The 2025 Ultimate Guide to Expat Living in Portugal

Beyond port and soulful Fado melodies, Portugal is a country with some intriguing credentials. 

It’s the world’s largest cork producer and boasts some of Europe’s most steadfast borders, unchanged since the Middle Ages.

Then there’s bacalhau: With a recipe for every day of the year, the Portuguese love of this codfish hints at a national obsession.

This mix of deep history, quirky charm and sunshine has long made Portugal such a magnet for those seeking out a European lifestyle with global perks.

But it’s not just sunshine and seafood that drew people in. 

For years, Portugal had a winning formula: Mediterranean-style living at a more accessible price, high levels of safety and security, and robust infrastructure. 

The real pull, though, was the Non-Habitual Resident (NHR) tax regime, which offered long-term tax breaks on foreign income. 

The NHR program fast-tracked Portugal as a prime destination within the golden visa industry.

But no advantageous tax program lasts forever. The NHR scheme concluded at the beginning of 2024, prompting many dramatic claims that Portugal’s appeal was over. 

But the Cassandras were missing the bigger picture.

The fundamentals that drew people in – the agreeable climate, the rich culture, the generally slower rhythm of life and its valuable European Union membership – remain firmly in place. Portugal’s cork trees are still growing, and so is its global appeal.

Today’s main attractions? A residency permit, European business access, tax advantages and the ultimate prize for many: a top-level second passport.

Portugal has kept the route to citizenship open through routes like its golden visa program (via funds or donations, though the route for property purchases has closed), the D7 visa for passive income earners, and the D8 visa for digital nomads.

Best of all, Portugal still offers a relatively straightforward route to citizenship after only five years of legal residency. Citizenship unlocks one of the world’s most respected passports, the ability to live anywhere in the EU, and many more benefits. 

In short, Portugal has a lot going for it, which means there’s also a lot to consider when it comes to moving and living there.

So the Nomad Capitalist team has put together an in-depth guide to provide a practical, up-to-date look at what it really means to live, pay taxes, gain residency and potentially become a citizen in Portugal today.

The Pros and Cons of Expat Living in Portugal 

Portugal is a good choice for expats, especially those who want a base in Europe. But it’s not just all sunshine and pastéis de nata. 

Like any smart move, relocating here requires weighing the considerable charm against the day-to-day realities. 

The Advantages 

It’s no secret that Portugal offers residents a fantastic quality of life, mixing that relaxed Mediterranean vibe with lively city energy. 

Residents can also naturalise after five years, become a Portuguese citizen, and gain one of the strongest EU passports in the world. 

The country also offers residency options, such as the golden visa, and easy routes for digital nomads or those with passive income to make the move. 

While it’s not the bargain it once was, the cost of living can still feel reasonable compared to other Western European countries, particularly outside the main city centres. 

The climate is a major plus – expect plenty of sunshine and mild winters, especially down south in the Algarve region. Healthcare access, both public and private, is generally reliable. 

For business minds and investors, Portugal is a superb launchpad into the Schengen Area and the wider EU market. 

Add to this a genuine welcoming attitude towards newcomers, and you find a friendly environment where settling in feels easy.

The Challenges 

Now, for the other side of the coin. 

Dealing with the Portuguese Government and bureaucracy can test the patience of a saint. Be prepared for mountains of paperwork, queues and processes that can leave you feeling dizzy.

Portugal is a good place to live, but prices have gone up significantly in popular areas like Lisbon, Porto and the Algarve. The prices haven’t gotten out of hand yet, but they’re a sign of what might be to come. 

Luckily, right now, you can still find affordable housing if you haggle and research the options or if you move to Madeira or another coastal area. 

If you want to work for a local company, be aware that average salaries are much lower than in Northern Europe and North America. 

Infrastructure is decent in the cities, but venture into the countryside, and things become a bit more ‘local.’

Lastly, getting your head around the Portuguese tax system can be difficult. It’s complex, and recent changes, like those affecting the NHR scheme, mean you definitely need advice. 

Nomad Capitalist is here to help. 

Portugal’s Residency Options and Visa Requirements 

Unless you hold a passport from an EU/EEA country or Switzerland, planting roots in Portugal for longer than 90 days means you’ll need the right paperwork. 

For this, you must secure the appropriate visa before you make the move, which allows you to apply for a residence permit once you are in the country. 

