Lisbon City Council Plans to Return Full IRS Tax to Residents, Impacting €86 Million Annually

Lisbon's Bold Tax Refund Proposal

The PSD/CDS-PP leadership in the Lisbon City Council aims to refund 100% of the IRS (Personal Income Tax) to residents, a move that will take effect in 2026 and will forgo €86 million annually. This announcement was made by the deputy mayor, Filipe Anacoreta Correia, during the presentation of the 2025 municipal budget proposal.

Key Details of the Proposal

• The council plans to propose a 5% refund of IRS for Lisbon taxpayers, fulfilling an electoral promise made during the 2021 elections under the coalition “New Times”.
• Since 2008, municipalities can participate in the IRS revenue, with a varying participation rate set by the local government.
• This tax refund commitment has been gradually realized since 2022, increasing from 2.5% to 3%, then 3.5% in 2023, and 4.5% in 2024.

Financial Implications

The proposal for 2025 includes an immediate impact of €77 million due to the current 4.5% refund, while the full 5% refund will affect the budget in 2026. Over the current mandate (2021-2024), the total tax refund commitment to Lisbon residents amounts to €267 million.

Broader Objectives

Anacoreta Correia emphasized the importance of this measure as part of a broader strategy to encourage residents to stay in Lisbon, along with initiatives in housing and mobility. He stated, “We seek to provide a wide range of advantages to our residents.”

Budget Overview

The 2025 municipal budget proposed by the PSD/CDS-PP leadership amounts to €1.359 billion, slightly higher than the €1.303 billion planned for this year. This budget is significant as it represents the last financial plan of the current term, which is governed without an absolute majority.

Political Context

The previous budgets received approval due to the PS party’s abstention, while other opposition parties voted against them. The current city government consists of 17 members, with seven from the “New Times” coalition.

This proposal reflects a commitment to tax reduction while maintaining a positive financial balance, ensuring that essential services like housing and mobility are not compromised.