All you need to know when moving to Portugal from US
Americans moving to Portugal after Covid-19
The experience of having lived through enforced quarantine and this pandemic has left most of us with a reinvented understanding of what matters most in life.
Many American expats are now considering their options of repositioning themselves overseas and moving to Portugal from the US is a very attractive option.
Forbes recently elected Portugal as one of the best places to live post Covid-19 followed by Mexico and Belize.
Besides the great quality of life, tax advantages and great climate the Portuguese people are amazing.
And life is as calm in Portugal now as it was before Covid19.
Portuguese people don’t panic – ever!
The way they are handling the current pandemic is an example to be followed by many.
1.2. What’s it like living in Portugal after Covid 19?
Despite an elderly population Portugal has managed better than most to limit the damage caused by Covid 19 but has not been left unscathed by the pandemic bubble.
The latest (July 2020) number of recorded cases in Lisbon and surrounding areas are 25,617, followed by the North region with 18,549, the Center region with 4,422. The Algarve has 853 cases, and Alentejo has 697 cases.
The self-discipline of the people, early reaction of the public services and government bodies plus the geographical position of the country have ensured a mild outbreak in Portugal.
There have been some spikes around the Lisbon area since flights resumed from the rest of Europe but further restrictions were quickly put in place and consistent efforts to avoid the spread are continuing.
“The Portuguese people understood very clearly that if we want to survive this, we would have to do even more than the others in crushing the curve, in prolonging and pushing forward the number of new cases,” he told POLITICO. “The country has shown tremendous solidarity.” https://www.politico.eu/article/how-portugal-became-europes-coronavirus-exception/
The use of face masks is mandatory in all public buildings and if you are caught without a mask you can be fined up to €1,000.
All shops, restaurants, supermarkets and government buildings have hand sanitisers which must be used on entering the building and social distancing markers for queueing and moving around the buildings. Many kiosks have money machines so that staff do not need to handle the money themselves.
The government granted all migrants in Portugal citizenship rights up to July 2020 to ensure they have access to health services during the corona virus outbreak.
The Lisbon city administration waived rent payments and provided food co-ops to the Portuguese population and foreigners who live there.
Drones are in operation in Porto and Lisbon to ensure social distancing measures are being adhered to.
The beaches are once again full as summer gets underway, however, the Portuguese holidaymakers are sticking to the rules and, for the most part, social distancing is being adhered to on the beaches.
1.3. Can American citizens travel to Portugal?
Is it safe to travel to Portugal from the US after Covid-19?
The Portuguese government transitioned the country to a general State of Alert on the 1 July 2020. However, certain areas, including central Lisbon, remain under strict quarantine rules
Some airlines are continuing to sell tickets for travel from the US to Portugal. But according to the US embassy website all non-essential (tourist) travel to Portugal by American citizens is prohibited.
Many American expats arriving into Portugal are being refused entry.
Here are the exit and entry requirements as stated on the embassy website:
All travellers must present proof of a negative COVID-19 test conducted within the last 72 hours – Your airline may refuse to board you without evidence of a negative COVID-19 test conducted in the last 72 hours. Passengers arriving to Portugal without these test results are subject to refusal of entry and/or mandatory testing at the cost of the passenger as well as quarantine until the results of the test. Additionally, all passengers arriving are subject to mandatory temperature checks, and may be required to undergo secondary health screening and/or COVID-19 testing.
- Portuguese nationals, holders of residency permits, and holders of other long-term visas issued by Portuguese authorities may enter the country.
- Third country national holders of residency permits or long-term resident visas issued by EU member states may transit Portugal to return to their country of residence.
- US citizens who are Lawful residents of EU member states may enter Portugal.
- Long-term visa holders are allowed but should contact the nearest Portuguese Embassy or Consulate to confirm that their visa qualifies.
- As of July 1, the Government of Portugal permits essential travel to Portugal by U.S. citizens for professional, study, compelling family emergencies, health, or humanitarian reasons. For these exceptions, please check with the nearest Portuguese Embassy, Consulate, or Portuguese immigration authorities at (SEF) to confirm you qualify, before making travel plans.
1.4. Do US citizens need a Visa to move to Portugal?
Normally (without covid-19 restrictions) American expats can stay in Portugal without a visa for up to 90 days for tourist or business purposes with a passport that is valid for at least six months. Americans wanting to move to Portugal permanently will need a visa in order to establish residence.
Some of the most common visa options include:
- Golden Visa
Moving to Portugal from the US after covid-19 is a little more complicated. However, our legal team here at RHJ can help with visa and residency applications for American expats wanting to move to Portugal from the US whilst they remain in quarantine in the US.
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Get information about VISAS from this article
1.5. Cost of living in Portugal VS US
For Americans wanting to move to Portugal one of the biggest advantages is Portugal’s cost of living which is way cheaper than the US. The cost of living in Portugal is amongst the lowest in Europe at around 30% lower than any other country in the region.
The main cities of Lisbon and Porto are now creeping up in price due to the influx of foreign investment with some luxury rental apartments fetching upwards of €2,000 per month.
However, a couple living on a budget of €2,000 per month in a smaller town or village in the north of Portugal would enjoy a lavish lifestyle.
For instance, buying lunch at a inexpensive restaurant can cost you 15,20 € in the US and in Portugal can cost half of that: 7,50 €. (source: numbeo.com link here)
Therefore you are going to need less food budget, so you can invest more money in other goods.
Overall, and comparing to other countries in Europe, Portugal is one the most affordable to live in, and the top cities are: Lisbon, Cascai, Porto and the Algarve region.
