Thinking of buying a property in Portugal? We hosted a live webinar "Ask the Experts: Moving to Portugal" on 14th July 2020 (watch the full session here). Below we answer the most popular questions about permanently relocated to Portugal with the help of Portuguese property experts - for more FAQs more, click here.
All answers are correct as of the date of publication.
What do you need to apply for residency?
You will need a fiscal number (which might take 2-3 days to obtain), an address (long-term rental contract or deeds to your home) and a local bank account showing €1,500 going into it over the last three months.
What are the typical buying costs for a resale property in Portugal?
The simple answer is around 5-9 per cent of the sales price.
Can you get a fiscal number before you live in Portugal?
Yes, you need a copy of your passport and proof of address (utility bill or copy of driving licence).
Can you open a bank account in Portugal if you still live in the UK?
Yes. Individual customers will need a passport or ID card, Tax Identification number (NIF) issued by Portuguese authorities and also tax identification document from your country of tax residency; proof of home address (eg utility bill), plus possibly proof of economic activity (seek further advice).
In order to apply for residency I realise that we will need an address in Portugal, could this be a friend’s house in Portugal or do we need to actually be residing in the country?
Yes, if the friend signs a rental agreement or a ‘commodatum agreement’ which is a contract which allows one party to give something to another who uses it and gives it back after the use.
Do you need to be resident for a certain amount of time to qualify for residency or just have an address?
It is meant to be three months, and the address can be a rental contract but you also have to show €1,500 going into a Portuguese bank account over three months (or 90 days; see above point).
What is the rate of tax payable on holiday rental income for non-residents?
It is 12.5 per cent.
The lockdown has meant our plans to sell in UK have been delayed. We will be in a motorhome - can we register for residency with a postbox address to start with before we have the funds to buy?
No you can’t - you need a rental or commodatum agreement (see above).
Are the rules to move to Portugal the same for people wanting to move to Madeira?
Would renting long term be a feasible plan before buying?
Yes, you can do this for your residency application, but also you could rent short term if you are keen to try out areas. Long-term rental contracts (ie. one year) are not always easy to find on the Algarve so do your research first.
How to access healthcare, and is English common in healthcare?
There is a very good national health service in Portugal - Serviço Nacional de Saúde (SNS), but access to free healthcare is dependent on your residency status. You will need to pay €120 per month towards it after Brexit; until then register at a local health service and your EHIC will allow reduced-cost access to services. English is widely spoken in the private healthcare system, not in the national health service.
What is the ‘golden visa’ in Portugal?
This is an incentive scheme for investors from outside of the EU - and one of the most popular such schemes in Europe. On the property side, you need to purchase a property for a minimum value of €500,000 to receive Portuguese residency in return. In the Algarve, this threshold has been reduced to €280,000 in ‘low-density’ rural areas, including parts of the Algarve. The government may stop the scheme in cities in 2021.
If you have already purchased a 'holiday' home but then want to buy a 'permanent' retirement property, are you still eligible for a golden visa?
You can register as a resident - with your holiday home address - until 31st December 2020, so you don’t need a Golden Visa, but, yes, you can apply for one in 2021.
Is there an area in Portugal that has mild temperatures all year round or is summer always blistering hot?
My understanding is that most people are avoiding Lisbon - which other cities/towns would you recommend?
This is not the case, as Lisbon’s population is growing, the number of schools is increasing fast and it is still affordable when compared to other western Europe capitals. But do look at Porto, a fabulous and more affordable city, although it does rain a lot more often.
Is there a big difference in prices between the mainland and Madeira for properties?
Because Madeira, due to its topography, offers relatively little land to build on, property prices tend to be quite high, but it depends what you are comparing it to - the “Golden Triangle” of the Algarve (the area between Almancil, Quinta do Lago and Vale do Lobo) is generally more expensive, whilst inland Portugal is probably going to be more affordable than inland Madeira.
What are the tax implications of being resident in both Portugal and the UK. Do you have to pick between the tax regimes?
