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Living in Portugal: Healthcare, Taxes, & All That Important Stuff

Last updated: November 2019*

Portugal is increasingly becoming a popular place to live, and for good reason too. It’s friendly and welcoming, it has good food, and of course there’s the weather – in the Algarve, for example, there are more than 300 days of sunshine per year.

Nazaré beach from above
Nazaré: about 90 minutes’ drive from Lisbon

Different tax schemes mean that are also sometimes financial advantages to living in Portugal but, even without those, because the cost of living is affordable, your money can go a lot further in Portugal.

Pros and Cons

Pros

Weather

You can’t discuss the pros of living in Portugal without mentioning the weather.

Portugal, particularly the South of Portugal, has some of the best weather in Europe. People flock from all over Europe, but particularly the UK, Germany, and Ireland, to enjoy the warm summers that Portugal enjoys.

And, winter is good too. While winter in Northern Europe is typically a mix of rain, snow, and generally greyness, in the Algarve it’s usually blue skies and temperatures in the mid to high teens.

That’s not to say all of Portugal is like that in winter. It’s definitely not. Porto and Northern Portugal have winters that are comparable to Ireland or the UK (think: wet, damp, and grey). Lisbon, while more similar to the weather in the Algarve, gets its fair share of rain and cold weather as well.

Of course, the biggest issue with winter weather in Portugal is not outside but inside: houses have such poor insulation and central heating is rare so it’s not uncommon for people to wear their jackets indoors.

But, if you can find a house that catches the sun or find an effective way of heating it, Portugal is a great place to be in winter.

Safety

Portugal is one of the safest countries in the world according to the Global Peace Index. In 2019, 2018, and 2017, it ranked 3rd, 5th, and 3rd safest respectively, always falling just behind Iceland and Norway. It’s often listed as a safe place for solo travellers, especially solo female travellers, for LGBT travellers, and for retirees.

No place is perfect, however, and there are some things to be aware of:

  • Petty theft: An issue in some of the more touristy parts of cities like Lisbon and Porto, famously on the Tram 28.
  • Burglaries: This can be an issue in Portugal, particularly in parts of the country where there are empty second homes.
  • Natural Disasters: Portugal’s dry summer weather means that it’s particularly prone to forest fires. In recent years, the areas that have been especially affected were Central Portugal, the Algarve, and Madeira. Portugal also sits on an earthquake zone, but large destructive earthquakes are rare.

Cost of Living

Although prices are rising, particularly rental and property prices, the cost of living in Portugal can be very affordable – especially when compared to places like the US, UK, Germany, Ireland, and Australia.

That’s not to say it’s all affordable. It’s not. Portugal has some of the highest utility (electricity, in particular) in Europe. Electronics – everything from computers to domestic appliances – are also more expensive than they are in other countries as are second-hand cars and fuel.

But, certain things are a lot more affordable. Food products like fruit, vegetables, meat, and fish are all affordable.You can get lunch anywhere in the country for less than €10 (although you might have to look harder in places like Lisbon and Porto). You won’t have any problems finding a drinkable bottle of wine for €3 and a cup of coffee in a café will set you back €0.50 to €1.

Cons

Bureaucracy

The slow pace of Portuguese life, particularly rural Portuguese life, can seem appealing, particularly when you visit Portugal for a short trip.

This slow pace of life is both a blessing and a curse, and it’s particularly a curse if you have to deal with government organisations. The challenge isn’t so much the amount of paperwork, but rather never knowing which paperwork you need – and not having anyone to tell you.

Although businesses don’t necessarily have the same bureaucracy issues that the public sector has, that doesn’t necessarily mean things move fast or easily when you’re paying for products or services.

Integration

While Portugal is a very welcoming country, both to tourists and expats, that doesn’t necessarily mean that integration is easy and it can be hard to make good Portuguese friends.

This isn’t one-sided, of course. Expats, particularly native English-speakers, aren’t known for making an effort to learn Portuguese properly and, even though a lot of Portuguese speak excellent English, this is essential to integrating. That said, even those that learn Portuguese fluently still find integration a challenge.

Employment

Portugal isn’t usually seen as a place to come for work. It’s very much the other way round, especially since the financial crisis: In 2017, the UN reported that there were almost 2.3 million Portuguese living outside of Portugal. A separate report said that in the same year Portugal had just 416,682 legal residents of foreign origin.

Low wages (when compared to other European countries) is one turn-off, but bigger issues are often a lack of job opportunities in the first place and opportunities for progression.

For a more detailed look at the cons, take a look at this guide to the downsides of living in Portugal.

Where to Live

Different parts of Portugal attract different types of expats. The Algarve, with its great weather, has always attracted retirees from places like the UK, Germany, and The Netherlands. Madeira, for similar reasons, is popular with retirees as well. It’s not uncommon for retirees or semi-retirees to just spend a few months of the year in Portugal and the rest in their home country.

As most of the jobs are in the capital, younger working-age expats typically head to Lisbon, however, as rental costs rise in Lisbon, Porto is increasingly being examined as well.

There are also small expat pockets around Portugal, particularly in more rural and affordable parts of the country. Castelo Branco and the countryside near Coimbra, for example, have both become known having affordable properties and are growing in popularity with retired-age expats.

Of course, some people go to parts of Portugal where there are no other expats – often for that reason.

Cost of Living

Portugal has a low cost of living, particularly when compared with other Western Countries. It’s particularly affordable for food and drink, both eating in and eating out and for public transportation.

Rental prices and property purchase prices can also be extremely affordable, but affordability varies from region to region.

In Lisbon, for example, rental prices for a 1-bedroom apartment typically average €700 to more than €1,000 per month while in the Castelo Branco region you can buy a basic house for €25,000.

