retiring in Portugal

Retiring in Portugal in 2022: How to Start a New Life in Paradise!

If you’re thinking about retiring in Portugal, you’re making a wise decision!

This beautiful country has much to offer retirees, including stunning scenery, a relaxed Mediterranean lifestyle, and a low cost of living.

In this blog post, we’ll discuss everything you need to know about retiring in Portugal.

You can rest assured that the information in this guide is based on firsthand, personal experience of living in Portugal.

We’ll cover topics such as visas, healthcare, taxes, cost of living, and more!

Whether you’re just starting to research retirement options or you’re ready to make the move, read on for all the information you need to plan this exciting new chapter!

What are the benefits of retiring in Portugal?

There are plenty of reasons why retiring in Portugal is a great idea. Here are just some of them:

  • Low cost of living: You’ll find that prices for food and other goods are generally lower than what you’d pay at home, especially if your domestic currency has strong exchange rates against the Euro (EUR). This means more room to enjoy the Mediterranean lifestyle!
  • Stunning scenery: Portugal is a beautiful country, with its rugged coastline, diverse range of beaches, verdant hills, and stunning cities. There’s always something new to see and explore.
  • Excellent healthcare: Portugal has high-quality, affordable healthcare. In fact, it has been ranked as one of the best healthcare systems in the world.
  • Warm weather: Portugal has a temperate climate, with average temperatures ranging from 18-25 degrees Celsius. You’ll be able to enjoy plenty of sunshine all year round!
  • Tax benefits: Portugal offers a range of tax benefits for retirees. These include a lower income tax rate, exemption from capital gains tax, and more.
  • Extremely safe: Portugal has been ranked one of the safest countries in the world for 2022.

Retiring in Portugal: Getting residency

Retiring in Portugal

The good news is, most foreigners will be able to retire in Portugal.

Portugal encourages immigration and has a welcoming policy to new arrivals.

When planning your retirement in Portugal, the first step is to figure out if you need a residency visa to move there.

There’s a lot of misinformation on the Internet about retiring in Portugal. We’re here to put you on the right track with accurate, first-hand information from reliable professionals on the ground.

Let’s have a look at the different Portugal residency pathways, which mainly depend on your income (level and type), and whether or not you’re an EU citizen.

EU/EEA or Swiss citizens

If you hold a passport from an EU/EEA country, or from Switzerland, then retiring in Portugal will be easy for you. Thanks to EU freedom of movement, you can retire in Portugal whenever you like.

You can immediately access most of the same privileges as Portuguese nationals, although you can’t vote in national elections or run for office unless you become a Portuguese citizen (this is possible after five years of temporary residency).

After spending three months in Portugal (or sooner if you like), go to your local municipality office with your passport to register your presence in the country. They’ll issue you with a temporary residency certificate (called the CRUE) that’s valid for five years.

Non-EU/EEA/Swiss citizens

If you don’t have a passport from the EU/EEA or Switzerland, then you’ll need a residency visa to begin the process of retiring in Portugal.

You’ll need to meet the following basic requirements to get a residency visa:

  • Have a valid passport
  • Provide proof of income
  • Have private health insurance (you can join Portugal’s state health care system, but only after you receive your residency permit)
  • Criminal record check from your current country of residency

Portugal has several excellent residency visa options designed to make immigration fairly straightforward for retirees.

Let’s take a look at each one.

#1. Retiring in Portugal with the D7 visa

Otherwise known as the passive income visa or retiree visa, the Portugal D7 visa is an excellent fit for retiring in Portugal.

To be eligible, you’ll need a source of passive income from outside Portugal – such as your pension – equivalent to at least €1,000 per month for a single applicant.

You should apply for the D7 visa at the Portuguese embassy or consulate in your country of citizenship or legal residence.

Once your D7 visa is issued, you can book your ticket to Portugal and complete the process by applying for your residency permit at one of the SEF (immigration and borders authority) offices around the country.

#2. Retiring in Portugal with the Golden Visa

Another popular option for retiring in Portugal is the Portugal Golden Visa.

