A Guide to Investments and Living in Portugal

Why is everyone moving to Portugal? There are many reasons, actually. Because of its friendly, inviting people and low cost of living, the country has become a haven for those seeking not just a residence, but a lifestyle.

Come explore the fundamentals of expat life in Portugal, whether you’re looking to invest, settle down, or start over.

Here, we’ll serve as your map, filling you in on daily essentials, the real estate market in Portugal, investment opportunities, and the financial environment so that your move goes off without a hitch.

In particular, the topics we’ll go over include:

• Is Portugal a good place to live?
• Cost of living in Portugal
• Quality of life in Portugal
• Is Portugal safe to live?
• Living in Portugal pros and cons
• Investing in Portugal for expats
• Portugal economy

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

Is Portugal a good place to live?

Where is Portugal located?

Portugal is a country situated in southwestern Europe on the Iberian Peninsula that’s bounded by the Atlantic Ocean, as per Britannica. The country also includes the Atlantic archipelagos of Madeira and the Azores. 

Lisbon is Portugal’s capital, while Porto, Faro, and Coimbra are among the country’s other important cities.

What language do they speak in Portugal?

Being both the de jure language of business and the majority of the population, Portuguese is an important distinction for Portugal. It becomes clear that English is second most often spoken, behind Portuguese, especially in professional and touristic areas. Some people speak Spanish as a second language too.

Quality of life in Portugal

High quality of life is typical of expat living in Portugal. The country boasts beautiful cities, lovely towns, and a complex cultural environment, with several cultural festivals and an active artists scene.

The weather in Portugal is moderate, making outside activities easy.

Warm, accepting, and friendly describe locals, and many locations have strong expat communities.

Portugal is also known for its excellent seafood, pastries, and regional delicacies.

Where to go in Portugal?

Consider the following places if you’re excited to know what to do in Portugal once you move there whether for the short or long term:

• The ancient quarters, lively streets, and famous monuments like the Jerónimos Monastery and Belem Tower make the Portuguese capital city of Lisbon a must-visit. Meanwhile, the picturesque city of Porto is for anybody interested in historic architecture, the Douro River, and world-renown port wine cellars.
• Sintra is like something out of a fairy tale, with its lush surroundings, fantastical palaces, and castles. Make sure you stop by the vibrant Pena Palace.
• Take in the breathtaking cliffs and crystal-clear waters as you stroll along the Algarve region’s picturesque coastline and relax on its lovely beaches.
• One of the world’s oldest wine areas, the Douro Valley is famous for its port wine and offers excellent wine sampling opportunities.
• The Atlantic archipelagos of Madeira and the Azores are perfect for adventure enthusiasts who want to see unusual landscapes, hike among volcano craters, and even see whales.
• Participate in cultural events and festivals like the Lisbon Carnival, Fado concerts, and Porto’s Festas de São João by attending these events.
• Try some authentic Portuguese delicacies like pastéis de nata as well as regional specialties from around Portugal.
• Travel to the past by seeing famous landmarks like the Évora Roman Temple and the Tower of Belém.
• Enjoy the great outdoors by going surfing in Nazaré or trekking in the Douro Valley—just a few of the many outdoor activities that Portugal has to offer.

Is it expensive to live in Portugal?

The cost of living in Portugal per month varies depending on the size of the household and the location. However, the country generally has lower living expenses than many Western European countries, particularly in terms of housing, food, and dining out.

For a family of four, estimated monthly expenses amount to 2,298.0€ excluding rent, according to data from Numbeo as of the time of writing. On the other hand, a single person can expect estimated monthly costs of 650.7€ without rent.

Housing costs also fluctuate based on location and size, with a 1-bedroom apartment in the city center averaging at 928.32€, while the same outside the center is around 710.18€. For those in need of more space, a 3-bedroom apartment in the city center costs approximately 1,670.99€, and outside the center, it is about 1,192.54€.

