Living in Portugal versus the United States
September 24, 2024
If you’re a high-net-worth individual (HNWI), chances are you regularly reevaluate which countries are best positioned to address your key needs of wealth preservation, global mobility and lifestyle.
After all, those qualities are critical for HNWIs looking to relocate or diversify their citizenship.
Two countries that might fit that particular bill are Portugal and the United States of America, as both offer attractive but distinctive paths for entrepreneurs and investors seeking residency or citizenship.
But if you had to choose, which would you opt for – Portugal or the US of A?
Portugal has hit the industry headlines numerous times in the last decade or so, ever since interest in this small European nation skyrocketed when it introduced its now-famous Golden Visa in 2012.
And while the country removed its much-coveted path to citizenship through real estate investment in late 2023, the Portuguese Golden Visa still exists, with the donation amount required for eligibility as low as €200,000 in certain circumstances.
Certainly, there’s a lot to like about Portugal.
The cost of living is low here and the locals enjoy a laid-back lifestyle. Lisbon, the capital, is the second-oldest capital city in Europe, and the country’s whimsical architecture and friendly locals are hard to beat.
But is it the right place for you?
On the other side of the Atlantic, the US is known for its high-income potential, diverse job market, and endless comfort and convenience.
Its EB-5 Investor Visa program allows investors to obtain a Green Card by investing in American businesses.
But both the EB-5 visa and the US lifestyle come at a price.
The visa requires higher investments and has strict compliance rules, while life in the US can incur sky-high living costs, an intense work culture and political instability.
In some ways, the two countries have a lot in common or, at least, they’re well-known to each other.
In Portugal, foreign nationals currently make up more than 10% of the population, with US citizens forming a significant part of that group. So, if you’re considering moving to Portugal from the US, it wouldn’t be too hard to ‘find your tribe’.
But which country is better to live in and why? And what should you even be looking at when comparing living in Portugal to the US?
At Nomad Capitalist, we specialise in creating custom strategies for immigration and asset protection. Understanding the pros and cons of each destination, specifically related to taxes, cost of living and citizenship benefits, is important.
So, this is our in-depth analysis of how these two countries stack up again each other. Below, we’ve identified the key differences to help you decide which one fits your personal and financial goals best.
Cost of Living in Portugal vs the US
Aside from second passport options, perhaps one of the first things most consider when weighing a move from Portugal to the US or vice versa is the cost of living.
Generally speaking, living in Portugal is significantly cheaper than in the US.
While the exact average varies greatly, depending on the cities you compare, the current cost of living in Portugal is about 35% lower than in the United States.
Even if you compare the cost of living in Lisbon to a city like Austin, Texas, which is arguably more affordable than major cities like New York, San Francisco or Los Angeles, Portugal is still the better option.
According to recent estimates:
- The overall cost of living in Lisbon is 23.8% lower than in Austin (excluding rental expenses).
- Rent prices in Lisbon are about 37% lower than in Austin.
- Restaurant prices in Lisbon are about 29% lower than in Austin.
- Grocery prices in Lisbon are 30% lower than in Austin.
Housing Costs
Rent in Portugal is about 65% lower than in the United States.
For instance, renting a one-bedroom apartment in Lisbon costs, on average, just over €900 (US$975) per month.
A similar apartment in New York City could set you back just over €2,600 (US$2,800) per month. That’s a whopping 187% difference.
If you want to buy, property prices in Portugal are also more affordable:
- A square metre in Lisbon averages about €5,800
- A square metre in San Francisco can cost up to €12,000.
Daily Expenses
Both groceries and the cost of eating out in Portugal are more than 40% cheaper than in the US.
A three-course meal for two at a mid-range restaurant costs about €35 (US$39). The same meal in a similar setting in the US could cost around US$70 if you’re lucky.
Transportation fees in Portugal are lower, too: a standard monthly public transportation pass in Lisbon costs €30 (US$32), while in New York City, it’s US$132.