1.6. Is healthcare free in Portugal?
Healthcare in Portugal is high quality and a fraction of the cost of healthcare in the United States. In fact, the Portuguese healthcare system was ranked 13th on the 2018 Euro Health Consumer Index.
Many measures have been put in place to improve the performance of the health system, including public–private partnerships for new hospitals, a change in hospital management structures, pharmaceutical reforms, the reorganization of primary care and the creation of long-term care networks.
The Portuguese healthcare system has public and private healthcare services and as a foreigner living and working in Portugal you are eligible to access subsidized state healthcare once you have registered with your local GP surgery (Centro do Saude).
The state healthcare system (Servico Nacional de Saude) covers both primary and secondary healthcare services including:
- GP Services
- Community healthcare
- Some Dental care
- Maternity services
- Hospital and specialist care
Healthcare in Portugal is not free but it is a fraction of the cost of healthcare in the United states. Non residents and temporary visitors will need to purchase private health insurance to cover their stay.
Healthcare for non habitual residents in Portugal
Americans moving to Portugal need to be aware that access to the public healthcare system is based on being a legal resident.
Non-habitual resident access is based on specific circumstances.
Professionals who are contributing to the social security system will be able to use the Portuguese health service or they can opt for a private healthcare plan.
During the pandemic citizens and residents alike are contacting family Drs via remote services, online, via telephone and messenger as well as the SNS 24 hour phone line.
The demand for emergency services in Portugal has actually gone down by around 30% since shortly after the 2 March when the first Covid-19 case was reported in the north of the country.
1.7. Can an American buy a property in Portugal?
Yes Americans can buy property in Portugal providing they have all the correct documentation.
The first thing you will need is a Personal Fiscal Number (Numero fiscal de contribuinte), which you can obtain from your local tax office. If you choose to open a bank account, you’ll be automatically assigned a Personal Fiscal Number.
And as there are no restrictions on foreign property ownership in Portugal, Americans can get a five-year residency permit (known as a golden visa) if they buy property worth a minimum of €500,000. In addition to allowing you to work or study in Portugal, the golden visa allows you to apply for permanent residency after five years.
1.8 Capital Gains tax on sale of US properties
Like many countries, Portugal imposes a capital gains tax on the sale of assets. Unlike others, it only applies to gains made on real estate and investments. This means that personal items are not taxable, and inheritances are instead only subject to a limited form of stamp duty.
Your exposure to Portuguese capital gains tax will depend on whether you are resident, how you own the asset and, with property, whether it is your main home.
Capital gains tax for Portuguese residents
Residents in Portugal are liable to tax on gains made on worldwide property and investments acquired from 1 January 1989 onwards.
Any gains on real estate are added to your other income for the year and taxed at the income tax scale rates, ranging from 14.5% to 48%.
Shares, securities and bonds are taxed at a flat 28% rate (assets deemed to be from a ‘tax haven’ – including Gibraltar and Guernsey – are taxable at 35%).
The rules are actually quite generous for residents. For example, only 50% of the gain on the sale of real estate is liable to tax and you can receive inflation relief after two years of ownership. There are also exemptions available.
Main home exemptions for Portuguese residents
If you reinvest the proceeds into another main home in Portugal – or anywhere in the EU/EEA that has a tax treaty with Portugal – you will not attract capital gains tax. To qualify, you must do this within 36 months after the sale (or 24 months before) and also live in the property within six months of the three-year deadline.
An additional capital gains tax relief was introduced this year that can particularly benefit retirees. If you are either retired or aged over 65, gains are now exempt if you reinvest proceeds from your main home in an eligible insurance contract or pension fund within six months of sale.
Rules for non-habitual residents (NHR)
Those with NHR status avoid liability for capital gains tax on certain worldwide gains, depending on which country has the taxing rights under the terms of the double tax treaty.
Where the gain is taxable in the source country – such as with US real estate – there is no liability in Portugal for non-habitual residents. Gains are ‘exempt with progression’, however, so are still added to your annual taxable income to calculate your effective Portuguese tax rate. So, although not directly taxable, the gain could increase your overall tax bill.
Capital gains tax for non-Portuguese residents
For non-Portuguese residents, the full gain from the sale of a property, shares, securities or bonds in Portugal is taxable at a flat 28% rate.
Note that if you own Portuguese property through a non-resident corporate structure – such as a company or trust – gains have only recently become taxable in Portugal. Since January 2018, where 50% or more of a non-resident company’s value comprises of Portuguese real estate, the gain on the transfer of shares attracts 25% corporation tax (35% if from a blacklisted jurisdiction).
This only applies where the double tax treaty between Portugal and the company’s country of incorporation gives Portugal taxation rights, for example, US-owned companies.
Portuguese wealth tax
Portugal’s version of wealth tax affects those whose ownership of Portuguese property is worth over €600,000, regardless of where they are resident. Rates are 0.4% for properties held by companies, 0.7% for individuals and 1% for those whose share in Portuguese property goes over €1 million.
There is a €600,000 allowance deducted from the value of all Portuguese properties owned by individuals, but not companies. So married couples and civil partners, for example, can have a combined allowance of €1,200,000 on their home before the tax is due. However, some types of owners, such as certain companies, aren’t eligible for any allowance at all and will be liable for wealth tax on the full value of all properties owned.
Are you an American expat wanting to move to Portugal permanently or at least for a couple of years?
Contact our legal team today here and see how we can help you apply for your visa and get your residency in place before you leave the shores of the US.