If considering a property purchase, the price per square meter for an apartment in the city center is 3,219.92€, while outside the center, it averages at 2,041.37€.

Other living expenses:

• Inexpensive Restaurant Meal: 10.00€
• Mid-range Restaurant Meal for 2 People: 40.00€
• One-way Local Transport Ticket: 1.75€
• Regular Monthly Pass for Local Transport: 40.00€
• Basic Utilities, including water and electricity: 108.38€
• Internet: 35.69€
• Fitness Club Monthly Fee: 34.59€

Cost of living in Portugal vs USA

The cost of living in Portugal is far lower than in the US. After accounting for rent, American consumer prices are about 60% greater than Portuguese ones. US consumer prices surge to 67.5% premium when rent is included, while rent is nearly 82% higher when considered separately. The US also has 70% more expensive groceries and 83% more expensive restaurants than Portugal.

To give you an idea, the typical American monthly cost of living falls under $2,500.

Related content: Top 9 Reasons to Move to Portugal from USA

Cost of living in Portugal vs Canada

In comparison to Portugal, consumer prices in Canada are roughly 44.7% higher when excluding rent. When factoring in rent, the overall consumer prices in Canada rise to be 45.1% higher than in Portugal, with rent prices alone being 45.8% more expensive. Moreover, restaurant prices in Canada surpass those in Portugal by 64.8%, and groceries are 58.2% costlier.

Expat Jobs in Portugal

Many foreign nationals living and working in Portugal end up in the following fields:

• Hospitality and Tourism: Jobs in the hospitality, food service, and tourism sectors are plentiful in Portugal due to the country’s high volume of tourists, particularly in prominent destinations such as Porto, Lisbon, and the Algarve region.
• Tech: Lisbon and other Portuguese cities have been successful in luring tech companies, and the country as a whole has seen a rise in its tech sector. Potentially available jobs include information technology, software development, and allied sectors.
• Freelancing and Jobs for Digital Nomads: Many foreign nationals living in Portugal take advantage of the growing trend of telecommuting and digital nomadism by taking jobs with multinational corporations. Some jobs may be available in industries that are more conducive to working remotely, such writing, design, and marketing.
• Real Estate: One factor that has helped propel Portugal’s property market forward is the increasing number of foreign purchasers. Expats may find employment opportunities in the construction, real estate, and property management industries.
• Translations: Opportunities may arise for expats who are proficient in more than one language in the fields of translation, interpretation, or localization.
• Medical treatment: Jobs for medical experts, such as physicians and nurses, can be available in Portugal. Being fluent in the local language could be really essential in this field.
• Banking and Finance: Opportunities in banking, finance, and related industries may be found in cities like Lisbon, which are home to financial institutions.
• Startups: Portugal, and Lisbon in particular, is home to a thriving startup scene that expats with an entrepreneurial spirit may take advantage of.
• English as a Second Language (ESL) Instruction: Expats often find work as English teachers, especially in private language schools. Job opportunities might be better if you have a TEFL or CELTA certificate.

Think about the language barrier (though knowing Portuguese is usually a plus), the local job market, and the legal requirements for working in Portugal before you apply for a job. Networking, whether virtual or in person, can help too.

In terms of annual wage in Portugal, Statista said it dropped about a hundred euros to an average of 20,323.3€ in 2022.

Taxes in Portugal for Expats

According to PricewaterhouseCoopers (PwC), how much tax money expats owe Portugal is conditional on their residency status. When an expat spends 183 days or more in Portugal each year, they are deemed a resident and are obligated to pay income tax on their global earnings. The progressive income tax rates for inhabitants range from 14.5% to 48% in 2023.

