Moving to Portugal from the US: A complete guide for expats

Portugal has emerged as a top destination for Americans seeking European living. The whole of the western coast of Portugal is made up of jaw-dropping coastlines, there’s an abundance of vibrant culture, a super affordable lifestyle, and welcoming communities of locals. The idea of moving to Portugal has become increasingly popular.

This comprehensive guide covers everything you need to know – particularly focusing on relocation, visa options, and practical setup for those considering immigrating to Portugal from the US.

Why move to Portugal?

If you haven’t already decided, before discussing how to move to Portugal from the USA, it’s important to cover another important question – why? Portugal offers US citizens an appealing blend of Old World charm and modern European living. Here are some of the key benefits:

• Exceptional climate: With over 300 sunny days annually, folks move to Portugal for mild winters and warm summers.
• Safety: Portugal consistently ranks as one of the safest countries globally, with low crime rates.
• Affordable healthcare: High-quality public and private healthcare (at a fraction of the US) is huge for those moving to Portugal from the USA.
• Rich culture and history: Centuries-old traditions, architecture, and vibrant local communities.
• Cost of living: Your dollar goes further in Portugal compared to most US cities.

Pro tip: The cost of living in Portugal is approximately 30–40% lower than in the United States, making it especially attractive for retirees and remote workers.

Visa options for US citizens

As a US citizen planning on moving to Portugal, you'll need the appropriate visa for your situation. We’ve broken them down into a table for you to see at a glance, but here’s a bit about each option:

D7 visa (Passive Income/Retirement visa)

The D7 visa is perfect for retirees or those with regular passive income (pensions, investments, rental income) who are relocating to Portugal. It requires proving sufficient financial resources to support yourself without working in Portugal. This is often considered the easiest way to relocate for Americans with stable income sources.

Digital nomad visa

The Digital Nomad Visa, introduced in 2022, caters specifically to remote workers and digital professionals who maintain employment with non-Portuguese companies. This has become an increasingly popular pathway for Americans moving to Portugal who want to continue their careers while enjoying European living.

D2 visa (Entrepreneurs)

The D2 visa is designed for entrepreneurs wanting to start a business when moving to Portugal from the United States. This requires a solid business plan and proof of financial resources to support your venture. With a growing startup scene, this is an attractive option for innovative business owners.

Golden visa (Investment-based)

For those wondering how to immigrate to Portugal from the USA through investment, the Golden Visa requires a qualifying investment, such as a property purchase or capital transfer. Minimum investments start at €350,000 ($398,000), depending on type and location. 

NOTE! The Golden Visa program underwent significant changes in 2022, with residential real estate in high-density areas like Lisbon, Porto, and coastal regions no longer qualifying. Check specific areas with your tax specialist before committing to any purchase.

Here’s a quick summary:
 

 

Each visa option has specific requirements and benefits, which will be suited to different types of people depending on their circumstances. Research each thoroughly, and consult with an expat tax expert before deciding which visa to apply for when you move to Portugal.

A quick note about bringing your family: 

Most visas allow family members to join the primary applicant. Eligible family members include spouses, unmarried partners (with proof of a stable relationship), dependent children, and financially dependent parents.

Residence permits granted to family members allow them to immigrate to Portugal from USA, with some being eligible to work locally or access public services like education.

Including family members when you move to Portugal requires additional documentation, such as marriage or birth certificates, and increases the financial requirements.

Example: Applicants must demonstrate an additional 50% of the monthly income requirement for a spouse and 25–30% for each dependent child.

How to apply for a Portuguese residence permit

When immigrating to Portugal from US, the application process involves several steps:

1. Gather required documents:

• a valid passport (at least six months validity)
• completed application forms (available on the Portuguese consulate website)
• proof of income or financial means meeting minimum thresholds
• clean criminal record certificate (federal and state)
• comprehensive health insurance coverage valid in Portugal
• proof of accommodation in Portugal (rental agreement or property deed)

2. Apply at a Portuguese consulate/embassy in the US
Schedule an appointment at a Portuguese consulate/embassy in the US well in advance, as wait times can be 2–3 months. Submit all documentation in person and pay the visa application fee (around €90 or $100, subject to change). 

Be prepared for an interview about your relocation plans, financial stability, and reasons for moving to Portugal.