The Double Tax Treaty Agreement between the countries lays out the terms, as it is de-facto; you can’t just choose. The Statutory Residence Test in the UK details the number of days you can spend in the UK before you are deemed to be a tax resident. You become a tax resident of Portugal if you arrive there with the intention of making it your home or if you spend more than 183 days there in any calendar year. It is possible, technically, to be tax resident in both and a ‘tie breaker ’will determine which country has the taxing right such that you won’t be subject to pay the same tax twice.
Is there any tax relief on private pension received or do I have to wait until state pension age. I currently have NHR in Portugal.
If you became tax resident in Portugal before 1st April 2020 then private pensions (non-government) will be exempt from income tax in Portugal for the 10 years of your Non-Habitual Residence (NHR). If you became tax resident after 1st April 2020 then a flat rate of 10% tax will apply for the NHR period.
What about pensions, post Brexit: in EU, UK pensions are index linked; having left EU, what happens?
Currently, the stated position of the UK Government is that this will continue, post Brexit, but subsequent governments could overturn that decision.
If you have a property in the UK and one in Portugal but Portugal is your main place where do you pay tax?
As Portugal is your main home, your taxes will probably be due in Portugal. However, you will need to keep the number of days you spend in the UK below a particular number depending on the ‘ties ’that you still have in the UK. The more ‘ties’, the fewer days you can spend in the UK without becoming or remaining tax resident there.
How would income from a UK rented property be taxed in Portugal
Rental income arising in the UK will always be taxed in the UK. Under the NHR regime, the income would be exempt in Portugal for the 10 year period.
If I do not have pension income but proof of savings can I get residency in Portugal?
Yes, you must be able to support yourself and show the equivalent of the Portuguese minimum wage of €8,890 per annum.
What is NHR?
The Non Habitual Residence tax regime is available to anyone that has the right to live in Portugal and that has not been a tax resident there in the past five tax years. It allows for foreign source income (such as UK bank interest, dividends and royalties), where that income may have been taxed in the source country, to be exempt from taxation in Portugal. The Double Tax Treaties that exist often mean that no tax is paid in either country. From 1st April 2020 foreign pension income is subject to a flat rate tax of 10% (except UK gov pensions as these will always be subject to UK tax). Certain local employment income can be taxed at a capped rate of 20%.
Can I apply for NHR before I go out?
No. You must be a tax resident of Portugal at the time of your application.
Can I lock in the flexible benefits of my UK personal pension by transferring it overseas.
Yes, if it is appropriate you might consider transferring your pension but be aware that transferring to a non-EU country would result in a 25% Overseas Transfer Charge and this could potentially be applied to EU transfers post Brexit.
What about the job market in Algarve? I am looking to move to Algarve but need an income/ job and do not speak the language. Do you have any tips?
Beware that unemployment - on the back of the pandemic - is currently relatively high on the Algarve. Usually tourism provides a large proportion of casual work; but maybe try to identify gaps in the market for a trade or service to expats, going forward? Finding work from scratch can be the hardest part of moving to Portugal.
Will property prices increase after Brexit?
There is no reason why this should happen because of Brexit. Any price rises - as seen in Lisbon - are driven by a large array of international purchasers buying for investment/golden visas. Britons are not the only people buying homes in Portugal, and they will still buy them after Brexit. If anything, the pandemic will have more of a general affect - depending on if it drives more demand, or decreases it.
Blevins Franks Disclaimer:
The FAQs above below are general in nature and should not be relied upon as a substitute for personal and specific advice. Statements concerning taxation are based upon our understanding of current taxation laws and practices; tax rates, scope and reliefs may be subject to change. Any tax information has been summarised and put forward for consideration purposes only and should not be construed as personalised tax advice; an individual should always request personalised advice in relation to their specific circumstances. Blevins Franks accepts no liability for any loss resulting from any action or inaction or omission as a result of reading this information, which is general in nature and not specific to your circumstances