The tax rates are outlined as follows per PwC:

• 7,479 € or below: 14.5%
• 7,479 € to 11,284 €: 21%
• 11,284 € to 21,070 €: 25%
• 21,071 € to 35,070 €: 35%
• 35,071 € to 48,033 €: 43.5%
• 48,034 € to 75,009 €: 45%
• 75,009 € and above: 48%

Non-residents pay 25% on their taxable income. A solidarity charge of 2.5% to 5% is also implemented for taxpayers earning over 80,000 €. For a decade, the Non-Habitual Resident (NHR Portugal) Tax Regime charged foreigners 20% on income and 10% on pensions. It is being phased down, though. This program’s tax benefits for new applicants is expected to end in 2024, according to Reuters.

Is Portugal safe to live?

Portugal’s crime rate is lower than the average of several European countries. Tourists and locals alike generally report feeling safe in this nation since violent crime is so rare.

In fact, the country ranked as the 7th safest country in the world based on the 2023 Global Peace Index report from the Institute for Economics & Peace which assessed and categorized 163 independent states and territories based on their degree of peacefulness.

Tourist safety is a top priority in Portugal because of how many people go there. In general, there is a good level of security at public places, tourist hotspots, and transportation centers.

Although there isn’t a lot of crime per se, there is a chance of minor theft and pick-pocketing in busy tourist locations. Regular safety measures, like locking up valuables and being extra careful in busy areas, are recommended for travelers.

 In most cases, you can trust Portugal’s public transportation system. On the other hand, remain wary and attentive of your surroundings, especially in busy urban areas and on public transportation.

Major natural disasters rarely strike Portugal. Significant natural catastrophes do not often strike Portugal. Severe weather disasters like as earthquakes, floods, or wildfires are rare and usually limited to certain areas of the country.

Medical facilities in Portugal are up to par with those in other wealthy countries. Assistance in times of emergency is easily accessible.

With a democratic administration in place, Portugal’s political climate is calm and secure. As a member of the EU, Portugal has very little political upheaval.

Be mindful of Portuguese traffic regulations and road conditions if you intend to drive while in Portugal. Driving defensively and according to traffic laws is vital in Portugal, as it is in any country, even though the roads are well-maintained.

Related content:

What are the Safest Countries in the World 2023?

Safest Countries in Europe to Live In

Banking in Portugal for expats

A variety of bank accounts, including checking and savings accounts, are available to expats living in Portugal. Particular accounts designed for non-residents may even be offered by certain financial institutions.

It is common practice for expats to be asked to provide identification documents, utility bills or other proof of address, and occasionally proof of income in order to start the account-opening procedure. Extra paperwork can be needed from non-residents.

The majority of financial activities in Portugal, including wage payments and daily spending, are denominated in euros (EUR), the official currency of the country. To make account management, bill payment, and transaction execution even more convenient for expats, many banks in the country offer online banking services.

Many bank tellers in large cities and tourist hotspots speak English and other languages, making it easier for expats to communicate and understand the banking systems there.

Bank fees vary by account type, transaction type, and service type; expats should be aware of these fees. In order to choose a bank and an account that suit one’s needs, one must be familiar with the charge structure.

The extensive network of ATMs in Portugal makes it easy for foreign nationals to withdraw cash and perform an array of banking operations. Caixa Geral de Depósitos is one of the largest banks active in the country.

Researching and comparing the fees and services provided by several banks can help expats choose the one that is most suitable for their needs.  Some banks provide non-resident accounts with different requirements and advantages. To comply with local tax laws, expats should consult a tax professional about their financial activities in Portugal.

Insurance in Portugal

Portugal offers public and private healthcare to expats. Everyone in the country can use the National Health System (SNS). Private health insurance can provide dental and vision care for expats not covered by state healthcare.

Portugal has top worldwide health insurers Cigna and AXA. Expats should get international health insurance before moving to Portugal to avoid expensive private healthcare. Do remember to carefully review the policies before taking one.

Pension system in Portugal

Foreign workers in Portugal, including self-employed and other workers, must pay social security. Contributors to the Portuguese social security system are eligible for state pensions based on earnings, contribution years, and average earnings over a given time.

