Obtaining a Residence Permit in Portugal for Retirees: What You Need to Know

Portugal is one of the most attractive countries for moving and obtaining a residence permit. It is sunny there, the air temperature rarely drops to or below 0°C in winter. Despite the proximity of the ocean, the number of fine days is close to 300 per year. Portugal has several zones with different climatic conditions. You can choose the right region to live in: mild-coastal climate with warm winters versus northern areas with bright summers and cool winters, whatever you like better.

Is It a Good Idea to Move to Portugal When You Retire?

When trying to decide whether it may be a good idea for you to relocate to Portugal when you retire, you need to take into account the key aspects of life in the country and the conditions on which permanent resident permits are issued for retirees.

Life of Immigrant Retirees in Portugal

Portugal is one of the most attractive countries for obtaining a residence permit for retirees. According to GPI estimates, the country is one of the top-5 places for comfortable living. The rating indicates high life expectancy, safety, high-quality healthcare, and a well-developed culture. There are world-class clinics, where prices for some treatment procedures are lower than in most other EU countries. Also, Portugal is distinguished by a suitable climate that is suitable for year-round cultivation of flowers and plants.

Talking about the advantages of relocating to the west of the Iberian Peninsula for retirees with a permanent residence permit, we need to discuss the following aspects of life in the country:

1. Environment. According to the Center for Environmental Policy established by Yale University, Portugal is among the top-30 countries with the best environment. For example, there are enough safe beaches here: 352 as of 2019 (including 317 on the sea coasts and 35 riverside ones).

2. Safety. According to the GPI rating compiled by the Institute for Economics and Peace, Portugal ranks second in terms of security in Europe. Local residents are generally law-abiding, warm-hearted citizens who are friendly about migrants.

3. International mix. Portugal is chosen by immigrants (especially retirees) from all over the world. The top lines on the list of immigrants’ ethnicities are occupied by Brazil, the UK, Cape Verde, Romania, Ukraine, Italy, China, and France, with over 46,000 British citizens registered for permanent residence in Portugal in 2020. There are large national diasporas in all the large cities: Lisbon, Porto, and others. Also, there are plenty of foreign nationals in the resort region of the Algarve. Big supermarkets in Lisbon offer goods from all corners of the globe, and there is a great cultural variety of churches, interest groups, and activities.

4. Leisure. In addition to resorts, Portugal has a lot to keep a visitor busy. The country features its own style of architecture. The country houses 15 UNESCO- protected historical sites, plus plenty of attractions, museums, and venues offering children and adult entertainment. The Portuguese appreciate festivals, which, in terms of color and scope, are practically on the level with Brazilian carnivals.

5. Cuisine and winemaking. One distinctive feature of Portugal is the predominance of fresh seafood: fish, shells, crabs, mussels are consumed in sufficient quantities due to the geographical position of the country, surrounded by the Atlantic Ocean. The position also ensures relatively inexpensive food prices. Portuguese wines are famous all over the world: pink, red, white, and green ones. Also, they produce Madeira – a strong drink infused with grapes.

6. A large selection of restaurants. You can choose between all sorts of venues, including small family restaurants, where the design is not changed for years, if not decades, and you can always expect high-quality, mouth-watering food.

7. All-year-round fishing. Many pensioners with a residence permit enjoy this great activity. In addition to the ocean, Portugal has plenty of fresh-water bodies of various sizes, which are full of fish. Fishing in the ocean is also available, and certain types of fish can be caught even from the shore. However, legal fishing requires a license. To fish in the ocean, you will need to get the corresponding permits issued by one of the DGRM branches. A license for freshwater fishing is given by the specialized Institute of Forestry and Nature Conservation.

8. Well-developed transportation network in large cities. Metro, trams, buses, and suburban trains provide the necessary comfort and speed of movement. At the same time, public transport in small towns is far less developed. 

Features of Various Portuguese Regions

Retirees who request Portuguese permanent residence are always interested in the information that may help choose the part of the country to live in. Portugal has 7 regions:

1. Northern Region. The second region in financial importance, this is the industrial center of Portugal. The area is famous for medical institutions and universities with internationally recognized diplomas. The center of the region is Porto, where many pensioners from various countries choose to relocate. This is the coolest region, not suitable for year-round beach holidays.

