Posted On Tuesday, 28th February 2017

Portugal's Algarve region is one of the best places in the world to live or retire overseas.

Nowhere else in the world can you experience a better overall lifestyle than in this southernmost coastal region of Portugal.  Here's our Algarve assessment :

Expat Community

The Algarve has been attracting foreign retirees for decades and is home today to more than 100,000 resident expat retirees. 


3,300 hours of sunshine per year, more sunny days than almost anywhere else in Europe.   The Algarve has a reputation as a top summer destination among European sun-seekers and a top winter retreat for those looking to escape Northern Europe's coldest months. 


The Algarve is one of the safest regions in Europe, and Portugal ranks as the 17th safest country in the world. Violent crime is rare, and petty crime is limited to street crime during the busy tourist season.


Portugal and the Algarve have enjoyed important infrastructure investments recently, specifically to do with the country's highway network and airports, making this a great base for exploring all of Europe and Northern Africa .

Health Care

Portugal's health care is international-standard, and the region is attracting medical tourism.


The Algarve's 100 miles of Atlantic coastline is punctuated by jagged rock formations, lagoons, and extensive sandy beaches, many awarded coveted Blue Flags from the European Blue Flag Association. The water off these shores is azure, and the cliff-top vistas are spectacular. In other words, you could fill at least some of your days at the beach, swimming, sunning, and boating. 

The region boasts 42 golf courses in less than 100 miles and is generally recognized as a top golfing destination in continental Europe, and the world. 

Living here, you'd be well and fully engaged, whether your idea of a good time is a morning round of golf, an afternoon shopping at an open-air market, or an evening of fine dining. 


Life here is healthy. The Portuguese are the biggest fish eaters per capita in Europe, and fresh fish of great variety is available in the ever-present daily markets. The abundance of sunshine means an abundance of fresh produce, too. There are low rates of pollution and generally clean streets and towns . 

Cost Of Living 

You could also describe life here as very affordable compared to the rest of Europe.  

The cost of living in Portugal is among the lowest in Western Europe, on average 30% lower than in any other country of the region. A retired couple could live here comfortably but modestly on a budget of as little as 1,200 euros per month.  

With a budget of 1,800 euros per month or more, you could enjoy a full lifestyle in the heart of Old Europe. 

The Algarve is among your most affordable options in Europe, but not worldwide of course , there are much cheaper places . 

Cost Of Real Estate

The property market in this region remains undervalued and, like the cost of living in general, among the most affordable in Europe.  Portuguese real estate has one of the most favorable price-to-rent ratios (a measure of the profitability of owning a house) and price-to-income ratios (a measure of affordability) in the region.  
This means housing is cheaper to buy and investors can make more money from rentals than in most other European countries.  


Finally, it is very easy is it to become a legal full-time resident of Portugal . 
One can qualify for residency in Portugal by proving as little as € 1,200 monthly income . 
This amounts to residency in the whole of the Schengen region? 
As a resident in Portugal, you can come and go as you want from Portugal to France, Italy, Spain... and any of the 26 Schengen member countries. 

Portugal Golden Visa

Golden Visa Portugal with €500,000 property investment.

The Portugal Golden Visa program  has proven to be the most popular scheme in Europe with investors attracted to its flexibility and benefits. Launched in 2012 the investor visa program has been actively promoted internationally by the Portuguese government. An investment of €500,000 in real estate in Portugal will gain a residency permit for a family including dependent children. The golden visa can be renewed every two years providing the applicant spends two weeks in the country every two years.

Permanent Residency and Citizenship

One of the most attractive options is the ability to apply for permanent residency after 5 years and citizenship after 6 years without the need to reside in Portugal. In fact, the applicant and their family need only visit for two weeks every two years in order to renew the Portuguese Golden Visa. In Portugal citizenship can be granted without the applicant having resided in the country. However the investor having acquired residency through the golden visa programme will need to demonstrate ties to the country and pass a basic language test. Citizenship of Portugal and a second passport conveys the right to live, work and study anywhere in the European Union. The Portuguese residency card granted through the golden visa programme allows the holder to travel throughout the EU Schengen zone.

