, and it makes the case worse. At €45,000 the state takes 31.4% — roughly London. The median developer does not leave over the rate. He leaves over the gross. Amsterdam pays double. Seattle pays triple. But ask why the gross is low. No Lisbon employer can win a bidding war at €2.81 of cost per €1 of net pay. The wedge is not a consequence of low wages. It is a cause of them. The chart holds salary constant, which is the one thing the world refuses to do. "Young workers pay far less, because of IRS Jovem." They do, for exactly ten years, on the first €29,542. Then the regime expires. Follow one engineer. Year 1, earning €32,000, the state takes 11%. Year 6, on €55,000, it takes 23.9%. Year 9, on €70,000, 33.1%. Year 11, still on €70,000, 37.8%. His salary has not moved and his net pay falls by €3,294. He is thirty-three. He has eight years of experience and a LinkedIn inbox. We have built a tax system that is kind to him while he is cheap and turns on him the moment he becomes valuable. It is a retention policy that stops working at precisely the age when retention starts to matter. What I propose. I modeled the cautious version: cap contributions at €88,000, kill the solidarity surcharge, move the 48% threshold to €250,000. Result: 45.7% becomes 42.2%. Lisbon climbs from 42nd to 38th. Not worth the political capital. So, three moves. One. Cap social contributions. Both sides, at three to four times the average wage, with a matching cap on pension accrual. This is not radical. It is what Spain, Germany and the United States already do. We are the outlier and nobody can explain why. Two. Extend IFICI to everyone in an eligible activity. No residency-history test. Include the Portuguese who stayed and the ones who want to come home. The regime either works, in which case give it to everybody, or it does not, in which case scrap it. A tax code that charges a foreigner 20% and a Portuguese 48% for the same desk is not a policy. It is an insult with a portaria number. Three. Then merge the two into a taxa única at 20%, with a large personal allowance and contributions capped. On €129,904 that puts the total take at 26% and net pay at $111,067. Lisbon lands eleventh, between Geneva and Denver. The third step costs real money and has to be paid for by spending less. Anyone who tells you it pays for itself is selling something. A tech worker needs a laptop and a contract. This chart tells him where to sign it.

psantacl's tweet photo. Portugal charges foreigners 20% and its own people 48%

A $150,000 tech salary, run through 44 tax codes. Lisbon finishes 42nd. Only Helsinki and Brussels take more.

I checked the arithmetic against the 2026 IRS schedule. It holds. On €129,904 the state takes €59,288. Effective rate 45.6%. I land within $18 of the chart.

That is the flattering number.

Add the 23.75% employer contribution. A Lisbon firm spends €160,756 to put €70,616 in an engineer's pocket. A 56% wedge. At the margin it is 64%. To give a senior engineer €1,000 more in net pay, a Portuguese company must find €2,810.

Every formerly communist capital on this list takes less than we do. Tallinn 22.4%. Prague 27.9%. Budapest 33.5%. Warsaw 41.0%. Bucharest 41.5%. Madrid, one border away, takes 39.1%.

One reason is a line nobody in Lisbon argues about. Spain caps the social security base at €5,101.20 a month — €61,214 a year. Germany caps it. The United States caps it. Portugal does not. A Portuguese worker on €130,000 pays €14,289 in contributions. A Spaniard on the same salary pays about €4,000. Same job, €10,000 apart, before a cent of income tax.

Now the part that should embarrass us.

Portugal already offers 20%. It is called IFICI, Article 58.º-A of the Estatuto dos Benefícios Fiscais. Move here from abroad, take a qualified job, and you pay a flat 20% for ten years. The state takes 31% instead of 45.6%. On this chart that is New York, not Brussels.

The condition is that you must not have been a Portuguese tax resident in the previous five years.

The state knows what a good engineer is worth. It has written the price into law. It just will not sell at that price to anyone in Coimbra.

Two objections, and my answers.

"Nobody in Portugal earns €130,000, so the chart is a fantasy."

Correct, and it makes the case worse. At €45,000 the state takes 31.4% — roughly London. The median developer does not leave over the rate. He leaves over the gross. Amsterdam pays double. Seattle pays triple.

But ask why the gross is low. No Lisbon employer can win a bidding war at €2.81 of cost per €1 of net pay. The wedge is not a consequence of low wages. It is a cause of them. The chart holds salary constant, which is the one thing the world refuses to do.

"Young workers pay far less, because of IRS Jovem."

They do, for exactly ten years, on the first €29,542. Then the regime expires.

Follow one engineer. Year 1, earning €32,000, the state takes 11%. Year 6, on €55,000, it takes 23.9%. Year 9, on €70,000, 33.1%. Year 11, still on €70,000, 37.8%. His salary has not moved and his net pay falls by €3,294.

He is thirty-three. He has eight years of experience and a LinkedIn inbox. We have built a tax system that is kind to him while he is cheap and turns on him the moment he becomes valuable. It is a retention policy that stops working at precisely the age when retention starts to matter.

What I propose.

I modeled the cautious version: cap contributions at €88,000, kill the solidarity surcharge, move the 48% threshold to €250,000. Result: 45.7% becomes 42.2%. Lisbon climbs from 42nd to 38th. Not worth the political capital.

So, three moves.

One. Cap social contributions. Both sides, at three to four times the average wage, with a matching cap on pension accrual. This is not radical. It is what Spain, Germany and the United States already do. We are the outlier and nobody can explain why.

Two. Extend IFICI to everyone in an eligible activity. No residency-history test. Include the Portuguese who stayed and the ones who want to come home. The regime either works, in which case give it to everybody, or it does not, in which case scrap it. A tax code that charges a foreigner 20% and a Portuguese 48% for the same desk is not a policy. It is an insult with a portaria number.

Three. Then merge the two into a taxa única at 20%, with a large personal allowance and contributions capped. On €129,904 that puts the total take at 26% and net pay at $111,067. Lisbon lands eleventh, between Geneva and Denver.

The third step costs real money and has to be paid for by spending less. Anyone who tells you it pays for itself is selling something.

A tech worker needs a laptop and a contract. This chart tells him where to sign it.

27

560

108

126

19K

José Pedro Silva

@jpsfs

Who to follow

Last Seen Users on Sotwe

Trends for you

Most Popular Users