3. Enter Portugal with your visa
Once approved, you’ll receive a four-month visa to enter Portugal and begin your relocation process. This entry visa is just the first step – after arrival, you must complete the residence permit process.

4. Apply for a residence permit in Portugal
After entering Portugal, schedule an appointment with Portuguese Immigration (SEF was recently replaced with AIMA) within your visa’s validity.

Submit biometric data (fingerprints/photos), pay the residence permit fee (approximately €80 or $90), and complete the final step of your move to Portugal. Book this appointment as soon as possible, as slots can fill quickly.

Mistakes to avoid:
Applicants moving to Portugal often make these mistakes on their applications:

• Providing insufficient proof of financial resources 
  Fix: Always exceed minimum requirements.
• Incomplete documentation
  Fix: Quadruple-check everything.
• Missing appointment deadlines
  Fix: Calendar reminders.
• Underestimating processing times
  Fix: Start at least six months before your move.
• Inadequate health insurance coverage
  Fix: Ensure it meets all Portuguese requirements.

Portugal citizenship for Americans

Many US citizens eventually consider citizenship after settling into their new lives. Understanding the pathways to Portuguese citizenship is valuable for long-term planning when moving to Portugal from the United States.

Naturalization

The most common route is naturalization after legally residing in Portugal for five years. Requirements include:

• maintaining legal residence for the full qualifying period (five years) with minimal absences from Portugal
• demonstrating basic Portuguese language proficiency (A2 level on the Common European Framework)
• passing a basic test on Portuguese civic knowledge
• maintaining a clean criminal record both in Portugal and your home country
• establishing sufficient ties to the Portuguese community through integration activities, employment, or community involvement

Marriage to a Portuguese citizen

A faster pathway exists for those married to Portuguese citizens. After three years of marriage or legal partnership with a Portuguese citizen, you can apply for citizenship, offering an accelerated route for some Americans moving to Portugal who form relationships with locals. 

The marriage must be legally recognized in Portugal, and you must demonstrate that the relationship is genuine and stable.

Ancestry

Portuguese citizenship by descent is available to individuals with parents or grandparents who are or were citizens. Applicants must prove familial ties via birth/marriage certificates – apostilled and translated if required. Processing takes 6–24 months through consulates, with no residency mandate. Knowledge of Portuguese or cultural ties may be requested for grandparent-based claims.

Dual citizenship rules

Portugal allows dual citizenship, meaning US citizens can maintain their American citizenship while becoming Portuguese citizens. This is particularly valuable for those who want to retain their US passport rights and benefits. Portugal has no requirement to renounce your original citizenship.

Timelines and requirements

The application process typically takes 1–2 years to complete after meeting the residence requirements and costs approximately €250 ($280) in government fees, plus any translation and document certification expenses.

The benefits of Portuguese citizenship are substantial: it grants you a powerful EU passport with freedom to live and work anywhere in the European Union, voting rights in Portuguese and European elections, consular protection in countries without US representation, and permanent right of residence regardless of future immigration policy changes.

Where to live: Best places in Portugal for Americans

When moving to Portugal from the United States, choosing the right location significantly impacts your experience. Different regions offer varying lifestyles, climates, expat communities, and cost of living considerations that appeal to different preferences and needs. Here are popular destinations for Americans:

Lisbon

Lisbon, Portugal's vibrant capital, offers cosmopolitan living with historic charm that many US citizens find appealing. Combining European charm with modern amenities, excellent public transportation, and a growing startup scene. 

However, it's also the most expensive Portuguese city for housing, though still affordable compared to major US metropolitan areas. Americans moving to Portugal often choose Lisbon for its international atmosphere and employment opportunities.

Porto

Porto, the northern coastal city known for port wine and stunning bridges, offers a more authentic and affordable alternative to Lisbon. The historic center is a UNESCO World Heritage site with winding cobblestone streets and colorful buildings. 

Many US citizens living in Portugal find Porto's laid-back atmosphere, lower cost of living (about 20% less than Lisbon), and excellent food scene appealing. The city is experiencing revitalization, with new cultural venues, restaurants, and boutiques opening regularly. The Douro Valley wine region is nearby for weekend explorations.

Algarve

The southern coast attracts many American retirees with beautiful beaches, world-class golf courses, and a large English-speaking expat community. For those moving to Portugal seeking sunshine and coastal living, the Algarve offers an ideal year-round climate with over 300 sunny days. 

