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How to Retire in Portugal

How to Retire in Portugal

Relocating to Portugal is popular among retirees, and it’s not hard to see why! There is an abundance of beautiful landscapes to spend your free time exploring and a warm Mediterranean climate. In this article, we’ll give you the lowdown on how you can retire in Portugal.


Can I retire in Portugal?


Although much simpler for EU or EFTA (European Free Trade Association) nationals, don’t be put off from retiring in Portugal if you are from the UK – you can apply for a residence permit at a Portuguese consulate in the UK if you have a valid passport, can prove your income/savings are sufficient and that you have health insurance. After five years of having a temporary residence permit, as a non-EU citizen you can apply for permanent residence.


Why should I retire in Portugal?


  • Property prices are reasonable and there is a relatively low cost of living for expats
  • Portugal ranked 4th in the International Living’s Global Retirement Index for 2022 – impressive!
  • Lisbon itself came 37th out of 231 cities evaluated for Mercer’s Quality of Living Index 2019; this is higher than London, Paris and Madrid.


Where should I retire in Portugal?


  • Lisbon is the buzzling capital of Portugal with plenty of shops and places to visit, however it is the most expensive place to buy property in the country
  • Porto is located in Northern Portugal and is a UNESCO World Heritage Site, which is reflected in its impressive architecture – however it is also a well-connected city, with an international airport, and expansive bus/tram networks.
  • The Algarve on the south coast is more expensive than other areas in Portugal, but it offers a high quality of life and is already home to many British expats.
  • Madeira is also popular with expats due to its relatively low cost of living, but take into account the rising house prices in the area.
  • Cascais is very close to Lisbon, but also has a gorgeous marina surrounded by beachfront homes – this area is one of the more expensive locations in Portugal
  • Guimarães is a historic city, whose centre is a UNESCO World Heritage Site and contains many beautiful stone buildings that are home to cafes, shops and restaurants


Wherever you choose to move to, we recommend getting involved in the community to integrate into it smoothly. Look out for local organisations and clubs for expats to join! In addition to this, you should look into whether you are eligible for the state healthcare system. See our recent blog article on healthcare for expats for more information.


What is the Golden Visa scheme?


Particularly suitable for non-EU residents such as those from the UK, the Golden Visa scheme is aimed at foreign investors wanting residence permits. It is even possible to apply to become a Portuguese citizen after six years! To be eligible, you need to do one of the below:

  • Spend €500,000 on real estate in inland Portugal or the Azores/Madeira 
  • Spend €350,000 on real estate in the same regions and refurbish it.
  • Complete a capital transfer of €1.5 million to Portugal
  • Invest €500,000 into research in Portugal


If you would like more information on the Golden Visa Scheme, please contact us or read this helpful blog article from our sister company, RHJ Accountants and Associates on the recent changes to the scheme.


What happens to my pension if I retire in Portugal?


In Portugal, there are three types of pensions: state pensions, voluntary occupational pensions and private pensions. For those who have not made sufficient social security contributions to their state pension, there is a means-tested option. However, to be eligible, you need to have been working and paying contributions to the social security system for 15 years.


It’s easier to transfer your pension to Portugal for EU residents, but still possible if you are a UK citizen. The Double Tax Agreement between the UK and Portugal means that you will not be taxed simultaneously by both countries; however you may have to pay tax on a private pension from abroad.


To avoid these taxes, British Nationals can transfer pensions to the Qualifying Recognised Overseas Pension Scheme. The Non-Habitual Resident Scheme is another option that offers more favourable tax rates to UK residents for ten years. For example, there is a 10% tax on foreign pensions and income from work in Portugal is taxed at 20%. Contact RHJ Law to get help with your NHR application via our website. Alternatively you can phone us on our UK number, 0114 227 0070 or our Portuguese number, +351 220280143.


Inheritance laws in Portugal


In the case of a passing, the Portuguese law states that the inheritance laws of your home country are applicable; you also do not have to pay inheritance tax on property in Portugal. However stamp duty has to be paid by beneficiaries except spouses and descendants. Although you are not required by law to have a will in Portugal as those written abroad are recognised, it is a good idea to have one drawn up if you have significant assets or investments in Portugal. 


If you are unsure about anything that you have read here, please do not hesitate to contact us for more advice via our website, via our UK number, 0114 227 0070 or our Portuguese number, +351 220280143.

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