Moving to Portugal from USA: Taxes and Practicalities

Moving to Portugal from the USA is becoming an increasingly attractive prospect these days. 

However, a move to Portugal comes with serious and oftentimes complex tax considerations, especially for Americans with businesses, investments, or retirement accounts. 

Recent updates to Portuguese tax rules and economic priorities are reflected in changes to popular regimes such as the Portugal NHR. As moving to Portugal continues to capture the American imagination, these changes underscore the importance of prep and cross-border tax planning before moving. 

This guide outlines the key steps, tax implications, and planning strategies US citizens should understand before relocating to Portugal. Let’s dive in.

Why Are Americans Moving to Portugal?

Between 2017 and 2022, the number of Americans living in Portugal increased a remarkable 239%. (1) This growth reflects a surge in US interest via facilitative immigration options to Portugal, such as the golden visa and digital nomad visa. 

It may come as no surprise, then, to hear that their real estate market is booming, especially when it comes to luxury properties. The 2025 Portuguese real estate market is already looking promising, with analysts anticipating interest rate decreases, greater rental profitability, and strong demand. (2)

A few reasons US citizens are moving to Portugal are outlined below. 

A (generally) pleasant climate

It’s true that, broadly speaking, Portugal enjoys mild winters and warm summers, with cooler temperatures along the coasts. However, many people envision Portugal as having a warm, coastal climate throughout the country, and then move to a place like Porto and are shocked to discover how cold and windy it can get.

Affordability (compared to high-cost states)

The cost of living in Portugal is significantly lower than in the US. According to Numbeo, consumer prices in Portugal (including rent) are about 33.7% lower than in the US. However, while those numbers are encouraging, they don’t necessarily paint the full picture.

As we’ve mentioned, certain cities have attracted more foreigners than others, and it’s no coincidence that prices in the aforementioned Lisbon and the Algarve. Additionally, don’t be surprised to see some perhaps higher-than-expected listings in Cascais and Estoril. As of this writing, Porto is still generally considered to be broadly affordable, but reports of increasing interest, particularly by Americans, forecast higher costs there, too.

Safety

Although the country’s government trends right-leaning and conservative, the country is politically stable and has very low rates of crime. The 2024 Global Peace Index declared it the seventh-safest country in the world and the fifth-safest in Europe. (3) 

Is Portugal LGBTQIA friendly? 

Yes! According to Wikipedia, since 2004, the Constitution of Portugal has prohibited any form of discrimination based on sexual orientation. And, according to the European Pride Organisers Association, the more than 200 organizers who convened for the annual conference in Portugal last year represented the highest number ever.

Finally, and perhaps even more reassuringly, across social forums such as Facebook groups (check out “LGBTQI+ – Expats & Immigrants Portugal”) and Reddit, Portugal is anecdotally hailed as one of the friendliest to members of the LGBTQIA community. 🏳️‍🌈 

Laidback pace of life

Like many European countries, Portuguese culture places a major emphasis on family, community, and simple pleasures. Think sit-down lunches, laptop closed and work notifications ignored until the next day, and after-dinner conversations (known as sobremesas in Portuguese, just like in Spain).

If “quality time” is your love language, prepare to finally live in an environment where you can fully express this. 

Robust infrastructure

Portugal offers widespread public transit, high-quality and affordable healthcare and public schools, high-speed internet, a well-maintained road network, reliable energy, and much more.

Beautiful nature

From white-sand beaches in the south to the lush Douro Valley winemaking region and subtropical forests of the Azores and Madeira, Portugal has breathtaking landscapes to discover. 

To that point, before moving, we highly recommend planning a scouting trip specifically to evaluate the places you’re interested in! 

Culture

World-famous wine varieties like Port and Vinho Verde, ornate Baroque architecture, intricate tile artwork, freshly-caught cod, and lively fado music are just a few of the cultural treasures Portugal has to offer.

And with about 14,000 Americans calling Portugal home, people moving to Portugal from the USA will be in good company. 

Of course, you’ll also have the opportunity to meet Portuguese locals and expats from other countries. Learning some basic Portuguese and practicing with your neighbors and other community members can go a long way toward helping you feel at home.

