Portugal consistently ranks among the safest and most peaceful countries in the world, standing at #3 globally in safety and #4 in peace according to the Global Peace Index. Living in Portugal offers a compelling combination of beautiful architecture, pleasant weather, and quaint cities that attract thousands of digital nomads, retirees, and remote workers each year.
For expats seeking a new home abroad, Portugal presents an ideal destination with its high standard of living and remarkably affordable cost of living. A retired couple could live comfortably for between $1,500-2,000 per month, making expat living in Portugal financially accessible compared to many other European countries. Additionally, recent changes to tax laws make it attractive for foreigners to settle in the country and save on taxes for 10 years.
The appeal of Portugal for expats extends beyond affordability. The country offers a relatively straightforward path to citizenship after only five years of legal residency, and has made the process of gaining residency easier for foreigners. Furthermore, the number of foreign residents has nearly doubled in the past five years, creating vibrant expat communities throughout the country. This comprehensive guide will walk you through everything you need to know about relocating to Portugal, with special focus on the unique opportunities available in Madeira.
Why Portugal Appeals to Expats, Retirees, and Families
The Mediterranean magic of Portugal keeps drawing people from all over the world, with places like Madeira becoming a favorite spot for expats, retirees, and families. You might wonder what makes this southern European country so special. The answer lies in a perfect mix of natural beauty, safety, and great prices that’s hard to find anywhere else.
Mild climate and natural beauty
The Portuguese weather is something to write home about, with sunshine blessing the country more than 300 days each year. Each region has its own weather personality – the south stays pretty dry while the northwest gets its fair share of rain. Lisbon’s summers are just right at 27.8°C, and winters stay mild with January hovering around 14.7°C.
Madeira’s weather story is even better. The island enjoys subtropical temperatures all year. This makes it a perfect spot for expats who want to skip the whole winter-summer drama.
Nature here puts on quite a show. The country stretches along 1,793 kilometers of dramatic Atlantic coastline and rolls into the beautiful Douro Valley vineyards. Nature lovers will find their paradise among the unique mix of Atlantic/European and Mediterranean wildlife, with some African species making surprise appearances in certain spots. UNESCO seems to agree – they’ve already listed several heritage sites here, with 19 more waiting in the wings. There’s always something new to explore.
Safety and quality of life
The safety stats tell just part of the story. Portugal ranks as the world’s 7th safest country in the 2024 Global Peace Index. This means expats can really kick back and enjoy life without looking over their shoulder.
Healthcare adds another bright spot to life here. The country sits at 21st place in the 2025 Health Care Index. Both public and private healthcare systems won’t break the bank. A doctor’s visit runs about €17, and many private doctors speak English.
Life moves at a different pace here. The OECD Better Life report shows that 94% of Portuguese people don’t work long hours. They’ve figured out how to enjoy life without being chained to their desks. The World Happiness Report backs this up – 88.2% of Portuguese feel good about their work-life balance.
American expats often notice a huge jump in their quality of life. Portugal ranks 6th globally in the Quality of Life Index, while the US sits at 38th place.
Affordable cost of living
Money talks, and Portugal speaks a language many expats love to hear. Living costs here run about 39.2% lower than in the US, and rent costs even less – 54.2% lower. British expats find similar savings, with overall costs 35% lower and rent 40% cheaper than back home.
A couple can live well on $2,500 to $3,000 monthly outside the big cities. Even in Lisbon, the capital, a couple needs around €2,100 monthly to live comfortably.
Grocery shopping won’t empty your wallet. Bread costs €1.39, eggs go for €2.69 per dozen, and apples sell for €1.94 per kilogram. Eating out stays reasonable too – a nice three-course dinner for two at a regular restaurant averages €45.
Housing offers the biggest savings. Interior Portugal has two-bedroom furnished homes starting at $450 monthly. Basic utilities for an 85m² apartment typically run €100 to €150 monthly.
Madeira wraps up all these perks in its own special package. The island keeps its unique character while offering great value to expats looking for that perfect mix of beauty, balance, and budget-friendly living.
Visa and Residency Options for Expats
Portugal’s residency options create a clear path for anyone looking to relocate to this popular expat destination. The country welcomes newcomers through several routes that match different financial situations and life circumstances.
D7 Visa for retirees and passive income earners
The D7 Visa, also known as the Passive Income Visa or Retirement Visa, works best for non-EU citizens who have steady income from outside Portugal. We designed this visa mainly for retirees and people with regular passive income. Applicants need to show a monthly income of €870 or €10,440 yearly. The visa starts with 4 months validity and lets holders enter Portugal twice to get their residency permit from Portuguese authorities.
