Living in Portugal: A Guide for Expats and Movers

Portugal is one of the most popular destinations for Americans and other English speakers moving abroad, and the appeal is practical as much as anything: a lower cost of living than most of the US and Western Europe, a public healthcare system, and a mild climate year-round.

Living there full-time is a different proposition from visiting, though. You need to work out what things actually cost, how the tax system treats your income, how healthcare works once you’re a resident, and which part of the country fits how you want to live.

This guide covers the day-to-day realities of life in Portugal: cost of living, healthcare, transport, taxes, and where to settle. If you’re still deciding on the visa itself, that’s a separate question worth getting right early.

What Portugal Is Like to Live In

Portugal sits on the southwestern tip of Europe, roughly the size of Indiana, plus two Atlantic archipelagos: the Azores and Madeira. That location makes it an easy base for travel around Europe, with direct flights to the US and UK from Lisbon, Porto, and Faro. A flight to New York runs about seven to eight hours; London is around three.

The climate is a big part of the draw. Winters are mild and summers are warm across most of the country, with the Algarve coast in the south getting the most reliable beach weather. The interior highlands are cooler and do get snow in winter, with skiing at Serra da Estrela.

Portugal has a relatively low crime rate. Petty theft and pickpocketing happen in tourist areas, on beaches, and around transport hubs, but violent crime is uncommon. The country has formal separation of church and state and protects freedom of religion, though the population is majority Catholic.

Cost of Living

Living costs in Portugal are lower than in the US, the UK, Australia, and Scandinavia, and compare favorably to Western European countries like Germany, France, and the Netherlands. That holds even in Lisbon and Porto, the two most expensive cities. Many retirees find that a modest pension and some savings cover a comfortable life.

What you actually spend depends heavily on where and how you live. Lisbon and the Algarve resort towns cost the most; inland areas and smaller cities like Braga are considerably cheaper.

Rent and Utilities

Rent is the biggest variable. It’s cheaper than comparable cities like London, Copenhagen, or Madrid, but prices in Lisbon, Porto, and Cascais have risen sharply and are no longer the bargain they once were. You’ll pay considerably less inland or in less-populated areas. Size, location, and whether the property has features like sea views all move the number.

Utilities usually aren’t included in rent. Budget for electricity and water on top of your rent, and confirm what’s covered before you sign.

Healthcare Options for Expats

Portugal has three layers of healthcare: the public system (Serviço Nacional de Saúde, or SNS), special health schemes tied to certain professions, and private voluntary insurance.

As a legal resident, you can access the SNS. Your GP is the gatekeeper: there’s no direct access to specialists without a referral. Hospitals handle secondary and specialist care. Care through the SNS is generally good quality and inexpensive, but wait times for non-urgent treatment can be long.

That’s the main reason many expats also carry private health insurance. Private cover gives you a choice of providers and shorter waits, and it’s reasonably priced compared to the US. If you’re moving on a visa, note that most Portuguese residence visas require proof of private health insurance for the application regardless of your later SNS access.

For a comparison of what private expat cover costs and includes, see our guide to choosing expat health insurance.

Transportation

Getting around Portugal is easy and cheap by US standards, and in the cities you can manage without a car.

Air

Portugal is well connected internationally. Lisbon’s Humberto Delgado Airport is about 7 km from the city center with direct flights to the US, Europe, and beyond, and it’s a hub for the national carrier TAP and for low-cost European airlines. Faro serves the Algarve and Porto serves the north, both mainly for European routes. Madeira and the Azores are connected largely to the mainland.

Trains and Buses

Comboios de Portugal runs the rail network, connecting Lisbon and Porto with coastal and inland towns north and south. Tickets are affordable and discounts are common. Long-distance buses fill in the gaps rail doesn’t reach, with several national companies covering routes from the far north down to the Algarve.

Metro

Lisbon and Porto both have metro systems, and both are cheap, with a single ride costing a couple of euros. Day passes and monthly passes are available if you’ll use them regularly.

Driving

Owning or renting a car makes sense if you live rurally. Roads and the motorway network are good, though many motorways are tolled. Speed limits are generally 50 km/h in built-up areas, 90 km/h on rural roads, and 120 km/h on motorways. Penalties for serious offenses like drunk driving are steep and can include losing your license.