This flexible pathway offers several benefits when compared to the D7, such as much lower minimum stay requirements in-country.

If you’re not ready to move full-time to Portugal, but still want the benefits of residency, the Golden Visa is your best option.

To get the Golden Visa, you must meet certain criteria, such as purchasing real estate or investing in Portuguese venture capital or private equity funds.

The minimum investment is €500,000 for the standard real estate route or Golden Visa investment funds, although there are several cheaper but more complicated routes available.

You can also choose to deposit €1.5 million in a Portuguese bank account.

To be eligible to apply for Portuguese citizenship, you must maintain your Golden Visa investment for at least five years.

Portuguese citizenship

After retiring in Portugal and living there for five years, you’ll be eligible to apply for either permanent residency or Portuguese citizenship.

Citizenship is the best option because it’s permanent, doesn’t need to be renewed and can’t be lost.

It also gives you full EU rights to freedom of movement, meaning you can live freely anywhere in the EU or EEA.

Getting permanent residency or citizenship requires you to pass an exam in basic Portuguese language, but only to A2 level – one of the lowest requirements in Europe.

What’s more, Portugal allows dual and multiple citizenships, so you’ll be able to keep your original passport (depending on the rules of your country of origin).

Getting a NIF in Portugal

The NIF (Número de Identificação Fiscal, Portugal’s tax number) is one of the most common concerns for new arrivals retiring in Portugal.  

Having a NIF is essential for many important aspects of life in Portugal, such as opening a bank account or buying property.

You should get your NIF as soon as you land in Portugal. You don’t even need a Portuguese address to get one. Having a NIF doesn’t automatically make you liable for Portuguese taxes.  

If you’re from outside the EU, you’ll need to appoint a fiscal representative in order to get your NIF. This person should be a Portuguese citizen or resident. It could also be your lawyer.

The fiscal representative is responsible for handling communications between you and the Portuguese tax authorities.

If you’re applying for a D7 visa or Portugal Golden Visa through a lawyer, getting your NIF is typically included as part of the process.

The visa handling service should also include fiscal representation, at least for the first year of residency. 

Cost of living in Portugal

With cost of living skyrocketing due to inflation, war and the post-pandemic environment, many people are moving to cheaper countries to stretch their retirement incomes further.

In general, Portugal is significantly cheaper to live in when compared to the US or UK.

The below comparison tables provide estimates of cost of living in some of the major cities.

If you’re currently in the US, one of your biggest monthly expenses – health insurance – will no longer be an issue when retiring in Portugal.

Portugal has a good quality state healthcare system, which you can access once you become a resident.

You’ll start the process by getting your SNS number, which identifies you as part of the healthcare system.

Healthcare alone can be a significant deciding factor for Americans choosing to retire in Portugal.

🇬🇧 UK vs Portugal (all prices in £)

LondonManchesterLisbonFunchal
Buy (per square meter for city center apartment)£12,326£3,858£3,943£1,628
Rent (monthly, 3 bed city center apartment)£3,408£1,538£1,372£876
Utilities (monthly)£204£162£95£68
Internet (monthly)£31£30£28£24
Health insurance (monthly, couple, over 65)Nil (NHS)Nil (NHS)NilNil
Meal for 2 in mid-range restaurant£60£60£33£27
Estimated costs of living in Portugal vs UK (Source: Numbeo)

🇺🇸 US vs Portugal (all prices in US$)

New YorkSan FranciscoLisbonFunchal
Buy (per square meter, city center apartment)$15,341$13,132$5,293$2,185
Rent (monthly, 3 bed city center apartment)$6,588$6,794$1,842$1,177
Utilities (monthly)$166$211$128$92
Internet (monthly)$65$66$39$32
Health insurance (monthly, couple, over 65)$583$583NilNil
Meal for 2 in mid-range restaurant$100$85$45$36
Estimated costs of living in Portugal vs US (Source: Numbeo)

Healthcare in Portugal for Retirees

Portugal has a publicly financed national health service (SNS), which offers coverage through its health centers across the country.  

Coverage includes all care, apart from dentistry, and is available to all residents of Portugal. You’ll need to get a numéro de utente (health number) from your local health center.  

