An international move is an exciting yet complex life change. While finding somewhere to live and planning the logistics of transporting your belongings overseas can be all-consuming, it’s also important to consider your finances, from tax obligations to registering your arrival and budgeting for school fees.
In this article, we’ve summarised some of the key areas to evaluate, with advice about ensuring your relocation goes smoothly and you’re prepared for a comfortable transition when moving to Portugal from the UK.
Ensuring Your Healthcare Cover is Comprehensive
Health insurance ranks highly on our to-do list, partly because a lack of insurance can become extremely expensive if you become unwell, but also because insurance is often regarded as a necessity purely to comply with visa terms rather than a valuable safeguard.
The Portuguese healthcare system operates to high standards. It is primarily funded through social security contributions, but you can only seek treatment once you are a legally registered resident.
Depending on the terms of your visa, you might also be expected to cover the costs of private treatment or medications, so taking out robust insurance before you move will protect your finances and ensure you can access the best facilities should you become injured or unwell.
Once your relocation is complete, be sure to register with the Seguranca Social (social security office) and obtain a Número de Identificação Fiscal (NIF) number, similar to a National Insurance number in the UK, which you’ll need to work, pay taxes, buy a home and register with your local GP.
Registering for Portuguese Taxes
The next area to think about is taxation. While Portugal and the UK have a dual tax treaty that prevents expats in either country from paying tax twice against the same income, you may need to declare all your worldwide income to the Portuguese tax office.
Tax residency differs from your visa conditions or residency status and if you are a tax resident, you become legally obligated to submit tax returns detailing all your earnings arising from any country and any activity.
It will be absolutely worthwhile to speak with an experienced financial adviser to ascertain whether your plans mean you will likely be treated as a tax resident or will remain a non-resident living in Portugal.
Expats who remain non-residents for tax purposes are obliged to file returns with HMRC in the UK but will be liable to pay Portuguese taxes against their earnings arising in the country.
Your tax obligations will differ if you have applied for a visa through the Non-Habitual Residents scheme. This initiative seeks to attract high-net-worth foreign nationals with varied tax advantages and exemptions for up to ten years.
Applying for a Job in Portugal
Many expats relocate to pursue career opportunities, and you may have a role already secured with a work permit in place.
Otherwise, it is important to consider your qualifications, skills, language capabilities and professional accreditations – it is advisable to have formal certifications translated and verified by a translator since some qualifications will not directly translate into the Portuguese equivalent.
UK nationals moving to Portugal without a work permit cannot take up employment without the requisite permission. It is important to apply, usually with support from a prospective employer, before you take up any work offer.
Renting or Buying a Portuguese Property
Expats moving permanently to Portugal have the choice of renting or buying – it is more common to rent at least initially, before settling on an area, city or neighbourhood where you would like to live.
We would suggest spending time in any region before purchasing a home since practicalities such as commuting times, distances to amenities and schools and the proximity to transport links or public transport facilities may be as important to day-to-day life as being within walking distance of the beach.
Foreign nationals must have a NIF number to purchase or rent a property, although some forms of short-term housing don’t require you to be a registered resident.
Most rental contracts are renewed automatically unless you provide notice, normally of two months, and you’ll need to budget for a deposit and at least one to two months’ rent upfront.
Purchasing a home takes a little longer, and while properties in the Algarve and major cities are inevitably more expensive, there are opportunities to buy homes slightly outside of the metropolitan areas for considerably less than you would expect to pay in the UK for a similar floorspace.
It is important to think carefully about your financing options if you are considering a mortgage since application criteria for non-residents are strict, and you will usually need a substantial deposit to be able to borrow from a Portuguese bank.
Enrolling Children in a Portuguese School
The public schools in Portugal are free to all residents, and mandatory education starts at age six. However, many expats send their children to private or international schools, to help them learn the language and because international schools may follow the UK curriculum or international baccalaureate.
Education standards are high, but children who aren’t fluent may struggle in public schools since all tuition is in Portuguese, aside from foreign language lessons.
The costs of private and international schools start at roughly €4,000 per year but can be significantly higher, with boarding schools in Lisbon and the Algarve charging around €30,000 per year per child.
Banking for UK Expats in Portugal
Our final aspect to consider is your banking because if you pay for general costs and purchases from a UK bank account, you will incur exchange rate fluctuations and international banking charges against each transaction.
While many expats retain a British account to cover costs back home, it is wise to open a local account in Euros to reduce your banking charges and ensure you have readily available finances whenever required.
If you’d like more advice about managing your finances when moving to Portugal from the UK, please access our free Portuguese Residency Guide, or contact the Portugal local office or Chase Buchanan Wealth Management team.
*Information correct as at March 2023