You’ll need to show proof of financial resources for at least 12 months, bank statements from the last six months, and tax returns from the previous three years. This visa leads to permanent residency after five years in Portugal, making it perfect for long-term stays.
Golden Visa for investors
The Golden Visa program has changed substantially over the last several years, but investment options still exist. Cultural heritage projects start at €250,000, while other paths need €500,000 in investment funds, scientific research, or business ventures.
This visa’s biggest advantage lies in its flexibility. Golden Visa holders spend just seven days in Portugal during year one and 14 days in the next two-year periods. This path works well for people who want to keep their homes elsewhere while having legal status in Portugal.
D8 Digital Nomad Visa
Portugal launched the D8 Digital Nomad Visa in October 2022 with two options for remote workers:
- Long-Term Residency Visa: Valid for 4 months at first, needs conversion to a 2-year residence permit after arrival, and opens the door to permanent residency after 5 years.
- Temporary Stay Visa: Good for up to 12 months with multiple entries and renewable 4 times without residency permit needs.
Both paths need a monthly income of €3,280 (as of January 2024), proof you work remotely, private health insurance, and a clean criminal record. Remote work’s growing popularity has made this visa a top choice.
Residency for EU citizens
EU citizens have an easier path to residency in Portugal. They can stay up to 3 months without registering. After that, they must register with their local Council within 30 days to get a Registration Certificate.
The certificate costs €15 (€7.5 for kids under six) and lasts five years. EU citizens can get permanent residence after living legally in Portugal for five straight years. The process runs smoothly, but missing the three-month registration deadline brings fines between €400 and €1,500.
Family reunification options
Portuguese residents’ non-EU family members can join them through family reunification. This includes spouses, minor children, dependent adult children, and first-degree relatives who depend on the resident.
The Portuguese resident starts by asking for a concession at AIMA. Once approved, family members can apply for their residency visas. Family members get independent residence permits after two years of legal residence, or right away for spouses married five years or more.
Whatever path you take, Portugal offers a clear route to permanent residency and citizenship after five years of legal residence. This makes it an excellent choice for anyone thinking about moving to Madeira or mainland Portugal long-term.
Understanding the Cost of Living in Portugal
Portugal’s biggest draw is its budget-friendly cost of living compared to other Western European countries and North America. You’ll need to know what your euros can buy before heading to Madeira or the mainland. This knowledge will help you plan your finances better.
Housing and rent prices
Your biggest expense in Portugal will be housing, and prices vary quite a bit by region. Lisbon tops the list as Portugal’s most expensive city. A 100-square-meter apartment here costs about €2,300 monthly, at €23 per square meter. Porto offers better deals at €19 per square meter.
Funchal in Madeira offers reasonable housing costs. Budget-conscious expats might want to look at smaller cities like Castelo Branco, where prices run €6-9 per square meter.
The rental market in Portugal showed interesting changes in 2025. Each rental property now gets about 17 people asking about it—43% less than in 2024. This could mean more rentals are available in some areas. Lisbon’s average monthly rent stands at €1,751. Better deals exist in nearby towns like Barreiro, Vila Franca de Xira, and Amadora, where you’ll pay around €1,200 monthly.
Utilities and internet
Monthly utility bills for an 85-square-meter apartment in Portugal run between €100 and €200. This covers electricity, water, heating, cooling, and garbage collection. Singles living in smaller places might pay €80-90, while couples in larger homes should budget €120-130.
Portugal’s electricity rates are steep because of taxes—about €0.24-0.26 per kWh. Two people typically spend €25-30 monthly on water.
Internet and phone services come at reasonable prices. Most companies offer package deals. Basic fiber packages (100-200 Mbps) start at €25-30 monthly. Premium 1 Gbps bundles with unlimited calls and mobile data cost €45-60.
Groceries and dining out
Grocery shopping won’t break the bank in Portugal, especially if you buy local products. Singles usually spend €150-250 monthly on groceries, while families budget €300-500.
Here’s what common items cost:
- Milk (1 liter): €0.83
- Bread (500g): €1.23
- Eggs (12): €2.36
- Apples (1kg): €1.77
- Chicken filets (1kg): €6.20
Eating out stays affordable throughout Portugal. A casual restaurant meal costs €7-15 per person. A nice dinner for two with three courses averages €44.88. Portugal runs on coffee culture, and you’ll rarely pay more than €1 for an espresso.
Transportation and fuel
Public transport works well and saves money in Portugal. Monthly passes cost about €40 in Lisbon and Porto. Single rides on busses or metro range from €1.50-2.00.