All Portuguese citizens and foreigners are subject to the same formula for calculating their state pensions, which takes into account their average wages and contribution history. To guarantee a certain level of support and to cap the payout based on earnings, state pensions in Portugal are subject to minimum and maximum limits.

Investors from outside Portugal have the option of adding private pension funds or other supplementary pension plans to their state pension. These programs are run by commercial institutions separate from the government system, and participation is entirely optional.

Numerous criteria, such as the type of job and the total number of years of contributions, determine the retirement age for expats in Portugal. Retirement plans that allow for early or delayed retirement are also available.

All pensions received in Portugal are taxable, regardless of whether they are from private or public sources. To avoid double taxation, the EU country has signed tax treaties with many nations. How a person’s pension is taxed depends on their country of residency and the specifics of the deal.

Where do expats live in Portugal?

1. Lisbon: The ancient architecture, multiculturalism, and cultural riches of Portugal’s capital city, Lisbon, never fail to amaze foreigners. A diversified expat community flocks to the city for its famously lively nightlife. Baixa and Bairro Alto are among the most popular neighborhoods that residents choose.
2. Porto: Located in northern Portugal, this city is well-known for its beautiful riverside, historical charm, and world-class port wine cellars. While Porto’s pace is slower than Lisbon’s, the city nevertheless has a vibrant atmosphere; prominent areas include Ribeira and Foz do Douro.
3. Cascais: Cascais is a coastal town close to Lisbon known for its beautiful beaches, marina, and picturesque old town. The town’s welcoming attitude toward its residents makes it a popular destination for families and individuals in search of a carefree coastal way of life.
4. Faro: The southern Algarve region’s capital, Faro, is well-known for its Mediterranean temperature, stunning beaches, and abundance of golf courses. Lagos and Albufeira are just two of the popular cities in the larger Algarve region that continue to attract expats.
5. Sintra: In the hills close to Lisbon lies Sintra, a magical place with palaces and castles straight out of a fairy tale, as well as verdant surroundings. Sintra is a peaceful getaway because of its peaceful atmosphere and its closeness to the capital.
6. Aveiro: This is a charming and laid-back Portuguese city that is often called the “Venice of Portugal” because of its many canals. People who value peace and quiet often choose to settle in this town because of its unique charm.
7. Coimbra: One of Europe’s oldest institutions, Coimbra, has a rich cultural and academic past. Students and expats seeking a vibrant atmosphere love the city’s heritage and modern conveniences.
8. Évora: Showcasing magnificently maintained mediaeval architecture, Évora is a UNESCO World Heritage Site situated in the Alentejo region. It offers peace and quiet that are often not found in chaotic bigger cities.
9. Braga: For expats looking for a smaller city with a good quality of life, Braga is a great alternative because of its low living costs and solid community.
10. Chaves: Expats seeking a tranquil existence in a historic town often choose Chaves as their destination due to its appeal and economical living.
11. Portimão: Located on the laid-back coast of the Algarve region, Portimão attracts expats with its welcoming neighborhood, beautiful beaches, and varied facilities.:
12. Funchal: Enjoy a high standard of living, first-rate medical treatment, and a thriving international community in Funchal, Madeira.
13. Ericeira: A growing number of expats are relocating to the coastal town of Ericeira, Portugal, thanks to its kind locals, stunning beaches, and easy access to Lisbon.

Are there international schools in Portugal?

Lisbon, Porto, and the Algarve are excellent examples of expat hotspots where you may find a selection of foreign schools. They mostly serve the children of expats and provide a range of curricula and teaching methods.

Over 50 different international schools in Portugal provide expat families a broad choice of programs, each with its own philosophy and emphasis on education.

