How to retire to Portugal as a British expat

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Portugal attracts hundreds of British retirees each year.

The blissful weather, stunning scenery and excellent food provide an alternative to the year-round grey skies British people are used to. Portugal is a hotbed for activities that traditionally go down well with retirees, such as golf, sailing and wine tasting.

As an added bonus, your family will also have a base in this fantastic country. Your children, or even grandchildren, can visit their elders and make a holiday out of it at the same time.

It can also be a practical move. The cost of living in Portugal is around 30% cheaper than it is in the UK. This difference will be especially felt if you’re moving from London. According to Forbes, the Algarve is the cheapest destination in Euro for retiring Brits.

On top of this, the healthcare system in Portugal is robust, and you can receive high-quality medical treatment without having to pay out too much.

So that’s why many Brits decide to spend their autumn years in this European gem. But how do you go about doing it? In this article, we’ll go through the ins and outs of retiring to Portugal, what the situation is post-Brexit, and how to move your money from one country to the next.

Retiring to Portugal post-Brexit
If you’ve been living in Portugal prior to 31st December 2020 and you can prove it, then — happy days — you will not need to apply for a visa as you’re protected under the withdrawal agreement.

If this is not you, and you’re planning to retire to Portugal in the future, then you may have to apply for a visa. There are a number of ways you can do this.
One option that has been in the news a lot recently is the Golden Visa. This essentially grants non-EU citizens residency in Portugal if they invest enough in the country.

It’s a detailed topic, but the bare bones are this. The Portuguese government will allow you a five-year residency permit if you buy property worth over €500,000. After the five years are up, you can then apply for a Portuguese passport.

Another way to obtain Portuguese residency if you’re retired is a D7 Visa. You apply for this once you’re in Portugal. It allows you residency if you’ve an income that is circa €1,000 a month. So, if you’re pension income matches or exceeds this, you should be good to go.

Receiving your pension in Portugal
The sun and sea are great, but you’ll need some form of income to be able to retire in Portugal. For many British retirees, that means moving pension payments over from the UK.

When you do this, your pension payments could be subject to Portuguese taxes. But there’s a way of avoiding this. For instance, you can apply for non-habitual residency (NHR). This offers expats favourable tax conditions for up to 10 years.

You have options when it comes to how you receive you pension payments. You can either get your pension paid into a UK bank account and then transfer it over, or you can have it paid directly into a Portuguese bank account.

At Privalgo, we’re experts in currency exchange. We suggest that you have your pension paid into a UK bank account, and then exchange pounds for euros. The alternative — having it paid directly to Portugal — will mean that you will have no control over the exchange rates or market volatility. We’ll talk about potential solutions for this at the end of the article.

The inheritance process
You’ll be pleased to know that Portuguese inheritance laws and implications are relatively simple. For expats who die in Portugal, the inheritance laws are governed by their home country. That’s the UK, if you’re British expat.

There is also no inheritance tax in Portugal. However, when it comes to property, there’s a stamp duty of 10%. Nonetheless, spouses and ascendants are exempt from this.

Moving money from the UK to Portugal
As we mentioned before, it’s best to have your pension paid into a UK bank account. You will then have control over the foreign exchange process.

When it comes to currency exchange, there’s lots to think about: exchange rates, market movement and other potential risks.

One option is to transfer your pension payments from a UK bank to a Portuguese bank account. Yet, the likelihood here is that you will get a poor exchange rate, and you’ll have to pay extra, hidden fees.

It’s recommended that you seek out the help of a foreign exchange broker. A good one will offer you a better exchange rate than a bank. What’s more, they’ll be able to provide with solutions that most banks don’t offer.

Certain FX solutions allow you hedge against market risk. In simple terms, this means you’re able to lock in a favourable exchange rate over a period of time. This can protect you from market movement. As the GBP/EUR exchange rate fluctuates, your rate will stay the same.

This can be invaluable if you’re regularly transferring sums across and you want the value to stay consistent, like pension payments, for example.

We’re Privalgo — specialists in foreign exchange. Through leading exchange rates and innovative solutions, we help Brits save money and time when they retire to Portugal. Get in touch today to see how we can help you build a rewarding foreign exchange strategy.