Taxes

Personal income tax rates in Portugal are high when compared to the UK and USA, particularly for low earners and high earners. Earners in the lowest tax bracket (up to €7,091) are taxed at 14.5% while earners in the highest tax bracket (€80,641+) are taxed at 48% and even above.

To other countries, however, these rates seem low. In Austria, the highest tax band is 55% while in Sweden it’s 69.8%.

However, there are tax schemes in place which are designed to encourage foreigners to move to Portugal. The most talked about of these is the non-habitual resident tax regime (NHR).

If you work in a pre-defined ‘high value-added’ scientific, artistic, or technical profession, and you work in Portugal you may be eligible to pay just 20% tax on your income under the NHR scheme.

If you receive income from abroad, such as a pension, you may be eligible to receive this for up to 10 years tax free if you are non-habitually resident in Portugal.

Property

Whether you rent or buy, property will likely be one of your biggest expenses while living in Portugal.

Renting Property

In Portugal, it’s more common to rent directly with a landlord rather than through a real estate agent or broker. Properties are normally listed on classifieds websites like OLX and Idealista, although in some rural parts of the country they are just put up as adverts on the supermarket noticeboard. To get an idea of rental prices, take a look at OLX or Idealista.

Although there are lots of properties for rent in Portugal, renting in Portugal is not without its challenges.

  • Private landlords often don’t want to give out contracts or any kind of paperwork (for tax reasons).
  • In Lisbon as rental prices keep jumping up, it’s not uncommon for landlords to raise the price by a third or double it once your contract is coming to an end.
  • Finding a reliable landlord who responds to problems can be difficult. They do exist, but it can be difficult to know what they’re like until a problem comes up.
  • Both landlords and real estate agents seem to be poor at responding to emails, so it can be difficult to organise viewings or get answers to questions.

Buying Property

Buying property in Portugal can be a relatively straight-forward process, regardless of whether you’re resident in Portugal or not. Prices are attractive, both for investment purposes and for living in.

For non-EU citizens, buying a property over a certain value (typically €500k, but in some cases €350k) could also make you eligible for Portugal’s Golden Visa Scheme which would allow you to live in Portugal for 5 years after which time you can apply for more permanent residency and, after 6 years, citizenship.

Selling Property

In Portugal, homes aren’t bought and sold as quickly as they are in countries like the UK and USA so it’s not uncommon for properties to sit on the market for a long time – often several years at a time – although hotspot areas like Lisbon and Porto are breaking the mould.

Estate agent fees, which are typically 5%, are one of the main reasons for this. In total, expect additional fees to increase costs by around 7-10%.

A number of new startups aim to make it cheaper to sell properties in Portugal, and these are definitely worth looking at when it comes time to sell, however they don’t always have the same reach as a traditional estate agent.

Healthcare

Ask people about the quality of public healthcare in Portugal and you’ll get very differing opinions based on experiences, typically on either end of the scale: some people say it’s fantastic while others say it’s terrible.

Healthcare indexes, such as those provided by the WHO, tend to be more balanced. While the following healthcare indexes have very different league tables, Portugal tends to score similarly in all of them: okay but definitely not at the top of the league tables.

SNS (Servico Nacional de Saude), Portugal’s state healthcare which is paid for by taxes, is typically available to all residents in Portugal, but many expats take out private health insurance as well (you can have both).

Pros:

  • Pre-existing conditions are covered.
  • A wide range of treatments are covered, including dentistry.

Cons:

  • You cannot choose your own doctor.
  • Your doctor needs to refer you to a specialist.
  • Long waiting lists.

Private health insurance

Private insurance costs range from several hundred Euros per year into the thousands and depend on a number of factors such as age, health, previous and current conditions, etc. Depending on your policy, you may still have to pay a percentage of the costs. It should also be noted that private hospitals do not have the facilities for all treatments and, depending on your condition, you may still need to go through the state healthcare system.

Taking out private coverage definitely has its benefits. It cuts down on waiting times, particularly to see specialist doctors or for non-urgent operations, and, depending on the insurance policy, may mean access to better facilities or doctors. And, as state healthcare doesn’t always cover all the costs of treatment, private health insurance may mean better coverage.

It also usually means more guaranteed access to an English-speaking doctor (or a doctor who speaks German, French, Spanish, etc.) Although English is widely spoken in Portugal, especially by those in the healthcare industry, it isn’t always the case. Private hospitals tend to be more expat-friendly, with doctors speaking several languages and the ability to book with a doctor of your choice.

You can also pay to access a private hospital out of pocket, and some people prefer to use the public health service and just pay for private treatments occasionally.

Transportation

portugal-train

Outside of cities like Lisbon and Porto, public transport in Portugal can be quite limited and, in rural areas, having a car is often essential. Every region of Portugal will have its hubs, usually around the largest cities in that region, so if public transport is a requirement, it makes sense to live near one of those hubs.

Longer distance public transport is usually better. Mainland Portugal has an excellent and affordable bus network that makes it easy to get to most parts of the country. Although Portugal’s train network only covers some of the country, it’s also affordable and, despite the age of the trains, reliable.

Brexit

Although the Portuguese government seems keen to continue to make it easy for Brits to live in Portugal, including retirees, Britain leaving the EU means it’s likely to become more complex – well as complex as it currently is for an American or Australian to move to Portugal anyway.

At the very least, these will probably be a lot more paperwork: up until recently, it was so easy to live in Portugal that many British people didn’t properly register themselves as living here. It may also mean hurdles like proving that you have enough money to live in Portugal.

Until Brexit happens and the dust clears, however, it’s impossible to say what the future will look like. Before that happens, it’s recommended that you register yourself as living in Portugal (if possible) and look into switching your driving licence over.

A more detailed guide to Brexit and Portugal can be found here.

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