Americans in Portugal
A new financial service has launched for American expats in Portugal.
When US citizens think to move or retire, Portugal is usually on the top of the list. Americans choose to move to Portugal from the United States to have a high-quality life in a European country. Recent studies show that over 60,000 expats have decided to live in Portugal, with 11 percent of them being US citizens.
Click here to meet Americans in Portugal.
“In the last decade, the overall population in Portugal has declined even as the number of foreigners has grown by 40%. The ranks of American citizens living in this land of 10 million shot up by 45% last year. Within the mix of retirees, digital nomads and young families fed up with issues including the costs of housing and healthcare, Trumpian politics and pandemic policies, Californians are making themselves known in a country once considered the forgotten sibling of Spain.”
– LA Times.com
Cascais, Portugal is one of many enclaves where American expats are enjoying a slice of the laidback Portuguese lifestyle. In one wealthy enclave about 15 miles from the Portuguese capital, Lisbon, American expats are finding their slice of California on the west coast of Europe: ocean breezes, mountain views, hot spring days on palm-tree-lined promenades, and the glow of sunsets that seep into the night.
Once Americans have found their ideal destination in Portugal, they need to move house and set up new financial arrangements.
Things to Think About When Moving to Portugal
- Setting up a local bank account in EUR in Portugal
- Setting up an offshore bank account in EUR or/and USD
- Setting up an offshore portfolio to hold your shares
- Setting up a savings plan
- Review your current retirement plan
- Speak to a US tax attorney to get your affairs in order
- Set up expat health insurance
- Set up life insurance to cover your new property in Portugal
- Setting up the right visa before arriving
- Getting your tax number, the NIF (Número de Identificação Fiscal or Número de Contribuinte)
Foreigners in Portugal
The government estimates that foreigners have invested more than $6 billion in Portugal since 2012 through property purchases alone.
The closely related tourist and rental industries brought in more than $10 billion last year and, before the pandemic, represented 15% of the nation’s GDP. (During the same time in the U.S., tourism accounted for less than 3% of the economy.)
Across Lisbon, the country’s largest urban center with 550,000 people, it’s hard to miss the Californians. The city, where tourism has boomed over the years to the point that entire streets in its historic core are made up exclusively of hotels and Airbnbs, has attracted monied newcomers from across the world, including the United Kingdom, Cape Verde, South Africa and Russia. But more Americans are buying expensive property than any other foreigners, surpassing the Chinese.
Why are Americans living in Portugal?
The benefits of living in Portugal go beyond purely financial reasons. Portugal’s mild climate – with more than 300 days of sunshine per year – ranks among the top reasons Americans decide to move to Portugal. Some Americans also opt to retire in Portugal, since the pace of life and affordable living costs are big draws.
Add in beautiful beaches, a relaxed pace to everyday life, and the prevalence of English speakers, and Portugal becomes an ideal place to watch the sunset well into your golden years. Portugal ranks in seventh position in the 2021 Education First English Proficiency Index). While English is not an official language in Portugal, the proficiency is so good that Portugal ranked higher than South Africa, a country where English is an official language.
Indeed, Portugal is becoming increasingly popular with Americans, providing them with a high-quality life in a historic and cultural European country.
The stunning coastline, summer sun, and the up-and-coming tech scene in the country are also drawing strong comparisons with California. For example, Websummit, the largest tech festival in the world relocated to Lisbon in 2016 and the abundance of startups and tech companies can be seen across the country. Digital nomads and young professionals from across the world are dialing into the fact that Portugal holds a lot of cards when it comes to advantageous entrepreneurial benefits.
Taxes for American expats in Portugal
The US requires that all US citizens, wherever they may have their place of residence, disclose their worldwide income to the IRS. We do, however, recommend that you research the Foreign Earned Income Exclusion, whereby you may qualify for an exclusion that could save you some money.
Basically, American citizens will need to pay taxes on their American earnings in America and their Portuguese earnings in Portugal. If you are an American expat that lives in Portugal, you are obliged to file tax returns in both America and Portugal.
One aspect of paying taxes in Portugal that you should be aware of is the Non-Habitual (NHR) Program, where you may be eligible to receive significant tax benefits for up to ten years.
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