Gas prices are higher than in North America, running around €1.70 per liter. Car ownership costs add up quickly—Portugal ranks as the world’s fourth most expensive country to own a car.
Entertainment and leisure
Entertainment stays reasonably priced across Portugal. Movie tickets cost €7-14, and gym memberships run €25-50 monthly.
Life in Portugal costs 39.2% less than in the United States, and rent costs 54.2% less. Couples can live well on €2,500-3,000 monthly outside major cities. This makes Portugal a great option for expats watching their budget.
Singles spend about €1,285 monthly including rent, while a family of four needs around €3,010. Even Lisbon’s higher prices beat other Western European capitals and major American cities. Your money goes further here, letting you enjoy a better lifestyle without spending too much.
Healthcare in Portugal: What Expats Need to Know
Access to quality healthcare ranks among the top concerns for expats contemplating a move to Portugal, and understanding the country’s dual-system approach is essential for a smooth transition.
Public healthcare system (SNS)
The backbone of healthcare in Portugal is the Serviço Nacional de Saúde (SNS), established in 1979 and supervised by the Ministry of Health. This universal system provides comprehensive coverage to all legal residents, including expats who contribute to social security. In essence, the SNS covers all medical procedures and treatments except cosmetic surgeries and dental care.
Portugal’s healthcare quality is impressive, ranking 22nd in the 2025 Health Care Index with particularly strong scores for infrastructure quality. The system focuses on preventative medicine like cancer screenings, making it excellent for long-term health management.
To access the SNS, expats must first obtain their número de utente (healthcare number) by visiting their local health center with their social security number, passport, and proof of residency. Subsequently, this number allows you to receive healthcare services at minimal costs—typically €5-10 for certain services, though since 2022, many user fees have been abolished.
Private healthcare and insurance
Despite the affordability of public healthcare, approximately 20-25% of Portuguese residents opt for private health insurance. Private coverage offers several advantages:
- Shorter waiting times for appointments and procedures
- Greater choice of doctors, including English-speaking providers
- Additional services not covered by SNS (dental, vision care)
- Increased comfort and privacy in facilities
Private health insurance costs vary based on age, medical history, and coverage level. Basic packages start around €15-20 monthly with minimal coverage of €15,000, while comprehensive plans range from €30-100 monthly with coverage up to €500,000. Consequently, a couple in their 60s might pay approximately €300 monthly for a high-end policy with €15 co-payments.
In view of these options, many expats choose to combine both systems—using the SNS for emergencies and major treatments while maintaining private insurance for specialized care and convenience.
Access for EU vs. non-EU citizens
For EU citizens, healthcare access is straightforward. The European Health Insurance Card (EHIC) allows access to public healthcare for up to 90 days. Following this period, EU citizens who register as residents gain the same healthcare rights as Portuguese nationals.
Non-EU citizens face different requirements. In the first place, most visa applications require proof of private health insurance before arrival. Once you establish legal residency and begin contributing to social security, you qualify for the SNS. With attention to this transition period, it’s advisable to maintain private coverage until you’re fully integrated into the public system.
Visitors and tourists without EHIC cards must secure their own health insurance, as emergency treatment—though not denied—will require payment after stabilization.
Healthcare in Madeira
Madeira operates its own healthcare system separate from mainland Portugal’s SNS, managed by the Regional Department of Health and Civil Protection (SESARAM). The island features three major public hospitals:
- Dr. Nélio Mendonça Hospital (Funchal): Primary hospital with 24/7 emergency care
- Marmeleiros Hospital (Monte parish): For critical hospitalization needs
- Dr. João de Almada Hospital (Monte parish): Specializes in geriatric and palliative care
Beyond these facilities, numerous health centers (centros de saúde) are distributed across Madeira and Porto Santo, with almost every civil parish having one for non-emergency care.
The private healthcare sector in Madeira is also well-developed, with facilities like Hospital Particular da Madeira, Madeira Medical Center, and Hospital da Luz offering additional options. Virtually all doctors in these private facilities speak English, making them particularly attractive to expats.
For those relocating to Madeira, the island’s healthcare system offers the perfect balance—comprehensive public options complemented by accessible private services, all operating within a compact geographical area that ensures medical care is never far away.
Taxes and Financial Planning for Expats
Tax planning becomes significant for expats who want to secure their financial future in Portugal. The country has attractive tax benefits, and you need to plan carefully to make the most of these advantages.
Becoming a tax resident
You become a tax resident in Portugal after spending more than 183 days in the country during any 12-month period. Having a permanent home that you use as your primary residence also qualifies you. Your worldwide income faces progressive tax rates from 12.50% to 48% for 2025 once you establish residency.