Taxes and Social Security in Portugal vs the US
Introduced in 2009, Portugal’s Non-Habitual Resident (NHR) tax regime offered significant tax benefits for foreign residents, making it particularly appealing to high-net-worth individuals.
While the program changed in January, 2024 to what the government is calling ‘NHR 2.0’, the flat 20% tax rate on certain Portuguese-source incomes and tax exemptions on most foreign-source incomes for the first ten years still apply.
That is, however, only if you meet the requirements.
If you do not qualify for Portugal’s NHR scheme (and, honestly, even if you do), you might find that taxes are higher than in the US or other countries.
Other low-tax countries in Europe offer more favourable tax rates and schemes so, if you make more than €2 million annually, you likely have better options.
While we ultimately suggest meeting with a tax and immigration specialist, here’s a quick breakdown of the differences between taxes and social security in Portugal vs the US:
Tax Rates
Personal income tax rates in Portugal range from 13.25% to 48%, depending on your income bracket. However, if you qualify for NHR status, a flat 20% rate applies to certain professions.
In contrast, the US employs a progressive tax system with rates ranging from 10% to 37%. But the key point is that the tax obligation for is based on citizenship (or permanent residency), not residence, meaning US citizens must file US taxes even if they are living abroad.
Additionally, US citizens and permanent residents are taxed on their worldwide income, regardless of where they live.
While there is a tax treaty between Portugal and the United States, there remains a danger of double taxation unless mitigated by foreign tax credits or exclusions.
Corporate tax rates in mainland Portugal are 21%, the same as the current corporate tax rate in the United States. Reductions apply to startups and special businesses.
Social Security
In Portugal, employees contribute 11% of their gross salary, while employers contribute 23.75%.
Social Security and Medicare taxes in the US amount to 7.65% for employees and 7.65% for employers, totalling 15.3%. Self-employed individuals must pay the full 15.3% themselves, though half of this can be deducted when calculating taxable income.
The biggest difference here lies in the benefits received from these contributions.
In Portugal, the public healthcare system is comprehensive and largely funded through social security contributions, providing significant savings on medical expenses.
Individuals may still needs to pay small co-pays for certain services, but these are low compared to the US healthcare system.
On the other hand, in the US social security benefits include retirement, disability and survivor benefits but the public healthcare system is limited to specific groups like the elderly (Medicare) and low-income individuals (Medicaid).
Even then, Medicare can involve costs like premiums, deductibles and co-pays.
Most US residents rely on costly private health insurance, which we examine below.
Quality of Life in Portugal vs US
Quality of life is a major consideration when choosing between Portugal and the US.
Both countries offer unique advantages, but they differ significantly in healthcare, education and safety.
Healthcare
Portugal’s universal healthcare system, funded through taxation, provides free or low-cost medical care to residents.
The quality of healthcare is high, ranking No. 9 in the 2022 World Index of Healthcare Innovation.
In contrast, the US relies heavily on private health insurance, which can be extremely expensive.
Coverage for a single person is currently about US$477 per month on average through the Affordable Care Act.
Education
In Portugal, public education isn’t just high-quality, it’s free and private schooling options for those seeking specialised curricula or smaller class sizes are also available.
Higher education in Portugal is also more affordable than in the US with tuition fees for a bachelor’s degree averaging around €950-1,250 per year in Portugal.
That’s a stark difference from the average cost of attending a public university in the United States, which comes in at just over US$27,000 per year for in-state students.
On the other hand, the US offers more varied educational opportunities, including world-renowned universities.
However, admission to those famous universities is exceptionally difficult to access while the general cost of tertiary education can be prohibitively high, often leading to significant student debt.
Safety and Crime Rates
Portugal consistently ranks as one of the safest countries in the world, with low crime rates.
According to the 2024 Global Peace Index, Portugal is the seventh-safest country in the world.