Related content: 16 Best International Schools In Portugal

Living in Portugal pros and cons

Benefits of living in Portugal as an expat

• Famous for its stunning scenery, lovely beaches, and Mediterranean climate (think hot summers and mild winters), Portugal is a popular tourist destination.
• With its illustrious past and thriving present, Portugal is a veritable cultural gem. It is recognized for its delicious cuisine, exciting festivals, interesting dance styles, and traditional music.
• The cost of living in Portugal is typically more economical than in many other European nations.
• The Portuguese people are well-known for their hospitality and kindness.
• Portugal clearly prioritizes public safety as evidenced by its comparatively low crime rate compared to other European countries.
• The availability of public healthcare in Portugal has led to a robust healthcare system that citizens can use. Individuals seeking other options can also find healthcare solutions in the private sector.
• Through the enhanced Golden Visa program, investors and their families may be eligible for permanent Portugal residency if their investments fulfill specific conditions.

Bad things about living in Portugal

• When compared to other major European countries, Portugal may not have as many work prospects in some industries, which can be a problem for expats looking to pursue certain career routes.
• Patience is required, especially when dealing with administrative duties, due to the lengthy bureaucratic processes typical of Portugal and other European countries.
• There may be some difficulty understanding official papers or communicating with people in rural regions due to a lack of English proficiency, even though many Portuguese speak English.
• Throughout its history, Portugal has faced economic difficulties, and those difficulties may have lingering consequences. Performing a thorough analysis of the current economic climate and job market is essential prior to deciding to move.
• Public transit alternatives may be more limited in larger cities compared to more rural locations.
• It is important to think about the fact that Portugal’s educational system, despite improvements, might not score as highly as other European countries.
• Driving in Portugal’s larger cities could be a nightmare due to heavy traffic and the difficulty of obtaining a parking spot.

How to move to Portugal

Visa requirements when relocating to Portugal

EU/EEA/Switzerland residents who wish to relocate to Portugal don’t need a visa. They can live, work, and study in Portugal for three months without such document, after which they’ll need to apply for a registration certificate to stay longer.

A visa is required for citizens not coming from Switzerland, the EU, or EEA to stay in Portugal for longer than three months. Depending on their stay, they may need a:

• temporary residence permit
• work visa
• study visa
• family reunification visa
• retirement visa
• long-stay visa

Long-stay visas allow repeated entries and a one-year validity term for stays over 90 days but less than a year in Portugal.

Visa applications typically require a valid passport, passport photos, proof of medical insurance, proof of accommodation, financial means verification, and a criminal record check.

Residency and Citizenship

A temporary residence permit is required to enter Portugal and remain for a minimum of five years; each permit is valid for one year at the outset and can be renewed every two years.

After five years of holding a temporary resident permit, one can seek for citizenship or permanent residency.

A valid Portuguese resident permit, held for at least five years, is a prerequisite for applying for Portuguese citizenship.

Other than the usual five-year residency requirement, you can apply for Portuguese citizenship through marriage to a Portuguese person or by obtaining a residence visa through investment.

In exchange for investing in businesses or creating jobs in Portugal, non-EU/EEA citizens can gain residency through the Golden Visa program.

Note that the Golden Visa program has been revised and now excludes real estate investments and capital transfers.

Related content: Portugal golden visa from 280 000 Euros – a good scheme?

How to apply for citizenship

Required when applying for Portuguese citizenship:

• A birth certificate
• proof of Portuguese proficiency
• a valid passport or travel ID
• information about your birth, place, occupation, and current residence

You must also meet other requirements set by the Portuguese government, such as:

• having a clean criminal record
• free of convictions for offenses carrying a three-year prison sentence or more
• satisfactory command of the Portuguese language

What are the benefits of citizenship?

You can live, work, and retire in any other EU member state with an EU passport, which you can obtain when you become a Portuguese citizen. It grants you many privileges enjoyed by EU citizens, like voting in national elections and referendums, using the Portuguese passport, and more.

Portugal economy

If current forecasts hold, Portugal’s economy is expected to rebound over the next years, as per the European Commission (EC). A GDP growth rate of 1.3% is anticipated in 2024 and 1.8% in 2025, the Commission said.