2. Central Region. The main distinctive features of the region are the combination of different landscapes and high environmental safety. Also, the country’s leading university and medical center are located here.

3. Lisbon Region. The scientific and technological center of Portugal with large diasporas of foreign retirees. There are many sports schools here, and the beaches are good for relaxing holidays and surfing.

4. Alentejo. The largest region in the country. Its southern position contributes to the development of winemaking and agriculture. Pensioners applying for a residence permit appreciate Alentejo for its favorable climate for gardening and growing flowers. However, frequent strong winds from the shores of the Atlantic make enjoyable beach holidays unlikely.

5. Algarve. The region has a mild, favorable climate. Even in winter it is pretty warm, therefore the main business here is tourism. Algarve is distinguished by a long coastline saturated with hotels, gambling and entertainment facilities, including many water parks.

6. Madeira. An island embraced by Golf Stream. The climate here is mild, so the island lives off tourism: there are hundreds of hotels and entertainment facilities. Madeira is also famous for its unique botanical gardens.

7. The Azores. A group of small islands, it is the smallest region in Portugal. The climate here is changeable, and the infrastructure is not as developed as in the other regions of the country, which makes the Azores far less popular for relocation.

What Are the Disadvantages of Living in Portugal with a Retiree’s Residence Permit?

Before applying for a residence permit and moving to Portugal, it is necessary to assess the possible negative aspects of living in the country during your retirement. Retirees should consider the following:

1. High taxes. In some countries pension is completely exempt from taxes, but Portugal is not one of them. Here, if you change your tax residence to Portuguese, you will have to pay the tax in the amount of 10% of your pension received from another country. Retirees can apply for the status of a Non-Habitual Resident, which allows them to get a reduced tax rate and helps avoid double taxation. Getting this status is an excellent idea, because tax residents of Portugal without it pay a pension tax (which is regarded as an income tax) on a progressive scale going up to the staggering 48%! Non-EU citizens who choose to receive their state pensions at Portuguese banks need to check the requirements and conditions put forward by their home countries regarding transfers of pensions abroad.

2. Comparatively high real estate prices. Portugal has overcome the economic crisis, and the well-being of the population has been steadily growing. Comfortable living conditions attract foreign investors, who participate in programs offering permanent residence for investments in real estate. All the factors put together have led to the notable increase in the prices for apartments, houses, and cottages in Portugal.

3. Difficulty with finding a job. Retired pensioners who receive a residence permit are highly unlikely to find a permanent job. At the same time, seasonal part-time jobs in agriculture and tourism are quite possible to get. However, given the relatively low prices, pensioners may be satisfied with the income received in their home countries (for example, retirement benefits plus real estate rental income).

4. Bureaucracy. Portuguese bureaucracy is notoriously comparable to the Italian one. Officials and the administrators are not used to rushing around, so it takes weeks and months to resolve most of the regular issues. Not knowing the Portuguese language will be a problem. Also, in certain situations local legislation requires the presence of a tax representative (a person with a permanent residence permit status, a Portuguese citizen, a representative of a legal entity registered in Portugal). With the development of the system of online applications for administrative procedures, bureaucracy began to ease up, the queues have shortened, but there are still some problems and delays.

5. Peculiarities of traffic and transportation. In large cities, public transport is well developed and easily covers most of the residents’ needs. Deeper into the country, the situation is much more complicated. More often than not it is impossible to do without a personal automobile or perhaps getting a one through carsharing. At the same time, there are many dangerous, curvy roads in Portugal, which is explained by the peculiarities of the local topography. All highways in the country are paid. The fare for a passenger car is 10 euros per 100 kilometers.

Conditions for Granting a Residence Permit to Retirees

There are two realistic options for retirees to move to Portugal with a permanent residence permit:

• Buying real estate; and
• Making investments in the country’s economy.