Your annual income above €80,000 and €250,000 attracts an extra solidarity surtax between 2.5% and 5%.
NHR and NHR 2.0 explained
Portugal’s Non-Habitual Resident (NHR) program ended for new applicants in late 2023. People who got NHR status before the program ended can still enjoy its benefits for up to ten years.
Portugal launched the “Incentivo Fiscal à Investigação Científica e Inovação” (IFICI) program in January 2024. People call it NHR 2.0. This new system helps professionals in scientific research, technology, and entrepreneurship. NHR 2.0 offers a flat 20% tax rate on eligible Portuguese-source employment or self-employment income.
The new regime taxes foreign pensions at progressive rates from 14.5% to 53%, unlike the original NHR program. Your foreign-sourced capital gains might be exempt if a double taxation agreement exists.
Double taxation agreements
Portugal has tax agreements with 81 countries worldwide. These agreements protect your income from being taxed twice – in Portugal and your home country.
The US-Portugal tax treaty states that your country of residence provides relief for taxes from the source country. US citizens living in Portugal must file US tax returns on their worldwide income. Foreign tax credits help reduce double taxation.
Pension and foreign income taxation
Portugal taxes foreign pensions under Category H (Retirement) or Category E (Investment) income. Your pension’s structure, purpose, and regulatory standing determine its classification.
Smart pension classification can save you money on taxes. Pension benefits paid by annuity might get an exemption on the capital element if they meet Article 21 CIRS conditions. Only 15% of the annuity payment faces taxation if you cannot calculate the capital element.
Americans moving to Madeira or mainland Portugal face unique challenges. These include keeping US brokerage accounts, managing US and Portuguese taxes, and handling currency exchange risks. You need professional cross-border tax planning because US tax-advantaged accounts like Roth IRAs, HSAs, and 529 plans might lose their tax-deferred status in Portugal.
Buying or Renting Property in Portugal
The decision between purchasing or renting property represents one of the most significant choices facing expats relocating to Portugal. Presently, both options offer distinct advantages depending on your circumstances, investment goals, and planned duration of stay.
Renting vs. buying: pros and cons
Renting provides considerable flexibility to explore different areas before committing to a permanent location. This approach allows you to test various neighborhoods without a major financial commitment. Indeed, many expats initially rent in Portugal to sample different regions before purchasing.
Buying, on the other hand, offers greater security and long-term stability. Yet this comes with substantial upfront costs, typically requiring 20-30% down payment plus additional fees. First-time buyers outside city centers often find better value.
Key considerations include:
- Time horizon: Renting suits those staying temporarily or uncertain about long-term plans
- Financial readiness: Buying requires economic stability and regular income
- Property control: Owners can freely modify their properties, while renters face restrictions
Real estate prices in 2025
Portugal’s property market remains robust in 2025, outpacing both the UK and EU markets. The country recorded a 15.8% annual price increase as of March 2025, with Lisbon’s average price reaching €6,934 per square meter.
The Algarve experienced 13.8% growth, with average prices at €4,385 per square meter. Porto has become a significant cultural hub with cheaper options than Lisbon, while Cascais boasts luxury properties averaging €7,260 per square meter.
Property laws for foreigners
Foreign buyers face no restrictions when purchasing property in Portugal. To complete a transaction, you’ll need:
- Portuguese tax number (NIF)
- Valid photo ID
- Portuguese bank account
- Property sales contract
The buying process involves three main steps: an optional reservation agreement, a binding promissory contract with 10-30% deposit, and the final deed signed before a notary.
Additional purchase costs include property transfer tax (IMT) ranging from 0% to 8%, stamp duty at 0.8%, and annual property tax (IMI) between 0.3% and 0.8%.
What to expect in Madeira’s housing market
Madeira offers excellent value compared to mainland Portugal and other European islands. The island recorded the strongest price growth nationwide at 21.7% annually versus the 6.5% national average.
The median apartment price in Madeira stands at €4,122 per square meter, while houses average €3,678 per square meter. Funchal, as the luxury real estate hotspot, commands higher prices at approximately €2,920 per square meter.
Given these trends, Madeira’s combination of natural beauty, political stability, and affordability makes it particularly attractive for expat buyers seeking both lifestyle benefits and investment potential.
Living in Portugal: the Best places for Expats
Finding the right place to live is crucial for expats who want to make Portugal their home. Lisbon and the Algarve are popular choices, but other amazing areas give international residents unique benefits.