Towns like Lagos, Tavira, and Albufeira offer different vibes, from cosmopolitan to traditional. Property is more affordable than comparable coastal areas in California or Florida, making it popular for those seeking vacation homes or retirement properties.

Cascais & Estoril

Cascais & Estoril, upscale coastal towns just 30 minutes from Lisbon, offer beautiful beaches and a high quality of life. These former royal retreats feature elegant architecture, yacht harbors, and international schools, making them popular with families. 

The proximity to both the capital and the Atlantic coast provides an ideal balance of urban amenities and seaside relaxation.

Coimbra

As a historic university city, Coimbra provides a more authentic Portuguese experience with lower living costs than Lisbon or Porto. Home to one of Europe's oldest universities, the city has a youthful energy alongside its medieval architecture. 

Its central location makes it convenient to explore more of the country, and housing costs are approximately 40% lower than in Lisbon.

Madeira vs mainland comparison

Madeira is so far off the mainland that you might forget it’s part of Portugal. Best known as the birthplace of soccer player Cristiano Ronaldo, Madeira is an autonomous Portuguese region that offers mild year-round temperatures and stunning natural beauty. 

This archipelago provides a unique island lifestyle that differs significantly from the mainland experience for those living in Portugal. The main city of Funchal offers modern amenities while maintaining Portuguese charm, and the island's dramatic landscapes feature volcanic peaks, lush forests, coastal paths, and even rare sights like a waterfall that lands right in the middle of the road (Cascata dos Anjos). The slower pace and natural beauty appeal to nature lovers and those seeking tranquility.

Pro tip: Many Americans choose the Algarve or Lisbon areas due to larger English-speaking communities, making the transition smoother. However, for more authentic cultural immersion and lower costs, consider smaller cities like Braga, Aveiro, or Setúbal, where your experience might be more integrated with local life.

Cost of living in Portugal vs the US

One of the biggest advantages of moving to Portugal is the significantly lower cost of living, which can dramatically improve your quality of life and financial situation. Below, we’ve broken down some of the key expenses so you can plan your relocation budget effectively.

Housing

Housing costs represent the most substantial savings. Rental prices are 50–70% lower than major US cities, with a one-bedroom apartment in Lisbon city center averaging €800–1,000 ($900–1,100) monthly compared to $2,000–3,000 in cities like Boston or Seattle. 

Outside major cities, rentals can be as low as €400–600 ($460–680) monthly. For those buying property in Portugal, prices average €2,000–3,500/m² ($2,300–4,000/m²) in desirable areas, compared to $5,000–10,000/m² in many US metropolitan areas.

In smaller towns and rural areas, properties can be remarkably affordable, with renovated homes available from €150,000 ($171,000), making homeownership accessible for many US citizens.

Daily expenses

Daily expenses when living in Portugal are consistently lower across most categories. Groceries cost approximately 30% less than US averages, with local markets offering fresh produce at particularly good values. 

Utilities and internet for a typical apartment run €100–150 (    $110–170) monthly, significantly less than comparable US services. Dining out is a particular bargain, with a quality restaurant meal costing €10–15 ($10–20) compared to $20–30 in the US. A coffee at a local café is typically €0.70–1.20 ($0.80–1.40), compared to $4–5 in the US. 

Public transportation is excellent and affordable, with monthly passes around €40 ($50) compared to $90+ in many US cities. Healthcare costs are dramatically lower, even for private insurance and out-of-pocket expenses.

Budget examples

For a better idea of budgeting, let's consider two lifestyle examples:

Modest lifestyle (single person)

A modest lifestyle for a single person typically costs €1,000–1,400/month ($1,100–1,600), broken down as follows: 

• Rent (one-bedroom apartment, outside the city center): €500–700 ($570–800)
• Utilities, including internet: €100–150 ($110–170)
• Groceries: €200–300 ($230–340)
• Transportation: €40 ($50)
• Entertainment/dining: €200 ($230)

Total: €1,040–1,390/month ($1,200–1,580). This budget allows for comfortable living while still saving compared to US costs.

Comfortable lifestyle (couple)

A comfortable lifestyle for a couple runs approximately €2,000–2,600/month ($2,300–3,000). Here’s an idea:

• Rent (two-bedroom apartment, good area): €800–1,200 ($900–1,400)
• Utilities and internet: €150–200 ($170–230)
• Groceries: €400–500 ($460–570)
• Transportation: €80 ($90)
• Entertainment/dining out: €400 ($460)
• Private health insurance: €100–200 ($110–230)

Total: €1,930–2,580/month ($2,200–2,940). This budget allows for regular restaurant meals, weekend trips, and cultural activities.

