In a recent webinar, we were joined by a panel of experts in Portugal relocation and US tax to give an overview of available Portuguese visas, property buying or renting in Portugal, and the tax and financial planning measures you may need to take if you're relocating from the US.
The number of US expats moving to Portugal has increased by almost 240% from 2017 to 2022. As of 2023, there were more than 14,000 US citizens living in Portugal.
With its affordable cost of living, warm climate, stunning scenery, relaxed culture and excellent healthcare system, it’s not a surprise that Portugal has become such a popular destination for US citizens who want to move abroad.
On 27 January 2025, we were joined by four experts from our Experts for Expats partner network to provide an overview of:
Read the summary of the webinar discussion below, or watch the full webinar here.
The visa types most commonly required by US citizens moving to Portugal are the D7, D8 and D2 visas. There is also the golden visa, which is a residency permit you are entitled to by making an investment in Portugal.
There is no minimum stay in Portugal associated with the golden visa. After you invest you can obtain a residency permit and begin your citizenship process – you don't need to move to Portugal. This is an option for US citizens who want a second passport but don’t want to move to Portugal right away.
If you want to move to Portugal either by yourself or with family, you’ll need to decide which D type visa is the most suitable.
The D7 visa is the most common visa type. You can apply if you have passive income combined with savings of around €50,000. You will also need to have a Portuguese bank account with at least €20,000 and must show proof of your passive income.
Passive income can be rental from property, royalties, interest from investments or intellectual property and must be equal to or more than the Portuguese minimum wage (€870 per month in 2025).
If you’re applying for the D7 visa with a family member, such as a spouse, you will need to show you have an additional 50% income on top of the Portuguese minimum for the other person. If you have children, you will need to add another 30% of the Portuguese minimum wage for each child.
You will also need to show you have a Portuguese rental agreement in place when applying for the D7 visa to show the Portuguese consulate you have a place to stay once the visa is approved. This causes confusion for many people, as you will need to invest in a rental agreement before you know if your visa is going to be approved.
If you will be working remotely after you move to Portugal, you can apply for the D8 visa. This is also known as the digital nomad visa. For the D8 visa, you will need to prove you have an income of at least €3500 per month and show that you have earned this amount for the past three months. You don't need to have savings as well.
Your income can either be from an independent activity (self-employment) or employment. If you are an employee, you will need a statement from the company you work for confirming you have permission to move to Portugal and work from there.
There are three different types of D2 visa. The first is for people with an independent profession, such as artists or musicians, if you can show you are able to continue your work once living in Portugal.
If you are an entrepreneur, you can apply for the entrepreneurship visa. You will need to set up a company in Portugal and have a business plan which shows your business is likely to be successful.
You can also apply for a startup visa if you have a technological or innovative project. The startup visa requires your company to be based in a Portuguese incubator such as Startup Lisboa or Startup Porto.
All D type visas are residency visas, which means they all have minimum stay requirements. Each D type visa is granted for four months, after which you will need to convert your visas into a two-year residency permit.
During your two-year residency permit, you can only be out of Portugal for six months consecutively, or eight months if interpolated. After two years, you can renew your residency permit for three years. After five years, you can apply either for a longer-term residency permit of five years or for Portuguese citizenship.
For the D type visas, you will also need to become a tax resident in Portugal.
Portugal is a formalist country, which means all contracts must be written down and signed by all parties. Some contracts simply require a private document, usually drawn up by a lawyer, to be signed. Others require additional formalism, such as notarisation and drawing up of a public deed.
Whether you’re renting or buying a property, we strongly advise you engage professionals such as a lawyer and real estate agency to accompany you through the process. This will ensure any deals are real, that you avoid scams and all required rules are followed.
If you choose to rent in Portugal, you will sign a lease agreement. Lease agreements are written contracts which must include:
In Portugal, lease agreements cannot be for less than one year or more than 30 years, but they can be renewed. The landlord can oppose renewal by giving the tenant prior notice, depending on the length of the contract, and the same applies to the tenant.
As a tenant, you can inform your landlord that you wish to end your contract before the initially established period. However, you will have to keep the contract in force for one third of the initial period and give a prior notice of intention to leave. Many people sign a lease agreement without realising they are bound by the contract for one third of the period – and this can be a long time depending on the length of the lease.
No more than two rental payments can be demanded at the beginning of the contract, and the value of the deposit cannot exceed two rental payments. Some landlords may ask for proof of income, but these amounts cannot be exceeded.
You will also want to confirm in advance whether utilities are included so this doesn’t come as a surprise later. If the rental includes furniture, it is strongly recommended that you make a register with photographs of the furniture to confirm its condition.