Exchanging Your Driving License

You can drive on your existing license when you first arrive. Non-EU license holders need to exchange for a Portuguese license within the first months of becoming resident; EU license holders get longer. To exchange, you’ll typically need a summary of your driving record from home and a medical certificate confirming you’re fit to drive. Check the current requirements and deadlines with the Portuguese authorities (IMT), as the rules and timescales can change.

Taxes

As a resident of Portugal, you’re taxed on your worldwide income. Portugal has tax treaties with around 80 countries, including the US and the UK, which are designed to stop the same income being taxed twice. US citizens should note that America taxes based on citizenship, so you’ll still file a US return no matter where you live.

The NHR regime has closed

Older guides make a lot of Portugal’s Non-Habitual Resident (NHR) scheme, which gave new residents ten years of reduced or zero tax on foreign income. That regime is closed. It stopped accepting most new applicants at the start of 2024, and the final transitional window ended on March 31, 2025. If you already hold NHR status, you keep it for your full ten-year term. If you’re moving now, you can’t get it.

Its replacement, called IFICI (sometimes “NHR 2.0”), is much narrower. It’s aimed at people working in specific high-value fields like scientific research, technology, and higher education, and it excludes pensions and passive income. Most retirees and remote workers living on foreign income will not qualify. If tax treatment is central to your decision to move, this is worth reviewing with a Portuguese tax advisor before you become resident, because the rules turn on your exact situation.

Standard income tax

If you don’t qualify for a special regime, you pay standard Portuguese income tax (IRS). It’s progressive across nine brackets, running from roughly 13% on the lowest band up to 48% on income above about €81,000. Higher earners also pay a solidarity surcharge, and municipalities can add a small surcharge on top.

VAT

VAT (IVA) has three rates on the mainland: a 23% standard rate, a 13% intermediate rate, and a 6% reduced rate. Madeira (22 / 12 / 5%) and the Azores (16 / 9 / 4%) are lower.

Capital gains

Capital gains on financial assets are generally taxed at a flat 28%. Gains on the sale of property work differently: for residents, only half the gain is taxable, added to your other income at the progressive rates, unless you opt for the flat rate.

Filing

The tax year is the calendar year, and you file your return the following spring, between April and the end of June, online or on paper. Late filing carries penalties, so it’s worth staying on top of the deadline.

Pensions and social security

Portugal has a state pension for those who’ve paid social security contributions there. EU citizens can arrange for their home state pension to be handled through the Portuguese system. Non-EU citizens, including Americans and Britons, can have US Social Security or a UK state pension paid to them in Portugal. How your pension is taxed depends on your residency status and the relevant treaty, so it’s worth getting advice specific to your income.

Best Places to Live in Portugal

Where you settle depends on whether you want a city, the coast, or somewhere quieter and cheaper. Here are the areas expats most often choose.

Cities

Lisbon is the capital and the main draw for people who want city life, good schools, and career options, with the coast close by. It’s also the most expensive place in the country, and rents have risen sharply in recent years.

Porto, Portugal’s second city about 300 km north, is cheaper than Lisbon without giving up much. It has good restaurants, strong healthcare, and it’s the home of port wine. A common choice for people who want a city without Lisbon prices.

Portimão, on the Algarve’s south coast, has a large expat community and is a popular retirement spot. It has good beaches and its own regional airport.

Beyond the cities

Braga, in the north near the Spanish border, is cheaper than the big cities and puts you close to both mountains and coast.

Ericeira, just north of Lisbon, is a small seaside town known for surfing.

Alentejo is the rural south: quiet, spread out, and cheaper, if you want to be away from crowds.

Ponta Delgada, the capital of the Azores, offers island life with a lower cost of living than the mainland, at the cost of being more remote.

Madeira is Portugal’s other island option, popular with people who want nature and mild weather year-round, and it has become a hub for remote workers.

What to Do Next

The practical first step is working out which visa fits your situation, since that determines almost everything else about your move. Portugal’s residency system can be slow and much of the process runs in Portuguese, so most people moving from outside the EU get professional help with it. If you’re weighing your options, our guide to moving to Portugal covers the main visa routes, and an immigration lawyer can tell you quickly which one applies to you.