How much money do you need to immigrate to Portugal? For visa purposes, you'll generally need to demonstrate an income of at least the Portuguese minimum wage (around €700 or $800/month) plus 50% for each dependent. 

However, budgeting €1,500–2,500 ($1,700–2,850) monthly for a couple is recommended. The Non-Habitual Resident tax program can further increase your purchasing power by reducing tax obligations during your first ten years after moving to Portugal.

Retirees find their pensions stretch much further, while remote workers earning US salaries can achieve a significantly higher standard of living. Many Americans report being able to save more, travel more, and enjoy life more fully, thanks to these cost differences.

Working or retiring in Portugal

Whether you're looking for local employment, working remotely, starting a business, or planning retirement, Portugal offers plenty of options.

Remote work and digital nomads

Portugal has become a haven for remote workers and digital nomads thanks to its digital infrastructure, lifestyle, and new visa options specifically designed for location independence. 

High-speed fiber internet (averaging 100+ Mbps) is widely available in urban areas and many coastal towns. Numerous coworking spaces have emerged in Lisbon, Porto, and even smaller cities like Braga and Aveiro, offering professional environments and networking opportunities. 

Digital nomad communities and regular meetups exist in major cities, helping newcomers build social and professional connections. Plus, tech hubs like Lisbon's "Silicon Valley" are attracting global talent and investment. 

Many US citizens moving to Portugal continue working for American companies remotely, maintaining their US salaries while enjoying Portuguese living costs.

The job market for English speakers

The local job market presents more challenges. While speaking Portuguese opens significantly more doors, English-speaking jobs do exist in some sectors. 

Tourism and hospitality employ many internationals, particularly in Lisbon and the Algarve. The IT and tech sectors increasingly use English as their working language, with international companies like Google, Microsoft, and Amazon expanding their Portuguese operations. 

International companies with Portuguese offices often hire English speakers for certain roles, and teaching English remains a reliable option for native speakers. 

It's important to note that salaries in Portugal are significantly lower than in the US (average monthly salary around €1,000–1,500 ($1,100–1,700), compared to $3,500+ in the US). Work permits are required, though residence visas like the D7 (more info here) may allow self-employment.

Starting a business

Popular sectors for foreign ventures include tourism, real estate, and renewable energy, leveraging Portugal’s booming economy and strategic location. Cities like Lisbon and Porto are ideal for startups due to their vibrant ecosystems and lower operational costs compared to other European capitals.

Entrepreneurs must navigate legal requirements such as business registration, tax compliance, and obtaining relevant permits, with visa options like the Digital Nomad Visa enabling business activities.

How about the retirement lifestyle?

Portugal, as a retirement destination, has numerous benefits for Americans. The affordable healthcare system provides high-quality care at a fraction of US costs, with both public access for residents and affordable private options.

The pace of life emphasizes quality time, outdoor living, and socializing rather than constant productivity. You’ll find plenty of expat communities to provide instant social networks for newcomers.

Renting or buying property in Portugal

Portugal’s housing market is popular with expats due to its scenery, vibrant cities, and relatively affordable prices. Over 75% of residents own their homes, and foreigners – including Americans – face few restrictions. Non-residents need a Portuguese tax number (NIF) and often a local bank account. 

Prices have risen steadily, especially in Lisbon, Porto, and the Algarve, with rental and purchase demand outpacing supply. Recent laws have improved tenant protections and encouraged long-term leases, but competition remains high in popular areas.

Rent vs buy

Renting is a flexible, low-commitment way for expats to settle in Portugal. Short-term rentals require a deposit and the first month’s rent, while long-term leases (1–3 years) offer better tenant protections. Central Lisbon rents for a one-bedroom range from €800–1,500+ ($900–1,700+), with lower prices in smaller cities. Utilities are usually extra and require a NIF. 

Renting suits those wanting to explore before buying or avoid property maintenance. Buying is best for those seeking long-term stability and investment. Upfront costs for buyers can reach 7–10% of the purchase price, but owners gain equity, potential appreciation, and rental income. The choice depends on your finances, lifestyle, and plans.