Best Places to Live in Portugal

Some of the most popular places for Americans moving to Portugal include:

Lisbon

Lisbon, Portugal’s bustling capital city, balances a traditional Mediterranean aesthetic with a modern, international vibe. Amidst cobblestone streets and sprawling plazas, you’ll also find trendy restaurants, cafés, and bars

While moving to Lisbon, Portugal, requires you to get used to climbing the city’s notoriously steep hills, you’ll often be rewarded with sweeping views of the Tagus River estuary at the top. And with an abundance of museums, bookshops, markets, parks, and nightclubs, Lisbon has something to offer just about everybody.

Porto

In the north of Portugal, you’ll find Porto, a city known for its namesake Port wine, location along the picturesque Douro River, and old-world European charm. Whether you’re moving to Porto, Portugal, to enjoy your golden years, raise a family, or just enjoy a slower pace of life, you’ll find plenty to do.

In the heart of the city, locals and tourists alike flock to the Cais da Ribeira promenade to enjoy fresh seafood, local wines, and riverside views. Other favorite haunts include green spaces like Parque da Cidade, the artisanal Bolhão Market, and Estádio do Dragão, home of the FC Porto soccer team. 

Travel just a bit further outside the city to visit the many vineyards of the verdant Douro Valley and beaches like Praia dos Ingleses and Praia da Luz.

The Algarve

Californians moving to Portugal may be especially interested in the Algarve, Portugal’s southernmost region.

With 96 miles of pristine coastline, hot summers and mild winters, and some of the best golf courses on the continent, the Algarve is often referred to as the California of Europe.

Moving to the Algarve in Portugal is especially popular among retirees. Whether you choose to move into one of the region’s many retirement communities or buy a home in one of the charming whitewashed fishing villages, you won’t have to look far to find other active seniors. 

That said, the Algarve is becoming increasingly popular among digital nomads and US expat families as well.

Steps to Moving to Portugal as an American

So, let’s say you are interested in moving to Portugal as an American — what steps do you need to take to get there? Here’s a high-level overview:

Visas for Americans Moving From the US to Portugal

The first step in moving to Portugal as a US citizen is securing a visa that allows you to apply for a residence permit. A few of the most popular options include the following:

• Residency permit for investors (AKA, the “Portugal golden visa”)
• D7 visa, (AKA “the Portugal retirement visa”)
• D8 visa, (AKA, the Portugal digital nomad visa”)

Here’s how these three visas compare:

Name	The Golden Visa	Retirement Visa	Digital Nomad Visa
Who It’s For	Investors	Retirees & others who live off of passive income	Remote workers
Requirements	€870 (~$992) per month in passive income (5). An additional 50% for spouses & adult dependents. An additional 30% for minor dependents	€870 (~$992) per month in passive income (5). An additional 50% for spouses & adult dependents. Additional 30% for minor dependents	Work remotely for a company based outside of Portugal Earn at least €3,280 (~$3,736.61) per month in income (6)
Duration	2 years	2 years	12 months for the temporary stay visa; 2 years for the residence visa
Renewable?	Yes, in 2-year intervals	Yes, in 3-year intervals	The residence visa is renewable in 3-year intervals; the temporary stay visa cannot be renewed

Pro tip: After five years of legal residence in Portugal, you can apply for permanent residence or citizenship. Fortunately, you don’t have to renounce your US citizenship to acquire Portuguese citizenship. (7)

Required Documentation for Portuguese Visas

To apply for one of the visas mentioned above, you’ll generally need to gather the following documents: (8)

• A completed application form
• A valid passport
• A passport-sized photo
• A personal statement explaining why you’re moving to Portugal & what you plan to do there
• Proof of accommodations (e.g., hotel reservation, rental contract)
• Proof of qualifying investment (for the golden visa)
• Proof of income (for the digital nomad visa and retirement visa)
• A clean FBI background check
• A form permitting Portugal’s Department of Borders & Customs to conduct a Portuguese background check
• A copy of your marriage certificate, if bringing your spouse
• A birth certificate, if bringing any children
• Proof of private health insurance for at least the first four months of your stay (i.e., until you can register with the public health insurance system)
• Fees
  • Golden visa: Typically €533 (~$606) for the main applicant & €84 (~$96) per dependent
  • Retirement visa & digital nomad visa: Typically $93.99 for the main applicant & $46.99 for children

Note that all government documents must generally have a Hague Apostille. You may also need an official translation for documents in English — check with your designated consulate, embassy, or visa processing center to confirm.