This is a great advantage for those retiring in Portugal from USA, with its high costs for health insurance.

You’ll be eligible for state healthcare once you receive your residence permit.

However, there’s normally a waiting period for the residence permit to be processed. So you’ll need to take out a suitable travel insurance policy that includes sufficient health cover for this interim period.

For some visa types, such as the D7 visa, having travel insurance for the first year will be a mandatory condition of the application.

Any travel insurance you choose should be valid in all the Schengen countries (not just Portugal). It should also cover you for emergency hospital treatment and repatriation.

Healthcare in Portugal is free for under 18s and over 65’s, otherwise it’s available at a lower rate. If you’re hospitalized, medication administered during a procedure is free of charge. 

Many people ask about the quality of Portuguese healthcare. It has improved greatly in recent years and is now ranked as the 13th best in Europe, beating Spain, Italy, Ireland and the UK.

If you need medical attention in Portugal, you should contact your local health center (centro de saúde).

In an emergency, you can also go to the emergency room at the closest hospital. The SNS also has a free 24/7 hotline available in English by calling 808242424. 

For those who still prefer to opt for private health care, Portugal has a variety of affordable options and plenty of private doctors in the country. 

Taxes on retirement income in Portugal

Retiring in Portugal

It’s no longer possible to retire in Portugal tax-free.

But Portugal still offers a range of appealing tax benefits for retirees.

These include:

  • A reduced income tax rate on foreign pensions and rents paid to non-residents
  • Exemption from capital gains tax on property sold outside Portugal by non-residents

To access Portugal’s tax benefits, you will need to apply for non-habitual residency or NHR status.

The NHR status is accessible to anyone who was not a tax resident in Portugal for at least five years during the previous decade.

To be eligible, applicants must fulfil certain criteria. See our guide to Portugal’s NHR for full details.

Everyone who resides full-time in Portugal is required to pay taxes on their worldwide earnings.

If you reside in Portugal for more than 183 days during a tax year, you’ll be classified as a tax resident. Residents must submit an annual tax return declaring their income, as appropriate.

Double taxation is typically avoided in Portugal thanks to double tax treaties with all 27 EU nations and the majority of non-EU countries, including the US.

We recommend that you seek advice from a tax professional ahead of your move.

Pensions in Portugal

As a tax resident in Portugal, your worldwide income will usually be taxable by Portugal, which includes your pension.

However, if you are resident with the NHR program, your pension income will usually be taxed at a flat rate of 10%.

If you’re an EU citizen, you can easily transfer your state pension from your previous country into Portugal.

You can then count the transferred contributions towards your state pension in Portugal.

The situation can be more complicated for non-EU citizens (including UK nationals).

If you’re from outside the EU, we recommend that you check with your state pension service to see if it’s possible to move it to Portugal.

Inheritance Tax in Portugal

Retiring in Portugal could be a great benefit not only for you, but also for your family!

With countries like the UK charging up to 40% inheritance tax, retiring in Portugal can be a great way to leave more of your assets to your family, rather than to the state.

In 2004, Portugal introduced a law to get rid of inheritance tax. So officially, there’s no such thing as inheritance tax in Portugal.

Do keep in mind that your Portuguese assets will still attract stamp duty, but at a relatively modest 10%.

Even better – your spouse and children won’t have to pay any stamp duty when inheriting from you (although anyone else will).

Capital gains tax is one key thing to watch out for when planning inheritance in Portugal. I

f your children or spouse inherit a property after your death, then sell it soon afterwards, they may be liable for capital gains tax at a standard rate of 28%.

It’s always best to speak to an experienced Portuguese tax advisor to properly structure your affairs. Contact us for a recommendation.

Lastly, if you decide to retire in Portugal, make sure you have a Portuguese will in place. The Portuguese authorities won’t accept wills drawn up in another country.

Our 5 Top Picks for Retiring in Portugal

Retiring in Portugal

Portugal is full of excellent retirement destinations. We recommend you spend some time doing detailed research to decide which one would be the best fit for you.

After all, everyone’s needs and preferences are different.