Getting a mortgage as a foreigner

Foreigners, including Americans, can get mortgages from Portuguese banks, usually up to 60–70% of the property’s value, with the rest as a down payment. Terms are stricter than for residents, and interest rates may be higher.

Applicants for a mortgage in Portugal must provide a comprehensive set of documents to demonstrate their identity, financial stability, and ability to repay the loan. The requirements are generally consistent for both residents and non-residents. Here’s a quick list:

• Valid passport – proof of identity for all applicants.
• Portuguese Tax Number (NIF) – mandatory for all financial transactions in Portugal
• Proof of current address – recent utility bill or official correspondence
• Recent bank statements – usually the last three months
• Proof of income
  - Employed – recent payslips (last 3–6 months), last year’s tax return, and possibly an employer reference letter
  - Self-employed – company financial statements (last 2–3 years), business tax returns, and business bank statements
  - Retired/other income – pension statements, proof of rental income, dividends, or other supporting documents
• Latest personal tax return – confirms annual income and tax obligations
• Bank reference letter – a letter from your bank confirming your financial standing (sometimes required, especially for non-residents)
• Proof of savings or investments – statements showing additional financial resources, such as savings accounts or investment portfolios
• Property purchase agreement or sales contract – documentation of the property you intend to buy
• Recent mortgage statement – if you already have a mortgage, provide an up-to-date statement to show existing financial commitments 

Additional notes: 

• All documents may need to be officially translated into Portuguese, depending on the lender.
• Some banks may request additional documents, such as proof of employment history or details of existing debts.
• The process can often be handled digitally or through a legal representative with power of attorney.

Legal considerations and taxes

Portugal’s legal system is friendly to foreign buyers, but hiring a local lawyer is advised when moving to Portugal from the USA to check the title, debts, and compliance. The main ownership types are freehold and leasehold. Key costs include IMT (0–8%), stamp duty (0.8%), notary/registration (1–2%), and annual IMI (0.3–0.45% urban, 0.8% rural). 

AIMI applies to high-value properties. Rental income is taxed at 25% for non-residents; capital gains at 28%. Property ownership does not confer tax residency. The NHR regime may offer tax benefits for some expats. Careful planning and professional advice are essential for a smooth purchase.

Healthcare system in Portugal

US citizens living in Portugal have access to both public and private healthcare options:

Public healthcare access for non-EU residents

Americans can access the public healthcare system (Serviço Nacional de Saúde or SNS) after obtaining residency. Register at your local health center with your residence card, tax number (NIF), and identification. 

A family doctor will be assigned for primary care. The SNS covers primary care, specialist visits, emergency services, hospitalization, and subsidized medications, usually for modest co-payments of €5–20 ($6–23).

Emergency treatment is available regardless of residency status. Many medical professionals speak English, especially in urban areas.

Private options

Many Americans supplement public care with private insurance for faster specialist access, shorter wait times, and direct access to private facilities. Monthly premiums range from €40–200 ($50–230), significantly lower than US policies.

Private facilities are concentrated in major cities like Lisbon, Porto, and Faro. Prescription medications cost substantially less than in the US, with pharmacies widely available and staff often able to provide basic medical advice in English.

How to get health insurance as an expat

Several options exist for expats seeking health insurance in Portugal. Popular local providers include Medis, AdvanceCare, and Multicare, while international insurers like Allianz and Cigna offer expatriate policies. 

Medicare doesn't cover healthcare outside the US, so alternative coverage is necessary. Some retirees maintain catastrophic coverage in the US while using Portuguese healthcare for routine needs. 

When choosing where to live, consider proximity to quality healthcare facilities, as rural areas may have limited options. Many Americans report healthcare costs at just 20–30% of US prices while receiving comparable or better care, making healthcare affordability a major benefit of living in Portugal.

NOTE! Most major Portuguese cities have excellent healthcare facilities, though rural areas may have more limited options.

Education and family life

International schools

Portugal offers a range of international schools catering to expatriate families, particularly in Lisbon, Porto, and the Algarve. These schools provide curricula such as American, British, or International Baccalaureate (IB), ensuring continuity for students transitioning from US schools. 

Notable institutions include the Carlucci American International School of Lisbon (CAISL), Nobel International School Algarve, St. Dominic’s International School, and Oporto British School. Tuition fees range from €6,000 to €24,800 ($6,800 to $28,300) annually, depending on the school and grade level. 