Funchal: island urban and cultural hub
Funchal, Madeira’s lively capital, serves as the island’s cultural center and many expats choose it for its mix of modern comforts and island charm. This coastal city brings together historic elements and modern living with its cobbled streets, colorful markets, and botanical gardens. The city ranks as Portugal’s second-best place to live, striking a perfect balance between city life and relaxed island living.
A growing and friendly expat community calls Funchal home. Social groups with more than 30,000 members help newcomers by organizing events, sharing resources, and making the transition to island life easier. English-speaking doctors work at almost all private healthcare facilities, which makes medical care easy to access for those who don’t speak Portuguese.
Castelo Branco: traditional and affordable
This small city near the Spanish border in east-central Portugal is home to about 50,000 people. Castelo Branco blends its historic roots with modern growth, and its well-preserved old town centers around a 13th-century castle.
The city draws budget-conscious expats because it has some of Portugal’s most affordable properties. You can find more space here than in pricier regions like the Silver Coast, Algarve, or Lisbon. The property market has many ruins and older homes perfect for renovation, giving you a chance to restore a piece of history.
Coimbra: universal history
Just two hours north of Lisbon, this former capital city houses one of Europe’s oldest working universities. Despite its size, Coimbra’s 107,000 residents enjoy the laid-back atmosphere Portugal is famous for.
This university town with its academic vibe gives expats great value for money. A couple can live here for about USD 2,492 monthly, with rent for a furnished two-bedroom apartment around USD 975. The city’s healthcare system is excellent, with modern hospitals and clinics.
Coimbra’s central location works great for residents—you’re just 45 minutes from the coast and can easily reach other Portuguese cities. Daily life is simple even without knowing Portuguese since many people speak English, especially students and academics.
Daily Life and Integration in Portugal
Living well in Portugal means understanding the practical parts of daily life that will shape your expat experience.
Language and communication
Learning Portuguese should be your top priority. Many Portuguese people speak English, especially in tourist spots and big cities. Your effort to learn Portuguese shows respect and helps build deeper connections with locals. The Camões Institute’s online courses give you self-learning options and personal tutoring over 12 weeks. You can practice speaking with native speakers at language exchange meetups. Portugal ranks 8th worldwide in English proficiency, which makes your first few months easier.
Cultural norms and etiquette
Portuguese people value politeness and modesty. Men usually shake hands to greet each other. Women exchange two kisses – right cheek first, then left. Portuguese people link clothing with social status, so dress modestly and elegantly. Family meals are a big deal here and can take time. Sunday family lunches might last five hours. Keep religion, politics, and money talk out of casual conversations.
Public transport and driving
Portugal’s affordable public transportation network has trains, busses, metros, and trams. Lisbon’s Viva Viagem card lets you use public transit, while Porto uses the Andante card. US licenses work for 185 days after you arrive. EU funding programs have improved Portugal’s road network by a lot.
Banking and setting up finances
A Portuguese bank account makes daily transactions easier. You’ll need your passport, NIF (tax number), and proof of address to open one. Big banks like Millennium BCP, Santander Totta, and Novo Banco are popular. Digital banks like ActivoBank offer optimized services. Most people use direct debits (débitos diretos) to handle utility bills.
Conclusion
Portugal, especially Madeira, combines rare benefits you won’t easily find elsewhere in Europe. This piece shows how Portugal ranks among the world’s safest countries. Life quality here costs substantially less than other Western destinations. Living comfortably costs about €2,500-3,000 monthly, making Portugal attractive to retirees and digital nomads.
Madeira shines as a top choice for expats who want both island peace and city convenience. The subtropical climate draws people in. Funchal’s thriving expat community and detailed healthcare facilities create the perfect setting for newcomers. On top of that, Portugal lets you apply for citizenship after five years of legal residency – a security feature rare in other places.
Different visa options fit almost every situation. The D7 works for retirees, the D8 suits digital nomads, and family reunification paths exist too. Recent tax changes haven’t dimmed Portugal’s financial appeal. The cost-benefit ratio of your new lifestyle still beats many countries.
Your move to Madeira needs focus on housing, healthcare, and language adjustment. Portuguese helps you blend in better, but English works well too. Most people in Funchal speak it, especially healthcare staff in private facilities.
Portuguese life moves at an easy, enjoyable pace that values wellbeing over output. Beautiful nature, great food, and friendly people explain why expat communities keep growing here.
You might want to retire on Madeira’s beautiful coast, work remotely in pleasant year-round weather, or raise kids in one of the world’s safest places. Portugal offers a lifestyle change that stays within reach. The trip needs planning and patience, but ask thousands of happy expats – living in Portugal rewards far outweigh any moving challenges.
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