To help you get started, here’s a round up of our favorite places for retiring in Portugal.

#1. The Algarve

One of Portugal’s top destinations for tourists and sun-seekers, the Algarve region is home to the country’s largest foreign retiree community.

If you’re retiring in Portugal from UK or USA, in particular, you’re sure to feel at home here.

In the Algarve, you’ll find 100 km of Atlantic coast, plenty of sunny beaches, great food, and a host of interesting cultural and sporting activities.

What’s more, staying active is easy in the Algarve, with plenty of boating, golfing, swimming, horse-riding, and hiking available.

The Algarve has around 3,000 hours of sun each year, It’s rainiest in winter, mainly between November and February.

Popular retirement spots in the Algarve include Portimão, Silves and Albufeira.

View Algarve live webcams

#2. Madeira

Living in Madeira is one of the best choices in Portugal when it comes to quality of life.

Located almost 1,000 km from mainland Europe, right out in the Atlantic Ocean, this little island packs a big punch in terms of lifestyle, environment, and range of activities.

It’s also one of Portugal’s safest locations, with almost zero crime.

Although the island is small, there’s so many things to do in Madeira that you’re unlikely to get “island fever”.

But if you do, just hop on one of multiple flights a day to Lisbon or Porto, with many routes all over Europe and even to New York.

The capital city of Funchal, is the best place to live if you want easy access to the island’s social scene with its lively bars and restaurants.

Downtown Funchal, the Lido area, or Praia Formosa are the most walkable parts of the city, bearing in mind that the whole island is situated on a mountain (ok, a volcano).

Other popular locations for retirees include Ponta do Sol, Calheta, Caniço de Baixo and Seixal on the north coast.

Madeira is generally sunny most of the year, with some unusual beaches well worth exploring.

The north coast is damper and cooler than the south, and it gets colder the further up the mountainside you live.

What’s more, Madeira is a great place to invest in property for the Madeira Golden Visa.

Despite the 2022 Golden Visa changes, the whole island is still eligible for the scheme, so you’ll have plenty of choice.

See Madeira for yourself: Check out live webcams around the island.

#3. The Silver Coast

Wilder and more rugged than the Algarve, Portugal’s Silver Coast is becoming popular with retirees thanks to its lower cost of living.

This region has stunning scenery, plenty of interesting cultural activities, and some of Portugal’s finest golf courses.

Best of all, the Silver Coast includes 150 km of amazing beaches, including the world-famous surf resort Nazaré.

It also boasts some of Portugal’s most historic cities, such as Aveiro, Coimbra and Tomar, plus a wide variety of villages and small towns.

Both of Portugal’s major cities are easily accessible from the Silver Coast, with Lisbon just an hour to the South, and Porto two hours to the north.

If you’re looking for an affordable and scenic alternative to the Algarve, start your research with the Silver Coast.

#4. Cascais

Often referred to as the “Portuguese Riviera”, Cascais is a great choice for those who want to be within easy reach of the city, but want something a little calmer than central Lisbon.

This sophisticated and pretty town is just a short scenic drive or easy train ride from central Lisbon, making it much better connected than the Algarve.

Cascais generally has warm weather and you’ll be close to many excellent beaches, including Guincho, Estoril, Carcavelos, and Avencas.

In terms of activities, Cascais is well known for sailing and golfing. The surrounding area boasts some of Europe’s best golf courses, with amazing views of the Atlantic Ocean.

#5. Porto and Northern Portugal

Portugal’s second city Porto and its surrounding areas tend to get overlooked, because they aren’t as sunny as other parts of the country.

But they still have plenty of charm, especially if you like mountains, tranquil towns and beautiful vineyards.

In particular, the Douro Valley is one of the country’s most famous wine regions and ideal for wine lovers.

The north of Portugal tends to be a lot more affordable compared to the south.

So this is the best place to find a bargain property, while enjoying an even lower cost of living.

If you love the beach, don’t worry, northern Portugal has plenty of coastline, although you’ll find it colder and more rugged compared to the south.

