Portugal built its reputation as a retirement destination partly on the Non-Habitual Resident (NHR) tax regime, which offered a flat 10% rate on foreign pension income for the first 10 years. The NHR closed to new applicants at the end of 2023. Its successor, the IFICI regime (Incentivo Fiscal à Investigação Científica e Inovação), has a more limited scope and is not designed for retirees. However, Portugal still has significant advantages — and understanding what remains available is essential for anyone planning a retirement there from 2024 onwards.
The End of the Classic NHR for Retirees
From 1 January 2024, new NHR registrations for standard retirees were closed. Individuals who registered before that date retain their 10% flat tax on eligible foreign pension income for the remainder of their 10-year window. If you are already an NHR holder, your status is unaffected.
The IFICI Regime
The IFICI regime (sometimes informally called "NHR 2.0") offers tax benefits but is targeted at researchers, highly qualified professionals, and those working in specific innovation and technology roles. Standard retirees drawing pension income do not qualify. If you are considering Portugal as a base for continued professional or consulting work, IFICI may be relevant — but for pure retirees, it is not.
What This Means for New Retirees
New retirees arriving in Portugal from 2024 are taxed under the standard Portuguese income tax regime (IRS). Portuguese income tax rates are progressive, ranging from 13.25% on the first €7,703 to 48% on income above €80,882 (2025 rates). These are broadly comparable to Spanish rates.
However, Portugal still retains several meaningful advantages over Spain for retirees, including zero inheritance tax between close family members, a generally lower cost of living outside Lisbon and the Algarve, and a straightforward residency visa process.
The D7 Passive Income Visa
The D7 Visa (Visto de Residência para Pessoas com Rendimentos Próprios Suficientes) is Portugal's primary residency route for retirees and others with passive income. Since Brexit, British nationals require it to stay beyond 90 days in any 180-day period.
Requirements
The minimum monthly income requirement is linked to the Portuguese minimum wage. As of 2026, the threshold is approximately €920 per month for the main applicant (matching the national minimum wage), plus 50% (around €460/month) for a spouse and 30% (around €276/month) for each dependent child. The figure is conservative — immigration advisers generally recommend demonstrating income comfortably above the minimum.
Qualifying income includes UK state pension, occupational pensions, SIPP drawdown, dividends, and rental income. You must also show:
- Clean criminal record (apostilled from the UK)
- Proof of accommodation in Portugal (rental agreement or purchase deed)
- Evidence of health insurance (if not covered by SNS)
- Sufficient savings (typically three to six months of the income requirement as a buffer)
Applications can be made at the Portuguese consulate in London, though the process has been complicated by backlogs at AIMA (the successor to SEF — the Agency for Integration, Migrations and Asylum, restructured in 2023).
AIMA Registration
After arriving in Portugal, you must register with AIMA and obtain a residence permit. The system has experienced significant delays; allow considerable time and consider working with a Portuguese immigration lawyer. Once legal residency is confirmed, you can apply for a NIF (Número de Identificação Fiscal) — your tax number — and access public services.
Healthcare in Portugal
SNS for Legal Residents
Portugal's national health service (Serviço Nacional de Saúde, SNS) is available to legal residents. Once you hold a valid residence permit, you can register with a health centre (centro de saúde) in your area. Access to a GP, specialist referrals, and most hospital care is free or subject to small co-payments (taxas moderadoras).
Quality varies by location. Lisbon and Porto have excellent hospital facilities. In rural areas, services are more limited. Waiting times for non-urgent specialist care can be long.
S1 Form
UK state pensioners moving to Portugal can obtain an S1 form from HMRC, which facilitates healthcare through the SNS without additional insurance requirements. Apply before leaving the UK via HMRC's International Pension Centre.
Private Insurance
Many expats supplement SNS access with private health insurance for faster access to consultants, private hospitals, and English-speaking practitioners. Médis, Multicare, and international providers such as Cigna offer suitable plans. Costs are modest by UK or UAE standards — a 65-year-old might pay €800–€2,000 per year for a solid plan.
