How Much Do You Need to Retire in Portugal?

Many people think of the ex-pat lifestyle as being only for the young or the business-minded, but it can also be an excellent way to retire. However, there are some additional costs and considerations one must be mindful of when it comes to retiring in a foreign country. Here are just a few of the most important things to keep in mind when you plan on retiring in Portugal.

The easiest way to retire in Portugal is when you are a citizen of an EU country. EU citizens can move to Portugal and then apply for a residency in one of the many SEF (Servico de Estrangeiros e Fronteiras) offices, basically immigration offices. Once you do that, you will receive many of the same retirement benefits that Portuguese citizens do. If you are a non-EU citizen, things are a bit more complicated. You have two options, the first of which is the residency permit.

For that, you’ll need a passport, proof of income, proof of health insurance, and a document of your criminal record. Once you bring these to the consular offices in Portugal, you can receive the permit, which will last for about five years. Only after those five years can you apply for a permanent residence. The second way a non-EU citizen can retire in Portugal is through a golden visa.

You can get this visa by buying property for more than €500 000, making a capital transfer of €1 000 000, creating ten full-time jobs in Portugal, donating around €350 000 to qualified research or the arts, or investing the same amount into a qualifying investment fund in Portugal. These rules are often lenient, so make sure you consider it if you can take this route.

Whether public or private, healthcare in Portugal is readily available to most citizens and residents and tends to be either free or with small fees attached in exceptional cases. As a retiring EU citizen, you will need the S1 form in the country of your origin to have access to public healthcare insurance in Portugal. It’s that simple. Non-EU citizens can only be part of the national healthcare insurance after five years of their stay, that is, after they receive permanent residence.

For the duration of the five years, you will need private insurance. The cost of private insurance is very different based on your age. People under 55 won’t have a problem finding decent private insurance, but many companies won’t insure people over that age. Companies like Millennium Bank’s Medis, Tranquilidade, and Multicare all insure people over 55, with Medis going as far as 75 years old. However, the older you are, the steeper the price may be – sometimes up to several hundred euros per month.

First off, Portugal offers a remarkable tax reduction if you are a so-called “non-habitual tax resident”. This makes it so that you only pay 20% tax on your income instead of the bracketed tax rates as high as 48%. You can only achieve this status if you have not been a tax resident in Portugal in the previous five years.

But that’s not all that this status gives you. You are also exempt from taxation in Portugal for the next ten years on all your international income, including businesses, rental income, investments, salaries, capital gains, pensions, and more. All Portuguese income will be taxed at the 20% rate rather than the higher bracketed one. Lastly, Portugal has double tax treaties with both EU and most non-EU countries, ensuring that you won’t pay your taxes twice for the same income.