Key Facts 

Investment of €500,000

Full family residency

Flexible. No requirement to reside

Permanent Residency from 5 years

Citizenship from 6 years

EU Schengen visa travel

Thinking about moving to Portugal for a lifestyle change or to soak up some sunshine in your retirement years? Did you know you could also enjoy years of generous tax breaks by moving here?

Portugal’s ‘non-habitual resident’ (NHR) scheme offers new residents special tax benefits for their first ten years in the country. Besides offering a low income tax rate if you are employed here, the NHR scheme allows you to receive foreign income – like pensions – tax-free. You could also pay no Portuguese tax on gains you make from UK property.

Being a tax regime, it will not be affected by the recent ‘Brexit’ vote to leave the EU, so Britons can continue to both apply and benefit. 

Sound tempting? It could become a reality if you: 

  • have not been a tax resident in Portugal for the previous five years
  • can meet the terms of Portuguese residency – currently this includes spending more than 182 days a year here or having your main home in Portugal
  • register as a non-habitual resident with the Portuguese tax authorities
Although Brexit may eventually have an effect on residency rules, double tax treaties such as the one between the UK and Portugal are independent of the EU. As a result, the existing tax treatment outlined here should continue to apply.

Tax breaks if you work in Portugal 

If you are in Portuguese employment and a non-habitual resident, you attract a flat 20% income tax rate if you work in one of the pre-defined ‘high value-added’ scientific, artistic or technical professions. This offers a significant reduction on the usual scale rates, which go up to 48%.

Tax-free foreign income

Generally, if you are a non-habitual resident, most foreign-source income and gains are tax-free for the first ten years. This includes pensions, rental income, capital gains on real estate (but not shares), interest, dividends or any non-Portuguese employment income.

This applies only if the income may be taxed (it does not have to be actually taxed) in the country of origin, for example, under the double tax treaty between the UK and Portugal. 

Take UK dividends; they are not taxed in Portugal because under the UK/Portugal treaty they are taxable in Britain. In practice, however, under the disregarded income rules they may not actually be taxed in the UK. In this case, and also where the double tax treaty grants taxation rights to the country of residence only, you could end up paying no tax – in either country – on UK income. 

Note, however, that such foreign income may be counted when calculating your overall tax bill for other taxable income or gains in Portugal. 

Tax-free pension income

Your UK source pension income is tax-free in the UK under the double tax treaty (unless it is a government service pension) and tax-free in Portugal if you are a non-habitual resident. This applies even if you take your whole pension fund as a lump sum under the new UK pension freedoms. After ten years, your pension income will be taxed at the scale rates. 

Tax exemption on UK property

The UK/Portugal treaty determines that gains on real estate may be taxed in the country where the property is located. So as a non-habitual resident, gains on UK property would not attract capital gains tax in Portugal. You would, however, be taxable in the UK on the gain accruing since April 2015. 

Other tax benefits in Portugal

Even if you do not qualify for non-habitual residence, Portugal offers some very attractive tax benefits for UK expatriates.

Unlike Spain or France, there is no wealth tax here. The inheritance tax regime is also more gentle – it only applies to Portuguese assets, spouses and children are exempt and others pay just 10%. Portugal also offers opportunities to enjoy extremely favourable tax treatment on your capital investments and pension income. 

If you do qualify for non-habitual residence, you may benefit from combining these structures with the regime rules. For example, it might suit you to sell a UK property or dip into your pension without paying tax in Portugal and reinvest elsewhere to make the most of the advantageous tax-efficient opportunities available in Portugal. Ultimately, the best course of action for you will depend on your individual circumstances and aims.

While the non-habitual resident regime can offer significant advantages, like any tax regime it is also highly complex. You should seek professional, personalised advice – covering both tax and financial planning for Portugal – to provide you with tailored recommendations to meet your objectives. 


The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.