Where to Retire in Portugal
The Algarve
The Algarve — particularly the Golden Triangle of Quinta do Lago, Vale do Lobo, and Vilamoura — has historically been the most popular destination for British retirees. It offers English-speaking communities, golf, excellent restaurants, and direct UK flights. Property prices have risen sharply since 2020; expect to pay €300,000–€600,000+ for a comfortable home. The summer months bring significant tourist activity.
Lisbon and the Setúbal Peninsula (Arrábida, Comporta, Sesimbra)
Lisbon has a growing international community and world-class culture, restaurants, and transport links. Property in prime Lisbon neighbourhoods is expensive; the south bank (Almada, Setúbal) offers better value. The Comporta area south of Lisbon has attracted attention as an upmarket rural retreat.
Porto and Northern Portugal
Porto is increasingly popular with younger retirees. It is more affordable than Lisbon, has excellent food and wine culture, and reasonable transport links. The northern interior (Douro Valley, Minho) offers extraordinary scenery and very low costs but limited English-language infrastructure.
Central and Interior Portugal
The Silver Coast (Óbidos, Peniche, Nazaré) and the interior (Évora, Alentejo) offer genuinely affordable property and a quieter lifestyle. The Alentejo region, in particular, is attracting buyers priced out of the Algarve, with farmhouses and quintas available at a fraction of coastal prices.
Property Purchase in Portugal
There is no restriction on non-EU nationals buying property in Portugal. Property transfer tax (IMT) ranges from 0% to 6% depending on property type and value, plus 0.8% stamp duty (IS). Notarial and registration fees are additional. IMT rates for habitual residence purchases benefit from exemptions up to around €92,000.
Annual property tax (IMI) is typically 0.3%–0.45% of the cadastral value, which is usually below market value for older properties.
Inheritance Tax in Portugal
Portugal abolished inheritance tax (Imposto do Selo on inheritances) between spouses and direct descendants and ascendants (children, parents) in 2004. This remains one of Portugal's most significant advantages for estate planning. There is no inheritance tax payable on assets passed to a spouse, children, or grandchildren.
Inheritance to other beneficiaries (siblings, nephews, friends) is taxed at 10% stamp duty.
Note: Portuguese inheritance law applies to Portuguese-situs assets. UK IHT may still apply to British nationals with UK property or who remain UK-domiciled.
Portugal vs Spain: A Comparison
| Factor | Portugal | Spain |
|---|---|---|
| Residency visa | D7, straightforward | NLV, income requirements higher |
| Tax on foreign pensions (standard) | Progressive IRS rates | Progressive + Spanish rates |
| Inheritance tax (direct family) | Zero | Varies by region; often low |
| Healthcare | SNS (free for residents) | SNS equivalent |
| Cost of living | Lower, except Algarve/Lisbon | Moderate |
| English spoken | Good (Porto/Lisbon/Algarve) | Good (Costa areas) |
| Property purchase tax | IMT 0–6% | ITP 6–10% |
For retirees without NHR status, the tax treatment is broadly similar. Portugal edges ahead on inheritance planning and cost of living outside major urban areas.
Practical Tips
- Apply for a NIF (tax number) as early as possible — you need it for almost every transaction.
- Consider registering with a local advogado (lawyer) to navigate AIMA and property transactions.
- If you plan to buy property, allow four to six months for the full purchase process.
- Keep records of all income remitted to Portugal — from January 2024, income from non-Portuguese sources is taxed in Portugal as it arises, regardless of NHR status for new entrants.
The value of retirement planning can fall as well as rise. Tax and visa rules change regularly; nothing in this article constitutes personal advice.
How Global Investments Can Help
Global Investments advises British nationals on retirement planning across all major international destinations, including Portugal. Whether you are still deciding between the Algarve and Porto, or are ready to structure your pension income and property purchase, our team can help you navigate the financial, tax, and estate planning dimensions of the move. Contact us to arrange a confidential discussion.
This article is for general information only and does not constitute financial, legal or tax advice. Rules, prices and regulations change; verify current requirements with a qualified adviser before acting.