Whether you're moving to Portugal for a particular lifestyle, to work, join family or to invest, the advice of a fellow expat can reassure you.
Claudia Mendes from Sable International shares some pointers to help you make the most of your new life abroad.
1. Visit Portugal before you make the permanent move
I moved to Portugal just shy of five years ago and although it took me some time to settle in, I can confidently say that I love living here. The reality can often be different from what you see in brochures or on carefully curated Instagram feeds though. In addition, your experience may vary significantly from region to region. For this reason, I always recommend friends and clients visit Portugal and explore different regions before moving here.
Portugal has several expat-friendly regions, including the Algarve, Lisbon and Porto, all of which have their own charm and lifestyle. Take a trip to Portugal to familiarise yourself with the lay of the land. When exploring, consider your priorities such as climate, cost of living, health facilities and proximity to amenities. There are many things that the internet simply cannot capture.
2. Learn the language
Although it is entirely possible to get by with English, the general consensus among the expat community I have spoken to is that knowing the language is a great advantage to settling and living in Portugal. You also have to pass a language test if you want to naturalise one day.
With patience and perseverance, it is possible to learn a new language like Portuguese, and it can even be fun. Get a head start before you leave by using a language learning tool like Duolingo or Babbel. The High Commission for Migration (ACM) offers online courses that can be used as a learning tool.
3. Be wary of Facebook Groups
While they are a great way to get to know the expat community in Portugal, share ideas and build relationships with like-minded people, it can also be a recipe for disaster. Any information you find in these groups should be taken with a grain of salt, especially when it comes to investing and tax planning.
Always seek professional advice where possible. As a tri-regulated (EU/UK and SA) qualified financial planner, I have come across several cases where advice from the right professional could have prevented issues occurring or opportunities being missed.
4. Get familiar with Portugal’s tax system
Despite the many benefits of living in Portugal, understanding the Portugal's tax system is key especially when it comes to employment income and your social security obligations.
Portugal Non-Habitual Resident (NHR) Regime
Portugal's Non-Habitual Residence programme is a tax regime established by the government to attract “high value” residents and investors. Under this regime, you can qualify for:
- A 10-year tax break on qualifying foreign income
- A 10% fixed tax rate on foreign pension income
- The possibility of tax exemption on dividends, real estate income and royalties
The NHR is only available to new tax residents, so it’s essential to plan ahead if you wish to take advantage. The NHR requires tax residency*, time spent in the country, but not capital investment and the applicant must not have been a tax resident in Portugal in the past five years.
*Must be present in Portugal for more than 183 consecutive days or otherwise, in any 12-month period or shorter but with the intention of keeping and occupying such as a permanent residence.
5. Don’t forget about wealth planning
Changing countries means changing tax jurisdictions and this can have an impact on your investments, objectives, and future financial planning.
Once the decision to move has been made, it is important to consult a cross-border financial planning firm before you move abroad. Here are just a few of the top wealth considerations as an expat from South Africa, the UK, or the US.
Moving from South Africa? Consider your living annuities
If you have living annuities in South Africa or are near retirement age in being able to qualify to purchase one, these can be structured to take full advantage of maximising offshore exposure.
Sable International's solution includes EUR-denominated portfolios that protect against the depreciating Rand to extend the lifespan of your living annuity.
See also: Tax considerations when planning to leave South Africa
Moving from the UK? Consider your pension
Legacy pensions can often hold UK-centric portfolio strategies and are generally denominated in GBP.
As your circumstances change, liability mismatching becomes a factor and the need to align your investment strategy to your new circumstances would be a key discussion to have. QROPS are solutions that may be suitable. However, these structures can be costly and are not necessarily a one-size-fits-all solution, so a cost-effective multi-currency SIPP (Self Invested Pension Plan) may be a better option.
See also: Moving to Portugal from the UK – A financial guide
Moving from the US? Consider your discretionary investments
As a US citizen, your investment portfolio is most likely US-centric (most of your investments are based in the US). Discretionary investments, which include home-based tax-free structures or investment bonds, are unlikely to be tax-efficient to hold now that you are moving to Portugal and there are several different solutions available.
The first step is to talk to a cross-border financial planner about whether your current investment structures will still work in Portugal or whether there are more suitable solutions. Any necessary restructuring should be done before you move to Portugal.
These are just a few examples of the many ways that moving to a new jurisdiction can impact your financial planning. We recommend that you speak to an adviser at least six months before you intend to leave to ensure all of your financial structures are tailored to your new circumstances.
See also: Financial considerations when moving from the US to Portugal
As an international, cross-border wealth adviser regulated in the EU, UK and SA, I have helped many expats in restructuring their assets for the move to Portugal. Please feel free to pass along my details to any friends planning on making the move, or get in touch with me yourself at claudia.mendes@sableinternational.com or +351 (0) 914 980 783 (Portugal) or +44 (0) 20 7759 7519 (UK).
Please note: This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity.