D7 Visa (Passive Income/Retirement)

Often dubbed the ‘passive income’ or ‘retirement’ visa, the D7 is designed for people who can support themselves through stable income streams generated outside Portugal. 

The income in question has to come in the form of pensions, rental income, dividends, royalties – essentially, money that works for you. 

For 2025, you’ll need to show that you make at least four times the Portuguese minimum wage each month, currently €870 per month for a single applicant. 

Beyond proving your income stream is consistent, you’ll also need proof of accommodation in Portugal (like a rental agreement), private health insurance covering your stay and, naturally, a clean criminal record. 

This initial visa grants you entry to Portugal, where you then apply for your renewable residence permit.

Digital Nomad Visa (DNV / D8 Visa)

Introduced more recently, the D8 or Digital Nomad Visa specifically targets remote workers and freelancers earning their income from clients or employers outside Portugal. 

To qualify, you need to show a monthly income of at least four times the Portuguese minimum wage, equating to roughly €3,480 per month as of January 2025. 

As with the D7, expect to provide proof of your remote work status (contracts or client agreements will do), confirmation of accommodation, adequate health insurance and a clean record check. 

What makes the D8 unique to most other digital nomad visas is that it comes with two options. You can choose a temporary stay visa valid for up to one year or a Portuguese residency visa, which serves as the stepping stone to applying for a formal residence permit, much like the D7.

Of course, if you take the residency path, then you can stay here long-term and even apply for citizenship in Portugal. 

Portugal’s Golden Visa (Investment Route)

For high-net-worth folks, the Portugal golden visa program is often the most popular pathway to Portuguese residency. 

Following changes in late 2023, the popular direct real estate purchase option is off the table. 

However, several qualifying investment routes remain open in 2025, meaning you can: 

• Invest a minimum of €500,000 into eligible, regulated investment funds (specifically those not focused on the Portuguese real estate market). 
• Inject at least €500,000 into creating or supporting a Portuguese company, as long as it creates and maintains a minimum number of jobs (typically 10 or 8 in designated low-density areas). 

There are also philanthropic routes that require donations of at least €250,000 towards approved arts or national cultural heritage projects or a €500,000 contribution to qualifying research and development activities in Portugal.

What’s the Cost of Living in Portugal as an Expat?

Portugal often gets tagged as one of Western Europe’s more budget-friendly spots. 

In comparison to major hubs in the UK, the US or Northern Europe, Portugal generally offers lower living costs – sometimes significantly so. 

Recent cost-of-living indices place Portugal as notably cheaper overall than other European countries like France, Germany or the UK. 

As in other western European countries, things are more expensive in major cities but there are cost effective alternatives. Lisbon, for instance, ranks considerably higher on expense indices than Porto, and both are leagues apart from regional cities like Coimbra or Braga. 

While Lisbon might be roughly 40-50% cheaper than London, it’s still far pricier than living outside Portugal’s main economic centres.

With that in mind, let’s look at some indicative prices:

• A one-bedroom flat in central Lisbon will cost you around €1,100 – €1,400+ monthly, whereas a similar place in central Coimbra could be just €450 – €600. 
• A simple lunch might cost €9 – €12, and a three-course meal for two at a mid-range restaurant‌ €40 – €60. 
• Your daily cappuccino is likely to cost under €2. At local markets, expect to spend around €1.30 for a loaf of bread, €2.70 for a dozen eggs, €6.50 – €7.00 for a kilo of chicken fillets, and you can certainly find a decent bottle of wine for €4 – €6.
• Utilities and transport, basic services for a standard 85m² apartment average around €110 – €130 monthly, with internet access, usually adding another €35 – €40 a month. 
• A monthly public transport pass in Lisbon or Porto is a standard €40, but running a car means facing petrol prices around €1.80 – €1.90 per litre.
• For lifestyle and services, a monthly gym membership typically costs €35 – €40, and a cinema ticket around €7- €8. 
• Private health insurance, popular among expats, might range from €35 to €85+ per person monthly, climbing with age and coverage.
• International school fees commonly range anywhere from €8,000 to over €25,000 annually per child.

In the end, your lifestyle choices, especially around housing and services like schooling or healthcare, will be the deciding factors in your cost of living equation in Portugal.