The United States ranks No. 132 on that list, just after countries like Libya, Ecuador and Brazil.
Lifestyle and Culture in Portugal vs US
Ah… culture – this is one issue you can’t ignore.
Tax benefits, citizenship and the cost of living aside, it’s important that you like where you live.
After all, what does saving a few thousand dollars each year mean if you’re miserable day after day, worried about your safety, incapable of adjusting to the climate or language or just plain bored?
Here’s how life in Portugal vs the US differs from a local’s perspective.
Daily Life in Portugal
Portugal’s culture is deeply rooted in its history and traditions: this is a country known for its warm hospitality, relaxed pace of life and a strong sense of community.
Festivals are a big part of Portuguese life, with events like the lively Carnaval and the traditional St Anthony’s Day celebrations filling the streets (literally) with colour and music.
For locals, daily life revolves less around work and more around friends and family.
Portuguese people have adopted a Western European mentality in relation to work and leisure, meaning that while locals work hard to earn their (meagre) wages, work doesn’t define them.
And speaking of leisure, rest assured there is plenty to do in Portugal.
The country’s coastline mimics California’s, making it a popular spot for American retirees looking for similar landscapes but without the issues (and prices) typical of the US West Coast.
Sail, surf or sunbathe – you can do it all along Portugal’s wild Atlantic coast.
While the country’s train system isn’t as well-connected as other neighbouring countries like Spain or Italy, Portugal is small enough to explore by car and boasts well-maintained roads that take you to picturesque vineyards up north or historic towns in the centre of the country.
It would be remiss not to mention one of the greatest adventures of living in Portugal: the cuisine.
Fresh seafood is a highlight, with dishes like bacalhau (salted cod) and grilled sardines being staples.
Portuguese cuisine is also known for its pastries, particularly the famous pastéis de nata (custard tarts).
Daily Life in the US
In contrast, the US is a melting pot of cultures that spans about 100 times the surface area of Portugal.
The cultural variances across different regions are profound, which differs greatly from Portugal.
Most people find they fit in somewhere in the United States, whether that means the bustling urban life of New York City or the more dreamy, laidback backroads of Georgia.
Recreational activities in the US are as varied as its landscape: you can enjoy outdoor adventures like hiking in national parks such as Yellowstone or Yosemite, skiing in Colorado, or simply lounging on Florida’s white sand beaches.
Entertainment options are virtually endless, with countless sports events, theme parks, and cultural festivals to enjoy.
Again, it’s impossible to accurately compare Portugal and the US without mentioning food, as food in the US reflects its cultural diversity.
Each region has its specialities, from Southern BBQ and Tex-Mex in the Southwest to fresh seafood in New England.
Portugal vs the United States: Which Is Better?
For high-net-worth entrepreneurs, the choice between Portugal and the United States hinges on strategic priorities.
If you qualify, Portugal offers significant tax advantages through its Non-Habitual Resident (NHR) regime, providing a potentially favourable environment for wealth preservation and financial planning.
Conversely, the United States offers unparalleled business opportunities and a dynamic market ideal for ambitious entrepreneurs. Its diverse economy and high-income potential are compelling for those focused on scaling their ventures.
At Nomad Capitalist, we believe moving to the US is overrated but, ultimately, the decision depends on whether you prioritise tax efficiency and lifestyle or expansive business growth and innovation.
Go Where You’re Treated Best
Whichever country you plump for, the decision needs to be followed up with meticulous planning and a clear vision for your future goals.
At Nomad Capitalist, we enable you to make informed decisions beyond tax reduction. Our focus is on crafting an ideal lifestyle that allows you and your family to go where you’re treated best.
We uniquely integrate tax, immigration, asset protection and investment strategies to ensure all elements work harmoniously to build your dream life.
If you’re considering relocating to Portugal from the US, our expert team can guide you every step of the way, including providing you with alternative options to better optimise your investments and protect your assets.
Apply to work with us today.
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