Portuguese Visa Application Process

The visa application process may vary slightly from one type of visa to another, but generally, you’ll take the following steps: (9)

• Gather the required documentation mentioned above
• Book an appointment at your nearest visa application center
• Attend your appointment to submit your application, have your fingerprints & photo taken, & potentially go through a brief interview
• Receive approval
  • The golden visa can take as long as 18 to 30 months to process, while retirement visas & digital nomad visas typically take just 60 to 90 days
• Collect your visa in person

Once you’ve got your visa, you’re ready to head to Portugal.

Note that you’ll need to apply for a Portuguese residence permit within 90 days of your arrival.

Key Callouts for Different US Expat Demographics

Advice on moving to Portugal often varies slightly for different groups of people. For example:

Investors

When considering Portugal’s Golden Visa program, investors should evaluate the different qualifying investment options closely. While some investment options may lead to a sizeable ROI, others are purely donations.

The qualifying investment with the lowest threshold is a €250,000 ($285,300) donation toward a project that preserves Portuguese heritage, but it won’t generate a concrete ROI. However, other qualifying options — such as investing €500,000 ($568,623) in a Portuguese venture capital firm or private equity fund — have a higher barrier to entry but greater potential for ROI.

US Tax Considerations for Investors

Investors must be cautious of U.S. tax implications. For instance, investing in certain foreign funds may trigger Passive Foreign Investment Company (PFIC) rules, leading to unfavorable tax treatment and higher costs associated with filing a complicated IRS tax form. Additionally, income from these investments must be reported on U.S. tax returns, and proper documentation is essential to avoid penalties.

Entrepreneurs

Any entrepreneurs planning on hiring Portuguese employees must, of course, fully comply with Portuguese employment law. 

While Portuguese salaries are typically lower, payroll taxes are often higher, and employee benefits are more generous. For example, workers must receive at least 22 days of paid time off per year, and at least 120 days of parental leave after having a baby or adopting a child. (10)

US Tax Considerations for Entrepreneurs

Entrepreneurs operating through foreign entities may have additional U.S. reporting obligations, such as filing Form 5471 for certain foreign corporations or Form 8858 for a registered freelance activity. Failure to comply can result in significant penalties up to $10,000. It’s crucial to understand the tax classification of the foreign entity and ensure all income is properly reported on U.S. tax returns.

Remote workers

While remote workers with salaries high enough to qualify for Portugal’s digital nomad visa will be earning well above average Portuguese wages, it’s still critical to budget carefully. Prices in Portugal have increased significantly in recent years, particularly when it comes to housing in popular areas like Lisbon and the Algarve.

US Tax Considerations for Remote Workers

Remote workers remain subject to U.S. taxation on their worldwide income. However, they may benefit from the Foreign Earned Income Exclusion (FEIE), which allows qualifying individuals to exclude a certain amount of foreign-earned income from U.S. taxation. To qualify, one must meet either the Physical Presence Test or the Bona Fide Residence Test. Alternatively, the Foreign Tax Credit (FTC) can help offset U.S. taxes paid on income also taxed by Portugal. Proper planning and understanding of these provisions are essential to minimize tax liabilities and optimize future planning.

Retirees

Speaking of the NHR tax regime, it’s important for retirees to understand that Portugal isn’t the tax haven for US retirees that it once was. 

While the original NHR regime offered a 10% flat tax on foreign pension income and social security benefits, the revamped NHR 2.0 regime does not provide the same benefits. Under NHR 2.0, foreign pension income is subject to ordinary income tax rates up to 48%, depending on your total overall income. 

If you’re an American citizen seeking to move to Portugal for retirement, you still have options, but ascertaining the best path forward will involve studying the US-Portugal tax treaty. You may also consider speaking with a qualified US-Portugal cross-border financial advisor and investment manager. 

Do US Citizens Pay Taxes in Portugal?