Finding the Best Place to Live in Portugal for Expats 

Figuring out where to settle in Portugal is arguably as big a decision as choosing Portugal itself. The country’s regions are incredibly diverse, each offering a distinct flavour, local customs, cost of living and pace of life. 

Lisbon and its surroundings (like Cascais and Sintra) are the country’s thriving heart, especially for business and Portuguese culture. The capital pulsates with energy, but this all comes with the highest price tag. 

Porto and Northern Portugal present a fantastic alternative. Porto, Portugal’s charismatic second city, has its own unique vibe, strong business climate and is the jumping-off point for the gorgeous Douro wine valley. 

The North generally costs a bit less than Lisbon while still delivering city perks and an international airport.

Down south, the Algarve is Portugal’s sun-drenched postcard destination, famous for beaches, golf and flocks of tourists. 

Stretching between Lisbon and Porto is the Silver Coast (Costa de Prata). This coastline is a bit wilder, great for surfing, and perhaps feels more traditionally Portuguese than the Algarve. It’s increasingly popular with expats looking for better property value and a less crowded atmosphere.

Heading inland, Central Portugal has historic cities like Coimbra, with its ancient university and Tomar, famous for its Knights Templar castle. 

Lastly, we should not forget the islands. The independent regions of Madeira and the Azores are famous for their beautiful volcanoes, unique cultures and close connection to nature. Madeira also offers certain business and tax advantages that draw specific interest. 

How Taxes Apply to Expats in Portugal

Getting to grips with taxes here begins with Portuguese tax residency. 

If you spend more than 183 days here in a year, or if Portugal becomes your main home base, the tax authorities will generally classify you as a tax resident. 

As a tax resident, Portugal taxes you on your income from all sources worldwide. 

Resident income is taxed on a sliding scale, starting at 13% but rising sharply to 48% once your earnings pass the €83,700 mark, with an extra ‘solidarity’ tax potentially kicking in on top for higher incomes. 

You can get some relief through deductions for things like health and education costs, but make no mistake – residents generally feel the weight of tax on their global income.

You might have heard about a successor to the famed NHR scheme. Indeed, 2024 saw the introduction of the ‘Tax Incentive for Scientific Research and Innovation’ (often called IFICI or NHR 2.0).

It promises a flat 20% tax on certain local professional earnings for ten years, plus exemptions on many types of foreign income (though notably, not pensions). 

But, eligibility is extremely tight. It’s specifically designed for high-level researchers, academics and certain tech roles in approved start-ups or innovation projects. 

It’s definitely not the open door the old NHR was.

Expat Living in Portugal: FAQs 

Is Portugal Going to Treat You Best? 

Portugal clearly solves several key problems for many people.

You get straightforward EU residency, a path to a top-tier passport in five years, plus a safe, pleasant lifestyle that’s great for accessing the rest of Europe. 

Even without the old NHR tax breaks, these are strong reasons why many people are still drawn here. But, is it where you’ll be treated best? 

Because, despite its charms, it isn’t a one-size-fits-all solution. 

The standard tax rates for residents are now undeniably high, impacting your global earnings significantly unless you fit the narrow niche of the new NHR 2.0 scheme. 

To top it off, bureaucracy is an issue. Lisbon and the Algarve are pricey places to live, and the Golden Visa can no longer be a simple property investment. 

These are issues to weigh seriously.

If your priorities lie in maximum tax efficiency, perhaps the zero-income-tax environment of the UAE is more appealing. 

If rock-bottom living costs and a simple territorial tax system are paramount, maybe Panama warrants investigation. 

Or perhaps fast citizenship is the goal. In that case, a Caribbean program like St Kitts and Nevis might be a better fit, despite the cost.

The point is that you have options – a whole world of them, in fact. 

Portugal might be a perfect fit, a near miss or entirely wrong for your specific circumstances, ambitions and financial picture.

Figuring out the best combination of visas, tax systems, investments, and lifestyle across different countries is complex. 

That’s precisely why getting the right advice is so important – it helps you land in the place that truly serves you best, not just settling for ‘good enough’ or following the latest trends.

At Nomad Capitalist, crafting bespoke, holistic strategies is what we do. We analyse your unique situation and help you plant your flags where you are treated best. 

If you’re ready to move beyond generic advice and build a plan for freedom and prosperity, perhaps it’s time we talked? Get in touch today.