The EC also expects that inflation will moderate in 2024 and even further in 2025, bringing it in line with the average in the Euro-area.

Portugal is a great place to put your money if you’re looking to invest in the real estate, tourism, hospitality, renewable energy, technology, or agricultural market sectors.

Investing in Portugal for expats

The Portuguese financial system is complex, and there is a certain procedure to follow when investing in the country. Find out everything you can about the Portuguese economy, housing market, and stock market—including things like political stability and regulatory changes—by doing some extensive study. Make your investment objectives, be they income creation or long-term growth, very clear.

Choose an asset class—stocks, bonds, real estate, mutual funds—that suits your goals and comfort level with risk. To invest in stocks, choose a trustworthy broker who follows all rules and laws and open an account with them. Investing in real estate requires study into various areas, property valuations, and prospective rental returns; you may even want to consult with real estate agents in the area for advice.

What investment options are available?

• Portuguese Compliant Bonds: Provides possibilities for citizens to invest in a variety of assets, including funds, shares, ETFs, gilts, bonds, unit trusts, and more.
• Investment Fund: For those looking to diversify their portfolios and gain exposure to the Portuguese market, an investment fund is a good option.
• Golden Visa Scheme: Portuguese residency can be obtained by foreigners who invest in certain fields, such as research, cultural heritage, or job creation. This makes the country a popular choice for investors looking to settle down.
• Assets and Stocks: Euronext Lisbon allows foreign nationals to invest in Portuguese stocks, while local brokerage accounts allow them to invest in worldwide stocks and securities.
• Savings Accounts: An easy way to invest with no risk is to put money in a Portuguese bank, though interest rates can be different.
• Entrepreneurship and Startups: Expats living in Portugal, and especially in Lisbon, have the chance to invest in startups or create their own enterprises thanks to the country’s thriving startup scene.
• Government Bonds: Bonds issued by the Portuguese government are an investment with a low degree of risk and a steady stream of income.
• Venture capital and private equity: These provide chances for expats to participate in private enterprises or new ventures.
• Tourism-related enterprise: Expats may want to think about getting into the hotel, restaurant, or travel agency industries in Portugal because of the country’s high volume of tourists.
• Retirement: Options for long-term growth investments, such as pension plans or retirement funds, are available to expats who are preparing for retirement.
• Real estate: Lisbon, Porto, and the Algarve are three of Portugal’s most popular real estate destinations. Investment properties in homes, vacation rentals, or businesses are common among expats.

Speaking of real estate, how’s the property market in Portugal looking in 2024?

Idealista, an online real estate site, cites research from CaixaBank Research and states that, at least in terms of house values, the slowdown in the Portuguese property market is turning out to be less severe than anticipated.

But the Spanish bank is pessimistic in 2024, predicting a 2.1% decline in home values due to a precipitous decline in demand.

It is important to get expert guidance in order to align your investments with your financial objectives and risk tolerance, as all investments have inherent hazards.

Related content:

Buying Property in Portugal Guide for Expats

10 Best Places To Invest In Real Estate In Portugal

Can foreigners get a mortgage in Portugal?

In Portugal, foreigners are free to take out mortgages as they like. On the other hand, having Portuguese residence will make it much easier to secure a mortgage. Lender options are more flexible and the loan-to-value ratio is higher for expats.

A loan amount of 65% to 75% of the property’s worth or sale price is often available from most institutions.

An independent mortgage broker is an alternative to contacting a bank directly for a mortgage application for expats. Hire a broker who speaks English if your Portuguese isn’t up to snuff. Applying for a mortgage could be a lengthy procedure.

The typical term for a non-resident Portuguese mortgage is 25 to 30 years. Home loan rates are based on Euribor with the bank’s profits added on top. The maximum amount that can be borrowed is determined by the loan-to-value ratio.

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