Moving to Portugal comes with both pros and cons. For many, the high tax rates in Portugal are among the biggest drawbacks. It’s wise to factor these increased taxes into the cost of moving to Portugal when drawing up your budget.

Generally, any American who a) qualifies as a Portuguese tax resident or b) earns Portugal-source income must pay Portuguese taxes. Portugal’s tax residency rules define tax residents as those who: (11)

• Maintain their primary residence in Portugal, OR
• Spend more than 183 days in Portugal over any 12-month period overlapping the tax year, regardless of whether or not those days were consecutive

Tax residents are subject to Portuguese taxes on their worldwide income, while non-tax residents are only subject to Portuguese taxes on Portugal-source income. Tax residents pay personal income taxes at the following rates in 2025: (12)

Income (EUR)	Income (USD)	Tax Rate	Allowed Deductible (EUR)	Allowed Deductible (USD)
Up to €8,059	Up to $9,165	13%	€0	$0
€8,059 – €12,160	$9,165 – $13,829	16.5%	€282.07	$320.78
€12,160 – €17,233	$13,829 – $19,598	22%	€950.91	$1,081.41
€17,233 – €22,306	$19,598 – $25,367	25%	€1,467.91	$1,669.37
€22,306 – €28,400	$25,367 – $32,298	32%	€3,029.38	$3,445.15
€28,400 – €41,629	$32,298 – $47,342	35.5%	€4,023.14	$4,575.26
€41,629 – €44,987	$47,342 – $51,161	43.5%	€7,353.76	$8,362.96
€44,987 – €83,696	$51,161 – $95,183	45%	€8,028.38	$9,130.16
Over €83,696	Over $95,183	48%	€10,539	$11,985.33

Note on the above: USD figures are approximate and may fluctuate depending on the exchange rate.

Non-tax residents, on the other hand, generally pay taxes at a flat rate of 25% on employment, self-employment, and pension income.

While the top tax rates in Portugal are significantly higher than in the US (48% vs. 37%), keep in mind that your cost of living will likely be much lower in Portugal, particularly when healthcare is accounted for.

“The main planning exercise we advise our clients to do before moving to Portugal is to ensure that the net income they receive will be higher than their cost of living,” said Ricardo Jesus, US Expat Financial Advisor at Liberty Atlantic Advisors. 

Understanding the New NHR Regime in Portugal (2024+)

For many years, one of the major draws for foreigners moving to Portugal was the country’s Non-Habitual Resident (NHR) tax regime. 

Established in 2009, the original NHR regime allowed new Portuguese tax residents who hadn’t lived in the country over the previous five years to receive tax benefits like: (13)

• 0% taxes on most types of foreign income, provided the income was subject to taxation in the country of origin
• A flat 10% tax on foreign pension income
• A flat 20% tax on Portugal-source income

Beneficiaries of the program were eligible for this tax treatment for up to 10 years. 

In 2023, however, Portugal’s government announced an end to the NHR regime, largely in response to local discontent over rapidly rising housing prices. While those already accepted into the program were allowed to continue benefiting until their 10 years were up, the government announced they would stop processing new applications as of March 31st, 2024.

They did, however, announce a new tax regime to replace the original NHR, which was finalized in December 2024. (14) The new program is officially called the “Incentivo Fiscal à Investigação Científica e Inovação.” In English, this translates to the Tax Incentive for Scientific Research and Innovation (IFICI), although it’s more commonly referred to as NHR 2.0. Portugal’s NHR of 2024 is significantly different from the previous iteration, however. 

For one, only highly skilled employees working for eligible employers in scientific research or another innovative field qualify. The benefits have also changed slightly:

• Only Portugal-source income related to employment & professional activities is subject to the flat 20% tax
• While most types of foreign-source income are exempt from Portuguese taxes, foreign pension income is subject to ordinary income tax rates

While there are still benefits to Portugal’s NHR for Americans, far fewer US expats will qualify. Still, if you’re a highly skilled worker considering moving your family to Portugal, the NHR 2.0 regime is well worth looking into.