Obtaining a Residence Permit Through Buying Residential Real Estate

As of 2022, the Portuguese program of issuing permanent residence permits in connection with purchasing real estate has been limited in the largest and most popular cities like Porto or Lisbon. An investor is welcome to buy an apartment or a cottage in less populated cities and towns or in other autonomous regions, which include Madeira and the Azores. However, fears about the possible closure of the Golden Visa program in Portugal are certainly premature: according to the news, the Parliament has rejected the suggested bill about ending the corresponding immigration program. It is important to note, though, that this way of obtaining permanent residence is only usable for relocating one or two people (the applicant and their spouse). It does not cover the applicant’s parents, children or other dependents. This program allows the visitor to receive the PRP after 10 years of residence in the country.

Obtaining a Residence Permit Through Investments in the Country’s Economy

Investing in the country’s economy provides a greater freedom of action. There are two investment options:

1. Buying commercial real estate, which was built no less than 30 years ago or is located in the areas of renovation.  The estimated cost is from 280,000 Euros, but the most realistic amount is from 350,000 Euros. The main advantage of this approach is the opportunity to sell the commercial real estate in 5 years, which will recoup the incurred costs.

2. Buying unit shares investment trusts. A trust fund is a special type of financial company engaged in attracting foreign capital for purposes of capital growth. An investment trust fund identifies promising assets and invests the financial means it receives from participants. Such lucrative investment areas may include commercial real estate, local business, industrial facilities, etc. The average payback period of investments is 6 to10 years, the shortest investment period is at least 5 years, and the minimum amount is 500,000 Euros.

Even considering the greater costs, this method of obtaining a permanent residence permit in Portugal has a number of advantages compared to the acquisition of residential real estate. IN the first place, investments provide extra profits, and if the person buys commercial property (supermarkets, manufacturing sites or office space), it can be resold in 60 months.

The conditions for obtaining a residence permit for retirees are also simplified in this program: it is enough to live in the country for only one week a year, and knowing the Portuguese language is not required when processing documents. Another advantage of the investment program is the opportunity to relocate the whole family: the applicant’s spouse, children, and parents. Here it is necessary to note that in order to obtain a residence permit, children must be under 18 years old or financially dependent on their parents (for example, they may be receiving education in higher educational institutions).

An investor is guaranteed to receive a residence permit in 2-6 months, and the probability of refusal is practically zero. At the same time, having received a residence permit, the person has the right to travel to all the countries of the Schengen agreement without any special visas.

Here are some of our most popular services for Portugal and other European countries:

• Getting a Residence Permit in Portugal
• A Concise Guide to Buying Real Estate in Portugal
• What You Need to Know about Portuguese Residency by Investment Program
• Can a Non-Resident Register a Company in Portugal?
• Buying a Plot of Land in Portugal
• Review of Portuguese Private Schools for Expats
• Getting a Residence Permit by Investing in Real Estate in Cascais
• A Guide to Relocating to Algarve, Portugal

How Much Money Do You Need to Spend Your Retirement in Portugal?

According to the requirements of the Portuguese Migration Service, a pensioner applying for a residence permit must officially confirm the income of 500 Euros per month for the applicant, plus 250 Euros for their spouse, the total of 750 Euros per month. However, when planning how much money you need for a comfortable life in Portugal, you need to take into account some realities of the country, such as food prices.

Compared to other countries of the European Union, Portugal is one of the cheapest. Here are some approximate prices for some essential goods:

• bread – 1 Euro;
• cheese – 10 Euros;
• beef or pork – 12 Euros;
• chicken filet – 7.5 Euros;
• milk (1 liter) – 0.9 Euros;
• eggs (10 pieces) – 2.8 Euros;
• rice (1 kg) – 1.2 Euros;
• oranges – 2 Euros;
• local wine (1 bottle) – 5 Euros.

It is also important to take into account the other types of unavoidable expenses for pensioners in possession of a residence permit:

1. Utility payments. When trying to estimate the size of payments for apartment maintenance, you can make the following calculations: 1 square meter approximately equals 1 Euro or more. An apartment of 80 square meters will cost 80-110 Euros per month. However, this amount does not include the cost of electricity (40-50 Euros) and water supply (10-20 Euros). Also, not all districts have centralized gas supply, and if it is not available, it is necessary to order gas cylinders that cost about 20 Euros for 10 liters (enough for about 35 hours of use). Unlimited internet costs about 65 Euros a month, satellite (cable) TV – 25-30 Euros.