Many schools feature smaller class sizes, English-language instruction, and extracurricular activities like robotics, sports, and arts. They often follow an American academic calendar (August/September to June) and offer AP or IB programs. Early application is advised due to waiting lists.

Universities

Portugal boasts excellent higher education options for international students. Prestigious universities such as the University of Lisbon, the University of Porto, and the University of Coimbra offer affordable tuition, averaging €1,000–7,000 ($1,100–8,000) per year – significantly lower than US costs. 

English-taught undergraduate and graduate programs are increasingly available, making them accessible to expats. Degrees are EU-recognized, opening career opportunities across Europe. 

Application requirements typically include academic transcripts and proof of language proficiency. These universities are known for their strong academic reputation and vibrant student communities.

School system overview

The Portuguese education system is divided into preschool (ages 3–6), primary education (ages 6–15), secondary education (ages 15–18), and higher education. Public schools are free, but primarily teach in Portuguese. Some urban schools offer bilingual programs or support for non-native speakers. 

The curriculum emphasizes languages (English is mandatory from primary school), mathematics, sciences, history, geography, and physical education. Adjusting to Portuguese instruction can be challenging initially; however, children often adapt quickly and achieve fluency within a year. Public schools follow a mid-September to mid-June calendar with breaks for Christmas, Carnival, and Easter.

Cultural integration & language

While many Portuguese speak English, especially in cities and tourist areas, learning Portuguese is highly recommended for a richer experience when moving to Portugal. 

Basic proficiency helps with daily interactions at markets, restaurants, and government offices. Language schools in Lisbon and other cities offer intensive courses for expats, from two-week immersion to semester-long classes. 

Online platforms like Duolingo, Babbel, and FluentU provide convenient ways to learn. Language exchange meetups (intercâmbios) let you practice with native speakers.

Locals appreciate any effort to speak Portuguese and are patient with learners, making integration easier.

Cultural etiquette and social norms

Portuguese culture emphasizes personal relationships and family connections. Multi-generational families often gather for meals on Sundays and holidays.

A relaxed approach to time is common in social settings – arriving 15–30 minutes late is acceptable, but punctuality is expected in business.

Politeness and formality are important; using titles like “Senhor” (Mr.) or “Senhora” (Mrs.) is customary when addressing professionals or elders. Meals are social occasions meant to be enjoyed slowly, with long lunch breaks.

Greetings typically involve a handshake or kisses on both cheeks, starting with the right cheek. Criticism is often delivered indirectly to maintain harmony.

Integrating and connecting with the people

Building connections when moving to Portugal can be achieved through various activities. Expat groups on platforms like Facebook, Meetup, and Internations host events for newcomers adjusting to life in Portugal.

Language exchange meetups combine cultural interaction with language practice. Volunteering opportunities with organizations like Re-food or Serve the City provide meaningful ways to contribute while meeting locals.

Attending local festivals such as Festas de Lisboa or Festa de São João offers authentic cultural experiences and opportunities for social interaction. Sports clubs, cooking classes, and hobby-based workshops also foster connections aligned with personal interests.

Banking, taxes, and financial setup

Relocating to Portugal as a US expat means new banking systems, dual taxes, and tax benefits. Here’s what you need to know.

Opening a Portuguese bank account

This is a priority. US citizens need to bring their passport, Portuguese tax number (NIF), and proof of address. Some banks may also request proof of income or a Portuguese phone number. 

Expat-friendly banks with English services include Millennium BCP, Novobanco, and Santander. Expect monthly fees of €2–7 ($2–8) and a minimum deposit of €250–300 ($280–340). Digital banks like ActivoBank and N26 are also options for online setup.

Currency, cards, and money transfers

Portugal uses the euro. Major credit and debit cards are widely accepted in cities, but cash is preferred in rural areas. The Multibanco ATM network is extensive and offers better exchange rates than currency exchange offices.

For international transfers, avoid high bank fees by using services like Revolut, Wise, or OFX. Multi-currency accounts can simplify spending and transfers.

US tax obligations while living in Portugal

Americans moving to Portugal remain subject to US tax laws, including the requirement to file annual tax returns on worldwide income, regardless of residency.