Key US Tax Considerations for Americans Living in Portugal

Unfortunately, Americans moving to Portugal aren’t exempt from US taxation due to the citizenship-based taxation regime that has been in effect since the Civil War. All Americans who earn above a certain threshold ($13,850 for single filers in tax year 2024) need to file a federal tax return, even if they live abroad. 

The good news is that you can often avoid (or at the very least, greatly reduce) US taxation through a few different mechanisms. Although the US has a dual income tax treaty with Portugal, a clause precludes most US expats from claiming its benefits. However, you can likely benefit from the:

• Foreign Tax Credit (FTC), which gives you US tax credits for any foreign income taxes you pay. The FTC is filed via IRS Form 1116.
• Foreign Earned Income Exclusion, which allows you to exclude some of your foreign-earned income from taxation ($126,500 in tax year 2024, $130,000 in tax year 2025). The FEIE is filed via IRS Form 2555.

Pro tip: The date you move to Portugal can have very serious tax implications. Before you take the leap, make sure to consult with a cross-border tax professional with US clientele in Portugal — like our team at Rook CPAs! During your first consultation, we’ll address common questions such as when you’ll be considered a Portuguese tax resident, whether your US business structure needs to be changed (as applicable), whether you should sell your principal residence in the US, and more.

Freelancers and Business Owners Moving to Portugal: What You Need to Know

Regardless of where in the world you live, owning a business often adds an additional layer of complexity to taxes. 

Value-Added Taxes (VAT)

US business owners living in Portugal may need to register for and charge value-added taxes (VAT), known in Portugal as Imposto sobre o valor acrescentado (IVA). However, business owners in Portugal generally don’t have to charge IVA to VAT-registered EU businesses or sales to non-EU businesses.

All businesses must register for IVA within 15 days of beginning operations in Portugal, as must self-employed individuals. (15) However, there is an exception for freelancers issuing just one invoice during the course of the year for less than €25,000 (~$28,431). 

Businesses that began operating after 2021 must also charge IVA at the following rates if their income exceeds €12,500 (~$14,216):

Region	Standard Rate	Intermediate Rate	Reduced Rate
Mainland Portugal	23%	13%	6%
Azores	16%	9%	4%
Madeira	22%	12%	5%

Note: Whether you qualify for an intermediate or reduced rate depends on the goods or services you provide. Generally speaking, many food-related services and certain agricultural activities qualify for the intermediate rate.

The reduced rate typically governs the sale of

• essential food items
• books and newspapers
• pharmaceutical products
• medical equipment for disabled persons
• passenger transport; hotel accommodation
• social housing
• renovation and repair of private dwellings.

Most other activities have VAT applied at the standard rate.

Payroll & Social Security Taxes

Businesses registered in Portugal must pay social security taxes at a flat rate of 23.75%, although there are no other payroll taxes. (16) Employees, on the other hand, pay at a rate of 11%.

Business Structure Considerations

1. Americans moving to Portugal with a business may need to reconsider their tax structure, especially if the business has elected S Corporation Status. In the US, an S Corporation is a pass-through entity, meaning owners report and pay taxes on business profits as if they were personal income.
   
2. However, Portugal does not recognize an S Corporation as a separate entity.
   
   International tax professionals call this a “hybrid entity” because it often creates a mismatch between when and how certain types of income and credits are claimed.
   
   Owners of a hybrid entity may be subject to the Portuguese social and income taxes, with difficulty claiming foreign tax credits, which ultimately results in double taxation. (17)
   
   When in doubt, and especially if a mistake would be expensive, we highly recommend getting ahead of any problems before they arise by connecting with an international US tax advisor.

Scenario Comparison: Owner vs. Owner-Employee

In Portugal, when a company employs an individual (including owner-employees), both the employee and employer contribute to social security at rates of 11% and 23.75%, respectively, calculated on the employee’s gross wages. 

Let’s consider a hypothetical scenario where João, an American citizen living and operating a business in Portugal, would like to receive €100,000 from his company each year. 

As you’ll see, there are considerable tactics involved in obtaining his desired salary, but one is clearly more tax-efficient, illustrating the importance of advance planning.