2. Telecommunications. There are only 3 major mobile operators in Portugal, but given the small size of the country, this is enough to develop competition, so communications are relatively inexpensive. Approximately 0.17 Euros per minute and 30 Euros for unlimited connection for a month.

3. Leisure and entertainment. A ticket to the cinema costs about 15 Euros, a monthly subscription to a fitness club – 80 Euros, and renting a tennis court – 35 Euros per hour.

4. Transportation. Calling a taxi comes at 3.45 Euros plus the fare of 0.5 Euros per kilometer. Public transport ticket is 1.5 Euros, and a monthly pass is around 40 Euros.

According to some retirees who have applied for a residence permit, the cost of living in Portugal is lower than in most European capitals. So, a pension one may get after having a respectable job plus some passive income from renting out property is surely enough for a quiet life for two retirees in Portugal.

The total amount required for comfortable living per month depends primarily on the needs of the pensioners, the presence or absence of a private automobile, the type and district of housing they decide on, and the region they choose for permanent residence.

Do Pensioners Pay Taxes in Portugal?

Until 2020, pensioners who received a residence permit under the NHR program (acquisition of residential real estate) received a ten-year grace period, during which they were exempted from paying income tax on the pensions received from their home countries.

However, do retirees pay taxes in Portugal now? In 2020, the bill was amended, and the grace period for emigrant pensioners was canceled. Today, if a resident of Portugal who receives a residence permit under the NHR program gets a pension in another country, he is obliged to pay a tax on it in the amount of 10%.

The rate is always 10%, regardless of the way the pension is paid (e.g., through annuities or similar payments). If a retiree’s pension is not taxed in their home country, the specified 10% of their income is the only thing they will be paying.

To sum up, we can say that with the Non-Habitual Resident status the recipients of state foreign pensions in Portugal are taxed in the amount of 10% of their income. Following are some peculiarities of taxation for pensioners:

• passive income (interest, dividends, capital gains) is not taxed, provided it is received in another country and is taxed there;
• there is no tax on inheritance and donated wealth (if they were received outside of Portugal);
• there is no wealth tax.

All these financial features are to be taken into consideration if you are thinking about moving to Portugal for your retirement years.

Conclusion

As a country with a high standard of living, Portugal attracts immigrants of all ages, including retirees from many countries of the world. These immigrants seek a calm, measured life in a mild warm climate, not far from the sea or the ocean and away from the pollution and rush of big busy cities. The main advantages of obtaining a residence permit in Portugal for pensioners are as follows:

1. High-quality healthcare. Portugal has some of the world’s leading clinics, a number of which focus on fighting against age-related diseases. The cost of medical procedures is less than in most European countries.
2. Mild, warm climate. The weather and the climate make gardening possible almost all year round. Given the importance of the environment for our health, Portugal is an excellent option for recovery and keeping fit. Clear sea air helps to strengthen the immune system.
3. Affordable prices. Generally, life in Portugal is not expensive compared to the neighboring European countries, so a pension plus some passive income (for example, earnings from renting out real estate) can provide for a comfortable moderate life.
4. Low crime rate. The Portuguese are a peaceful people, there are few crimes even by the standards of the EU.
5. Large foreign diasporas. It is not hard to find expats from most large European countries. There are dozens of interest groups on the Internet, which greatly simplifies adaptation for pensioners who have moved into the country with a residence permit.

The main disadvantage is the complicated requirements and procedure for getting the residence permit for retirees. The minimum starting capital is around 100,000 Euros. In addition, you will need to confirm the official income in your home country in the amount of about 500 Euros a month (plus 250 Euros for a spouse). This is the way Portuguese authorities are trying to limit the influx of low-income immigrants, targeting at accepting the individuals who can bring real profit to the state.

If you are considering the prospect of relocating to Portugal (or perhaps another country in or outside the EU), please contact us today for a free consultation. Our experts will help you review the existing destinations and opportunities, analyze the key requirements of various permanent residence programs and make the most beneficial choices just for you!