In Portugal, rent increases are regulated. They can be increased every year, according to a government law. However, when there is also an increase in rent on the contract, parties can agree which one will be enforced as both cannot be added.
Important documents that you need to confirm before signing a lease:
All contracts must be fulfilled after they are signed by the parties. In case of non-compliance, the injured party can exercise their rights in a court.
If you choose to buy a property, it’s important to note that popular areas like Lisbon, Porto and the Algarve are more expensive. However, smaller towns and rural areas offer affordable options, and they are getting more popular with expats.
When buying a property in Portugal, it’s recommended that you use a real estate agency to ensure the deal you’re being offered is real. If you search online, always visit the agency to check they have a license for this activity, called the AMI license.
To formalise a purchase and sale, a public deed is required. The purchase begins with the signing of a promissory contract of purchase and sale, and it is mandatory that signatures are notarised by a lawyer or notary. This promissory contract will be fulfilled in the public deed, which is the act in which the property is transferred. Buyers must be present to sign the deed or represented by someone with a power of attorney and notarisation is mandatory.
Before signing this contract, it is recommended that you have all paperwork validated by a lawyer. Once the deed is signed it must be complied with under penalty. The date, place and time of the deed is communicated by the seller in writing, and the rest of the payment of the property price will be due. You will need to ensure the funds to purchase the property are in Portugal in a good time for this.
On the day of the deed, your keys will be delivered, and you will be the owner of a property in Portugal. At the same time, several documents will be presented and delivered from the seller to you. This will usually be in the form of a file containing all the information about the house including the land register certificate, energy certificate, land booklet, housing data sheet and – if the property is an apartment – documents issued by the condominium stating there are no debts pending.
In terms of costs, down payment on a property in Portugal will typically be 10-20% of the purchase price. You will also pay:
Foreign buyers can also apply for mortgages in Portugal. You will be expected to provide proof of income or tax returns, and requirements can vary from bank to bank. When looking for a mortgage in Portugal, it’s important to evaluate several options and consult several banks.
Portugal determines tax residency based on the 183-day rule. If you spend more than 183 days in the country, consecutively or not, in any 12-month period, you will be deemed resident in Portugal from day one of arriving.
Alternatively, if you own or rent a house under conditions which suggest you have the intention to maintain and occupy it as your habitual residence, this will also trigger tax residency.
In general, tax residency in Portugal is determined on a self-assessment basis. This means you will self-declare as a tax resident when you fulfil one of the above criteria.
As a tax resident in Portugal, you are subject to worldwide taxation and must report income from all global sources. In Portugal, income tax is a progressive system. The more money you earn, the higher percentage of tax you will pay. Income tax rates range from 13.25% up to 48% depending on your earnings and tax applies to income from jobs, self-employment and pensions.
Rental income, capital gains, or other investment income may be subject to different taxation rules which are not progressive.
With individual retirement accounts, you won’t pay tax until you take the money out. You will have different tax liabilities in Portugal depending on the specifics of your retirement plan and how money is withdrawn. In this case, it's important to consult a tax advisor who knows the specifics of your retirement plan. For example, it's possible to pay only 11% on your retirement account drawdowns in Portugal, not considering foreign tax credits that may eliminate any taxation altogether.
If you are going to work in Portugal, whether you have a job or are self-employed, you must register for Social Security and make contributions. If you have a US job, you may be able to have an agreement where you don't pay Social Security but this is an exception to the rule.
It’s also important to consider the tax treaty between the US and Portugal. This tax treaty is in place to avoid being taxed on the same income in both countries. However, as a US citizen, you will remain subject to us worldwide taxation. You may need to claim foreign tax credits or foreign earned income exclusion, because US citizens are taxed on citizenship criteria, which is different from other tax treaties.
In Portugal, there is no wealth tax besides property tax. You will pay property tax on real estate, but this is low compared with the US – though there is an additional real estate tax for high value properties.
There is also no inheritance tax in Portugal if assets are being transferred to close relatives, which comes as a surprise to many people.
There is also no taxation on long-term holdings of crypto assets. If you are a crypto investor, you have tax exemptions for holdings of more than 12 months
All Americans, whether living abroad or not, are taxed on their worldwide income. This can sometimes come as a surprise for Americans living abroad, who question why they’re paying tax in the US if they aren’t living there.
As an expat, the US system requires you to report your income every year, from any source, regardless of where you're living. There are plenty of ways to make sure you're not paying tax twice though. You also need to be earning a certain amount of money before you pay tax in the US, and this amount will change depending on your filing status.
Most Americans are familiar with the Form 1040 if they’re filing taxes while in the US. If you move to Portugal, you will still file Form 1040.