Component	Owner (Dividends Only)	Owner-Employee (Salary)
Corporate Social Security	None (applies only to salaries)	23.75% of João’s salary paid by the company
João’s Social Security	None	23.75% of João’s salary is paid by the company
Taxable Income	Dividends taxed at 28% (standard rate; could be lower if under NHR regime)	Salary taxed at progressive rates up to 48%
US Implications	Dividends not eligible for FEIE; subject to US tax (offset by FTC for Portuguese taxes paid)	Salary eligible for FEIE up to $126,500 (2024); FTC applies to Portuguese income/SSC

Example Calculation (€100,000 Allocation)

Category	Owner-Employee (Salary)	Owner (Dividends)
Employer Social Security Contribution (SSC)	€23,750 (23.75%)	€0
Employee SSC	€11,000 (11%)	€0
Dividend Tax (Portugal)	€0	€28,000 (28%)
Net Income for João	€89,000 (before income tax)	€72,000
Total Company Cost	€123,750	€100,000

Disclaimers on the above

1. A third strategy is possible, one that blends taking a salary and taking dividends. How this is designed will depend on João and the priorities he outlines with his tax advisor. 
2. In some situations, your visa status may require you to show a salary, rendering some tax optimization strategies disappointingly not possible, on one hand, but on the other, clarifying the best path forward. 

Key takeaways

• Tax Savings Opportunity: Avoiding the 23.75% employer SSC by structuring compensation as dividends reduces corporate costs but increases João’s personal tax liability (28% vs. progressive rates). The breakeven depends on João’s marginal tax rate.
• US Impact: Salary may be more tax-efficient if João qualifies for the FEIE, while dividends face double taxation (mitigated by FTC).
• Compliance: The US-Portugal Totalization Agreement prevents dual SSC contributions for employees.

This analysis of a hypothetical American business owner living in Portugal underscores the need to tailor your tax strategy with cross-border considerations, including the desired income level and residency status under both tax systems.

Retirement, Investments, and Foreign Income in Portugal

Taxation of Foreign Passive Income

Regardless of tax residency status, capital gains, dividends, interest, and rental income are generally all subject to a 28% tax rate (unless you qualify for the more favorable NHR rates mentioned earlier). While you can opt into standard progressive rates (13.25% to 48%), this is typically only favorable for those with lower overall taxable incomes.

If you plan on selling off a significant portion of your assets, it’s best to do so before you move to Portugal to avoid these higher tax rates. 

Investing While Living in Portugal

US-Based Investments

Investing as a US expat living in Portugal typically comes with quite a few more limitations. For one, those without a US address typically can’t buy US-based mutual funds (although they usually don’t have to sell off any they purchased before moving abroad). 

“Ideally, you should rebalance your portfolio according to your risk profile at least annually, and if you can’t buy more mutual funds, that limits your options,” said Ricardo Jesus, US Expat Financial Advisor at Liberty Atlantic Advisors.

Maintaining a US address may serve as a workaround, and in practice, many Americans in Portugal do this. But when you’re a Portuguese tax resident, it’s still somewhat of a gray area. On top of that, US-based custodians (e.g., Fidelity, Edward Jones, Vanguard) may do compliance checks to ensure you really do still use your US address, such as by requiring you to respond to mail sent to your US address.

Pro tip: Charles Schwab is one of the few US custodians that allows those without a US address to open or maintain an account.

A good alternative to mutual funds for US expats living in Portugal can be exchange-traded funds (ETFs), which are also typically more tax-efficient.

Portugal-Based Investments

Most foreign investment vehicles aren’t a good fit for US expats due to the complex reporting obligations and punitive tax rates they incur. Many pooled foreign investment funds qualify as Passive Foreign Investment Companies (PFICs). A PFIC fund is one that: (18)

• Earns at least 75% of its gross income from passive income
• Holds at least 50% of its assets in order to produce passive income

According to Ricardo Jesus, US Expat Financial Advisor at Liberty Atlantic Advisors, even non-pooled foreign funds may meet this definition, since most European products have insurance wrappers that typically meet the PFIC definition.

PFICs face such harsh tax treatments that any gains you earn from your investment may very well be erased by the taxes you owe on them.

Beyond PFIC concerns, European financial instruments also typically have higher entry costs and overhead, and that’s not even considering performance. As a result, Jesus noted that Liberty Atlantic Advisors recommends that US citizens go through US custodians and platforms due to their increased cost efficiency.

