Retiring to Portugal: Learn About These Important Healthcare Costs and Tax Considerations

Lisbon city roofs in Portugal.
StockByM / Getty Images/iStockphoto

Swayed by the low cost of living, a supportive health care system, wonderful weather and excellent tax incentives, Portugal has long been a destination for retirees the world over. Add in the country’s safety and friendly reputation, it is no wonder that it has increasingly become a haven for many Americans over the last few years as well.

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Influenced by the favorable factors above, Portugal is a popular retirement target because its resident visa requires less income than many of its European counterparts. Portugal offers various visas, but Americans who plan to move there usually get either the Golden Visa program (if they’re high net worth individuals) or the residence D7 visa from the Servico de Estrangeiros e Frontieras (SEF).

U.S. expatriates are a very small but growing population in Portugal. Numbering less than the ex-pat demographics from Brazil, the U.K., Cape Verde, China, India, Italy and others, more and more Americans have been looking to the Mediterranean treasure. Of Portugal’s 10.33 million population, 714,000 people are from other countrie. The total number of U.S. residents in Portugal is now around 7,000 — a number that has doubled in the past few years, according to Traveler.

Retire Comfortably

One of the most appealing aspects of spending time in Portugal is its affordable living costs. And consumer prices concerning rent are about 40% lower than in the U.S., according to Numbeo, the world’s largest cost-of-living database.

Not surprisingly, costs in the capital city of Lisbon, which is the most expensive area in the country, are around $3,500 per month. In contrast, living costs are less than $2,000 a month outside of larger cities. Public transport options outside the cities are also cheap and efficient.

Health care is available to all foreigners and is virtually free. U.S. health insurance and Medicare will not cover you in Portugal, however, so most Americans buy private insurance, which is cheaper than in the U.S. and provides better access to doctors and services than its public counterpart. Premiums will cost between $55 and $320 a month, but you must make sure you buy what you need as some policies do not cover pre-existing health conditions.

Retire Comfortably

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Portugal’s Non-Habitual Resident tax regime (NHR) is a huge incentive to move to Portugal and offers tax exemptions on foreign pensions and other incomes. In addition to the non-existence of wealth tax, or inheritance/gift tax for close relatives, the NHR regime essentially grants qualifying individuals the possibility of becoming tax residents whilst legally avoiding or minimizing income tax on certain categories of income and capital gains for a minimum period of 10 years.

Be warned: moving outside the U.S. does not exempt you from paying taxes if required. However, there are tax treaties and incentives that may decrease what you owe, especially if you stay for 10 years or longer.

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Retire Comfortably

About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to change careers in 2016 and concentrate full-time on all aspects of writing. He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry.
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