Officially known as Portuguese Republic, Portugal is a country rich in history. The reality that it was home to historical personages like Bartolomeu Dias and Vasco da Gama makes Portugal a perfect place to retire for the Old World European lover. The country is located on the Iberian Peninsula in Europe. Aside from bordering Spain, Portugal has part of its territory the Azores and Madeira.

Retiring to A New Life in Portugal

Climate in Portugal

Portugal is a country subject to two different types of climate: oceanic and Mediterranean. Northern Portugal has a climate consisting of the former. That means that that the temperature and weather in the north are almost always moderate - not so hot during summers, not too cold during winters. The Southern part is dominated by the Mediterranean climate that might consist of scorching summer days.

Portugal is known to be one of Europe's warmest countries . In truth though, its average yearly temperatures of 18 degrees Celsius in the south and thirteen degrees Celsius in the north are still much cooler than any tropical country's. There are parts of the country that may exhibit extreme weather conditions. Examples are the northeastern locations reaching temperatures of up to -12 degrees Celsius during the winter and the south-eastern locations with summers reaching up to a sweltering 44 degrees Celsius.

Government in Portugal

The country operates under a democratic republican mixed parliamentary system as set forth in the Constitution. The constitution laid down in 1976 formed the government of Portugal to what it is today. With Lisbon serving as its capital, the government of Portugal is divided into four elements. The division of powers among the executive, legislative, and judicial components is granted by the powers of the country's constitution.

The first element of the Portuguese government is the country's president. The presidential seat is merely supervisory and non-executive with a term lasting up to five years. The second element is the country's parliamentary body called the assembly of the republic. This parliament is unicameral consisting of 230 seats for deputies with terms lasting for four years.

The next element, the government, is lead by a Prime Minister. The Prime Minister is the one responsible for appointing state secretaries and ministers that make up Portugal's Council of Ministers. The two political parties dominating both the parliament and the government in Portugal are the Socialist and Social Democratic Parties. The current Prime Minister is Jose Socrates. The last element of the Portuguese government, the courts, is organized into judicial, fiscal, and administrative organs that keep the government in motion.

Tax System in Portugal

The tax rate for Portugal for the year 2007 is between 10.5%-42%. Some residents with incomes of specific types are granted tax exemption. For example, a resident with less than 149,753 Euros in annual income will be waived his/her annual tax fee. If you decide to move to Portugal and become a resident, you will be liable to pay taxes you earned both in your native country and in Portugal. Someone who only works in Portugal, however, will only be taxed for earnings made in the country.

For you to be recognized as a resident of Portugal, you must have been living in the country for a minimum of 183 days. Sometimes, even less than one hundred eighty three days would suffice if you have a property in Portugal you can declare as your main residence. December 31 is the end of a taxable year in the country. Individuals are expected to file the tax details by the 30th of April.

As for property purchases, an expat shared the applicable taxes in a post at the Portugal Expat Forum last July 29, 2009:


You must pay the purchase tax, (IMT), before you complete the sale. Purchase Tax for plots of land are 5% for ORDINARY LAND, 6.5% for BUILDING LAND. IMT on other properties is on a sliding scale based on the value of the property.

IMI - (Imposto Municipal de Imoveis)

This is a Municipal Tax levied on the taxable estate value on all properties located in Portuguese Territory. The Taxable Person is the named owner of the property, as on the 31st of December of the year in which the tax is related.


Rustic and Agricultural lands: Pay flat rate of 5% IMT Tax

When Buyer is an Offshore Company, Tax to be paid is flat rate of 15%

The IMI Rates are calculated on the following basis:

For Rural properties 0.8%

For Urban properties betweeen 0.5% (variable from council to council, annual review)

As a First Time Buyer in Portugal, you are allowed a few years of Council Tax Exemption, depending of your local Council and Price of the Property.

Check with your Solicitor

Property Value
Percentage Applied
Value Deducted

Up to €85.500,00

€85.500,00 until € 117.200,00

€117.200,00 until € 266.400,00

€159.800,00 until € 266.400,00

€266.400,00 until € 511.000,00

Superior to €511.000,00

Medical Care in Portugal

Despite being a developed country, the health care in Portugal is ranked among the lowest in the Western European regions. However, the country does present peace of mind regarding medical care since it has a ratio of 2.9 doctors to 1,000 patients that ranks higher than that of its neighboring countries. These health care practitioners, however, are centered in the urban areas of Portugal leaving the rural areas in need.

Portugal has a health system that pays for a resident's hospital and medical bills in full. The system is offered by major urban hospitals, some regional ones, and several health centers The overall Portuguese health system is operates the National Health Service, health subsystems and voluntary private insurance. Despite these, the system needs vast improvement in order to be up to par with its Western European counterparts.

Real Estate in Portugal

The majority of the rural areas in Portugal have no supply of electricity and this prompted the residents to move to urban establishments. This caused over-population in Portugal's urban dwellings, especially in Lisbon, where there is estimated to be 200,000 illegal housing structures. The rental percentage in Portugal is 60%. In fact, even the opulent residents of country opt to live in rented apartments that the city of Lisbon is riddled with high-end buildings for their usage.

This trend is now reversing, as the redevelopment of tourist areas such as the Algarve have made these people flock back to their old hometowns for their livelihoods.

Shopping in Portugal

Shopping centers in Portugal usually operate seven days of the week from 10:00 am to 11:00 pm. Since Portugal is a member of the Eurozone, its currency is in Euro. Different banks exchange for different rates and with varying commissions charged. Currently, MultiBanco (MB) ATMs are being installed in the country which charge currency exchange commission of only 2%. Standard credit cards such as MasterCard, Visa, and American Express are accepted in Portugal. Eurocheque cards are also accepted and traveller's cheques are gladly exchanged.

The famed Portuguese brands include Fatima Lopes, Maria Gambina and Dolls. Other places have more well known international brands located in malls in highly urbanized centers.

Cost of Living in Portugal

Cost of living in Portugal has risen in the last decade. Still, it remains cheaper than the rest of its neighboring Western European countries. As expected, high-end places in Portugal like The  Algarve golfing areas are expensive, but away from the country's fashionable destinations, prices are quite low. To reduce every day costs, steer clear of plush supermarkets and venture to the street markets popular all over the country with fresh produce straight from the farms. The most expensive regions of Portugal are Lisbon, Estoril, and Cascais. The most reasonable place to live on the other hand is in the northern parts of the country.

An expat summarized the matter of cost of living in Portugal in a post at the Portugal Expat Forum last July 8, 2009:
  1. dependant on standard of living, family of four could live on 800-1000 per month.
  2. Houses are available in that area for that price.
  3. Grocery=400 month utility=140 month internet=9.99-24.99 month telecoms= for international calls, you are far better off with Skype, you will need a landline for multi use internet at home and that costs around 15 a month.
  4. buying a car, you can have my BMW for 9k, or you can buy much cheaper options or much more expensive, it really does depend what you are looking for. A friend has just bought a new Ford Focus for 23k.
  5. Income tax, you must file a tax return, you may not be charged anything, depends on your income and where it is from.
  6. insurance is available, but not really necessary, as long as you are residents, if not it can get expensive really quickly.
  7. not a drive I have done very much but I would think your timeframe is realistic.