Retirement Income

When planning your financial future in Portugal, it’s important to remember that US tax benefits don’t necessarily carry over. 

For example, Roth IRA and Roth 401(k) distributions are generally tax-free in the US, but this isn’t necessarily the case in Portugal. Distributions from taxable accounts like 401(k)s and traditional IRAs, meanwhile, are generally subject to higher tax rates in Portugal than in the US. 

In general, it’s best to arrive in Portugal with a healthy mix of both pre-tax and post-tax accounts, as this gives you greater flexibility to optimize your income determination between ordinary income and capital gains income.

“If somebody sits pretty heavily in 401(k)s and IRAs, it may be a good time to start making some distributions or doing a Roth conversion to generate more assets subject to the capital gains tax,” Ricardo Jesus, US Expat Financial Advisor at Liberty Atlantic Advisors.

Again, though, it’s best to consult with cross-border tax and finance professionals before making any substantial changes to your personal finances. 

Social Security, Healthcare, and Long-Term Planning

As we mentioned earlier, most employees pay Portuguese social security taxes at a rate of 11%, while businesses pay at a rate of 23.75%. These payments fund public healthcare, pensions, unemployment insurance, and parental leave, among other benefits. 

While legal residents are eligible to access Portugal’s public healthcare system (Serviço Nacional de Saúde, or SNS) upon registration, most other benefits, including unemployment and parental leave, typically require a minimum contribution period to qualify.

While moving abroad doesn’t exempt US expats from having to pay into the US Social Security system, a totalization agreement with Portugal prevents them from having to pay into both countries’ systems at the same time. 

Just like their stateside counterparts, American expats aged 62 years or older who have paid US Social Security taxes for at least 10 years are eligible for US Social Security payments. You can receive these payments even if you live abroad. 

Pro tip: Only up to 85% of US Social Security payments are subject to US taxation.

Historically, the Windfall Elimination Provision (WEP) provided an additional challenge to expats seeking to claim their benefits if they. (19) Fortunately, WEP was repealed in early 2025 via the Social Security Fairness Act: Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). (20)

Final Thoughts: Make a Plan Before You Move

Cascais, 2024. Rook CPAs Founder, Nicolas Castillo, CPA, speaking at a financial and tax planning seminar for Americans in Portugal, hosted by ExpaCity. Photo credit to Sarah Kilgallon.

That’s not to say you shouldn’t move, though! At Rook, we’re not in the business of dissuading Americans from moving to Portugal — or anywhere else in Europe. (After all, our founder moved from Miami to Spain!) 

However, it is critical to consult cross-border tax and financial advisors before moving. Doing so can help you minimize your tax bills as much as possible and set you up for financial success in Portugal now and in the future. 

Planning a move to Portugal from the US?

Take the guesswork out of your tax strategy by partnering with Rook International CPAs & Advisors.

We craft custom tax strategies and prepare returns for American business owners, freelancers, and other US expats. Schedule a complimentary discovery call today to learn more.

References

1. Americans Head to Europe for the Good Life on the Cheap
2. 2025 Real Estate Market Outlook – Portugal
3. 10 Most Peaceful Countries in the World – 2024
4. Residence Permit for Investment – ​​Art. 90.º-A
5. Means of subsistence
6. TEMPORARY STAY VISA FOR THE EXERCISE OF A PROFESSIONAL ACTIVITY DONE REMOTELY – “DIGITAL NOMADS”
7. Request portuguese nationality
8. Portugal – Residency – Checklist for Long Stay (type D)
9. Apply for a visa
10. Working in Portugal
11. Portugal – Individual – Residence
12. Portugal – Individual – Taxes on personal income
13. Portugal to scrap ‘unjust’ tax breaks for foreign residents
14. Portugal activates ‘NHR 2.0’ tax regime, officially known as the IFICI
15. Value Added Tax (VAT) in Portugal
16. Portugal – Corporate – Other taxes
17. The treatment of US S-Corps in Portugal
18. What Is a Passive Foreign Investment Company (PFIC)?
19. Windfall Elimination Provision
20. Social Security Fairness Act: Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) update | SSA

With Special Thanks