If you have one or more bank accounts in Portugal with total sum of over $10,000, you will need to file the FBAR form. This must be filed every year with the Department of Treasury.
If you have over $200,000 in foreign financial assets or bank accounts, including a foreign pension, you'll also have to file the Form 8938. This is a Foreign Account Tax Compliance Act (FATCA) form that’s filed with your tax return.
There are potentially harsh penalties for failure to file these forms on time every year, and things can become a lot more complicated when you're dealing with two tax systems. Therefore, it’s always recommended you seek support from a tax specialist.
As a US citizen living in Portugal, there are a few ways to make sure you’re not paying taxes twice. The first is called the Foreign Earned Income Exclusion (FEIE). The FEIE allows you (for 2024) to exclude up to $126,500 from your income.
If you earn less than $126,500, you can exclude this from your US tax return using FEIE and you would not be required to pay any US tax on that income. However, you must also meet one of two tests:
For both tests, you're allowed to prorate the exclusion. If you move in the middle of the year, you can still use the exclusion for half of the year and half of the amount.
The second main way to avoid paying tax twice is to use Foreign Tax Credits (FTCs). If you have already paid taxes in Portugal, the amount paid can be used as a credit against what you would owe in the US. If you earn above $126,500, you can use the FEIE on your first $126,500 and then use FTCs on income above that amount. Because of the higher tax rates in Portugal, most Americans who move abroad to Portugal won't be paying much US tax.
However, you may be paying tax on other types of income, such as US-sourced income. In this case, taxes you pay to the US can be used as foreign tax credits in Portugal. If you’re required to pay tax at a higher tax rate in one country, you may not have enough FTCs to eliminate your tax bill – but you aren’t ever going to be paying taxes twice.
Tax deadlines in Portugal are similar to the US, where April 15 is the tax deadline. It’s important to remember that this isn’t only the deadline to file your taxes in the US, it's also the deadline to pay. Even though you can file an extension which will allow you more time to file your taxes, it’s not an extension of the payment deadline.
Sometimes, this can be an issue for Americans living abroad because you may be waiting for your Portuguese taxes to be completed before finalising your US tax return and knowing exactly how much you owe. However, if you’re conservative and pay more than you think you owe, you'll receive a refund after you file. There is an automatic extension for Americans living abroad which is June 15, and you can also file for extension of that period which gives you until October 15 to file your taxes.
There are two categories of individuals who might be moving to Portugal from the US. The first is Americans who plan to move to Portugal and continue working. The second is those retiring in Portugal – and the tax situation is going to be different for each.
If you're working in Portugal, your income will be deemed as sourced to Portugal. If you're retiring in Portugal, you still may have US income as well as US retirement accounts and Social Security. This will affect where you file first, and where you use tax credits.
There is also a mixed category of Americans who move to Portugal to work but also receive other types of passive income such as rental income, drawdowns from retirement or other types of investment income, such as capital gains. In this case, you will need to work with both your Portuguese tax advisor and US tax advisor to determine where to file first. For example, you might prepare estimates for your income based in one country, supply those to your account in the other country and they'll file your return. Then, the accountant in the first country will receive the final amounts and use those as foreign tax credits in your first country. As you can see, this is where things can become very complicated, and where it is difficult to do everything on your own.
While it may be possible to file your US taxes yourself if you're up to date, you’re familiar with the forms, and you're in a situation where you're only earning wage income in Portugal, it’s always recommended that you speak with a trusted specialist.
If you’re a US citizen planning on moving abroad, you may also want to consider severing your state tax residency by officially moving your address to a state without state taxes. This choice will depend on your tax situation, what type of assets you have and what access the state might have to tax those assets. For example, if you are moving abroad from California, it is worth making the extra effort to sever your residency as state taxes are very high.
If you have already been living in Portugal for several years, and haven’t been filing your US taxes because you weren’t aware you had to, the IRS has a program called the streamlined filing program. Instead of filing for all the years you failed to file, you only have to file the past three years, past six FBARs, and a certification of non-willfulness. After that, the IRS will consider you up to date and will waive all penalties.
Finally, if are opening a business in Portugal as an American this can be complex. You’ll have to file the Form 5471, there are possible Global Intangible Low Tax Income (GILTI) tax implications, and it requires a lot of planning. If you will be setting up a corporation in Portugal, always work with an accountant to make sure you understand your obligations from a US tax perspective.
If you are applying for a D2 visa and setting up a company in Portugal, you will need to consult with an advisor who can support you with both the incorporation of a company in Portugal and the D2 visa application. Often, people will incorporate a company in Portugal but when they come to apply for the D2 visa, find they either need to make changes to the company or close it and start a new one. Therefore, consulting a specialist before setting up your company will save you time and money.