Here’s a quick summary:

• Foreign Earned Income Exclusion (FEIE): In 2024, you can exclude up to $126,500 of foreign-earned income if you meet residency tests.
• Foreign Tax Credit (FTC): Offset US tax liability with taxes paid to Portugal.
• FBAR (FinCEN 114): Required if your foreign bank accounts total over $10,000 at any time during the year.
• FATCA (Form 8938): Report foreign assets if they exceed IRS thresholds.
• Social Security: The US-Portugal Totalization Agreement determines which country’s system you pay into, depending on your length of stay.
• The US and Portugal have a tax treaty to help prevent double taxation, but the US “saving clause” means you must still file US taxes. Most expats utilize the FTC or FEIE.

Portuguese tax residency and filing

You become a Portuguese tax resident if you spend 183+ days in Portugal in a year or have a habitual residence there. Residents are taxed on worldwide income at progressive rates up to 48%. 

Non-residents pay a flat 25% on Portuguese-source income. Annual tax returns (Modelo 3) are required, and foreign income must be declared, especially if you benefit from the NHR regime.

Need support? Taxes for Expats can offer a personalized tax prep quote in 2 minutes.

Portugal's NHR (Non-Habitual Resident) tax regime

Portugal’s Non-Habitual Resident (NHR), introduced in 2009, offers significant tax benefits for new residents for up to 10 years. Some notable features:

• Reduced tax on foreign income: Most foreign-source income, such as dividends and pensions, is taxed at reduced rates or is exempt if covered by a double taxation agreement.
• Flat 20% tax rate: Portuguese employment income in qualifying professions is taxed at 20%, compared to standard rates of up to 48%.
• No Wealth Tax: There’s no wealth tax, and gifts/inheritance to direct family are exempt.

Recent changes: The original NHR regime closed to new applicants in 2024, but transitional rules allow some to still apply. A new “NHR 2.0” (IFICI) regime now focuses on attracting professionals in innovation and R&D fields. If you qualify, apply within your first year as a tax resident and ensure you were not a Portuguese tax resident in the previous five years.

Final tips:

• Get your NIF early (needed for almost all financial transactions).
• Consult a cross-border tax advisor to optimize your situation and ensure compliance.
• Keep detailed records for both US and Portuguese tax filings.
• Use digital banking and transfers to minimize fees.

Practical life setup

Internet and mobile services

Portugal boasts reliable digital infrastructure, with high-speed fiber internet (100+ Mbps), costs of €2540 ($3050) per month, with major providers like MEO, NOS, and Vodafone.

Installation is typically completed within 12 weeks. Contracts usually last 1224 months, though some providers offer shorter. Mobile plans start at €1015 ($1020) per month for 35GB data, while unlimited data plans are €2530 ($3035). Prepaid SIM cards are widely available for newcomers.

Coverage is excellent, with 4G/5G networks reaching over 98% of populated areas, and public WiFi is common in cafes and public spaces.

Driving and getting a license

US citizens can drive in Portugal on their US license for up to six months. After this period, you must exchange your license for a Portuguese one. The process depends on your state of residence, with some requiring only translation and paperwork, while others may require a driving test.

Portugal’s roads are well-maintained and have excellent public transportation, with monthly passes of around €40 ($50), making car ownership unnecessary for many expats.

Bringing pets

When relocating to Portugal with pets, ensure they are microchipped and have a rabies vaccination at least 21 days before travel. An EU health certificate from a USDA-accredited vet, endorsed by your state’s USDA office, is required. No quarantine is necessary if all documentation is correct. Portugal is pet-friendly, with affordable veterinary care and many public spaces that welcome dogs.

Shipping belongings

Shipping household goods from the US to Portugal takes 36 weeks by sea, with costs ranging from $2,00010,000 depending on volume. Air freight is faster but significantly more expensive.

Portugal offers customs duty exemptions for personal belongings if you’re relocating. Proof of prior address, Portuguese residency, and an inventory in Portuguese are required. Many expats ship only essentials and buy furniture locally, as retailers like IKEA are widely available.

Need help navigating taxes when moving to Portugal?

Moving to a new country comes with complex tax implications. Our specialists can help ensure you meet all requirements for tax compliance in both Portugal and the US. With expertise in expat taxation, we'll guide you through everything, including:

• US tax filing requirements while living abroad
• Portuguese tax obligations
• NHR application and benefits
• double taxation treaties
• FBAR and foreign account reporting