Retiring in Portugal pros and cons

Many of these are unique to the individual, but here’s a brief overview of what we think are the most important points.

Pros

  • Fast timeline to a second passport, only five years
  • Tax benefits for retirees from the NHR program
  • Many people speak English, especially in the big cities and Madeira
  • Low cost of living compared to other Western European destinations, such as Spain
  • Well located on the west coast of Europe with easy access to most destinations, including the UK and US
  • Accessible residency pathways for non-EU citizens, with low income requirements
  • Extensive Golden Visa scheme available if you need greater flexibility
  • Peaceful, calm and politically stable country

Cons

  • Portuguese bureaucracy can be a challenge
  • Winters can be harsher than you’d expect, especially in northern cities
  • Utility bills can be surprisingly high in Portugal
  • Limited choice of shops (e.g. for groceries or clothing) compared to the US or UK

Retiring in Spain vs Portugal

Spain and Portugal both have much to offer for foreign retirees. But how do these two popular countries measure up against one another?

Spain is a larger country than Portugal with a wider choice in terms of diverse retirement destinations.

You’ll find a large expat community in Spain, and a wide variety of facilities geared towards expat living.

Spain also has excellent weather and you can find many places with sunshine all year round.

On the downside, Spain lacks some of Portugal’s benefits. For example, Spain doesn’t have any special tax scheme for new foreign residents.

In Spain, you’ll pay a lot more tax on your worldwide income compared to what you’ll pay in Portugal. Spain also has a higher overall cost of living than Portugal.

What’s more, if you want to acquire Spanish citizenship, not only will you have to wait at least 10 years, but you’ll also have to give up your original passport. That’s right, Spain doesn’t allow dual citizenship.

Whereas in Portugal, you can apply for Portuguese citizenship or permanent residency after just five years. Plus, you’ll be able to keep your original passport.

FAQs: Retiring in Portugal

retiring in Portugal

We get questions every day about retiring in Portugal. Here’s a selection of the most common ones.

How can I retire in Portugal from the USA?

To retire in Portugal from the USA, the first step is to decide which visa suits you best. If you want to live full time in Portugal and have sufficient passive income, for example your pension, then the D7 visa is a good fit.

If you want more flexibility and have sufficient capital to invest, you should consider the Portugal Golden Visa. To apply for either, the basic requirements are: 1) your passport, 2) proof of sufficient income, 3) private health insurance (until you get your residency permit), 4) criminal record check.

Can I retire in Portugal after Brexit?

Yes, you can retire in Portugal after Brexit. You can get residency as a retiree via the D7 visa (with proof of your pension income), or the Golden Visa if you invest in Portugal.

Can I retire in Portugal on social security alone?

Yes you can, if your monthly income from social security is the equivalent of at least €1,000/month.

Do retirees pay taxes in Portugal?

If you become a tax resident in Portugal, then you need to declare your worldwide income in Portugal every year. But thanks to Portugal’s special NHR tax program, you may end up paying a low tax rate on your retirement pension, with the possibility of zero tax on certain other kinds of income from outside Portugal.

What is the cheapest way to transfer money internationally to Portugal?

Wise is one of the cheapest ways to transfer money internationally to Portugal. You can get a free Wise account here. For transferring larger sums (e.g. for buying property) we recommend Currencies 4 You. Get a free quote

How much money do I need for retiring in Portugal?

The answer is, it depends on your lifestyle! If you want to live in a major city, such as Lisbon, Porto, Faro or Funchal, then your costs will typically be higher than if you live in a small town in central Portugal. For a retired couple in one of the major cities, we’d recommend a minimum of €2,500 a month to live comfortably and enjoy all that Portugal has to offer.


Conclusion

Portugal is still one of the top places in Europe for foreign retirees.

Its unique combination of accessible residency pathways, enticing destinations and climate, affordable cost of living, and fast timeline to citizenship make Portugal an appealing choice for those looking to spend their retirement abroad.

What’s more, Portugal has many advantages over its main competitor Spain, especially for retirees who want the eventual benefits of freedom of movement across Europe as an EU citizen.

Still have questions? Want to discuss your move with an expert?

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