The Expat Sage Podcast
Moving, Working, and Investing for Americans Abroad.
Pre-relocation planning advice and investment strategies for American citizens moving abroad.
Discover expert insights and comprehensive strategies for expats on investing in a dual taxation world, managing finances, and planning for retirement.
The Expat Sage Podcast
Moving to Portugal costs less, but taxes get complicated.
We tackle the essential financial aspects of relocating from the United States to Portugal, breaking down cost of living, banking requirements, tax implications, and ongoing US obligations.
• Portugal offers 40-74% lower cost of living compared to the US, varying dramatically between expensive coastal cities and affordable inland regions
• Housing costs reflect this split – Lisbon one-bedrooms average $1,200-1,500 while similar inland properties cost around $400-450
• Opening a Portuguese bank account requires obtaining a NIF (tax ID number) first, with banks like Activo Bank often recommended for English services and lower fees
• Portugal's Non-Habitual Resident (NHR) tax program closed January 2024, replaced by the narrower IFESAI program targeting scientific and innovation professionals
• The IFESAI program eliminates NHR's favorable 10% tax rate on foreign pensions, significantly impacting retirees
• US citizens must continue filing American tax returns while living abroad, using the Foreign Earned Income Exclusion or Foreign Tax Credit to avoid double taxation
• Expats must report foreign financial accounts exceeding $10,000 through FBAR filings and potentially file additional FATCA forms
For more information, see Financial Planning for Moving to Portugal.
Welcome to the Deep Dive.
Speaker 2:Today we're tackling something many of you are thinking about the financial side of moving from the US to Portugal. We've gone through a lot of material to pull out the key financial points, basically your shortcut to understanding the essentials.
Speaker 1:Exactly. Think of this as your financial checklist before you even think about booking a flight. We're going to look at four really crucial areas based on our research what it actually costs day to day in Portugal, how banking works over there, the details of Portuguese taxes, including those special programs you hear about, and definitely your ongoing US tax stuff.
Speaker 2:Right. Our aim is to give you a clear picture financially, without it being totally overwhelming. We're looking for those sort of aha moments, the details that might actually surprise you and help you plan properly. So OK, let's jump into the big one. First, cost of living.
Speaker 1:Yeah, what really jumps out from the numbers is just how much you could save. Overall, the cost of living in Portugal could be like 40 percent to maybe even 74 percent lower than in the US. That's a massive range, though, so we need to get into the specifics.
Speaker 2:Exactly, Because it's not like the whole country costs the same. Our sources make it clear Lisbon, Porto and those lovely coastal tourist areas like Cascais, Estoril, the fancy parts of the Algarve yeah, expect higher prices there, more expensive US cities.
Speaker 1:Precisely. But then if you look inland places like L'Aria or Castelo Branco or even more rural spots, the cost drops like quite significantly. That geographical split is really fundamental. You might pay, say, three pound fifty for a coffee in a trendy Lisbon spot, but maybe half that inland that kind of thing adds up.
Speaker 2:Let's dive into housing. That's usually the biggest expense for everyone, right? Sources suggest average rents in Portugal can be maybe 40% to 50% lower than the US average and get this potentially over 100% lower compared to like really high cost US metro areas. This is where it gets interesting.
Speaker 1:We do so in Lisbon City Center. A one bedroom you might be looking at $1,200 to $1,500, maybe more. A bit outside the center that could dip to around $900. A three-bedroom in central Lisbon easily $2,200 to $2,500 plus. But okay, compare that to smaller towns. Away from the big hubs you might find a one-bedroom for like $400, $450 walls. Huge difference. Really shows you the regional variation.
Speaker 2:And if you're thinking of buying property, is generally more affordable than many US markets, though location, location, location, as always Plus the annual property tax IMI they call it imposter municipal sobering mobiles is typically lower than what you might pay in the States. So housing, potentially a big plus financially. What about groceries, food?
Speaker 1:Groceries yeah, another area with potentially big savings. Sources say your bills could be gosh, anywhere from 49% to over 100% lower than in the US, especially if you lean into local stuff fresh produce, bread, dairy meat, fish and, naturally, portuguese wine. The thing to remember, though, is imported goods might cost more, so if you need your specific American brands, that'll bump the budget up.
Speaker 2:Makes sense. Okay, what about keeping the lights?
Speaker 1:on Internet Utilities. The average for basic utilities electricity, water, heating, garbage for maybe an 85 square meter apartment around 125 euros a month, could be less than you pay now. Internet's generally cheaper too. However and this is a really important heads up winter heating can be tricky. A lot of older Portuguese buildings. They don't have central heat or great insulation, relying on electric space heaters. Your electricity bill can shoot way up in the cold months. It's a potential hidden cost.
Speaker 2:Definitely something to factor in. Maybe not obvious at first Getting around.
Speaker 1:Transport. Public transport's pretty good, efficient and way cheaper. Monthly passes are around what 40 to 44 euros Big savings there. Now if you plan on having a car, the mass changes Gas prices are much higher. Buying a car might be similar cost-wise, maybe a bit more than the US, but car insurance might actually be cheaper. So really thinking about using public transport could make a big difference to your budget.
Speaker 2:Health care always a huge factor when moving countries.
Speaker 1:Portugal has its public system, the SNS, serviço Nacional do Saúde. It gives residents free or low-cost care and even private health care seeing specialists, getting procedures, buying insurance. It's significantly less expensive than the US system. For a lot of people, that's a massive financial relief.
Speaker 2:And just you know, enjoying life, eating out entertainment schools for kids.
Speaker 1:Yeah, portugal offers really good value here Eating out, whether it's a little local place, a tasca or a mid-range restaurant, it's much more affordable. Like an inexpensive meal might be 10 euro or 12, a proper three-course dinner for two maybe 40 euro, 50 euros. Gym memberships are usually cheaper too, and for families public schools are free for residents, private and international school tuition generally way lower than US equivalents.
Speaker 2:So, yeah, the savings potential looks really strong, but our sources also warn about lifestyle inflation. Right, that's a key point.
Speaker 1:Oh, absolutely critical. If you go there and try to replicate a big American lifestyle, you know a large house that might be drafty and needs tons of heating or AC, relying heavily on a car even with high gas prices, always buying imported food. You can basically wipe out those savings pretty quickly. The real key to benefiting financially often means adapting a bit Using public transport, shopping, local markets, maybe living in a slightly smaller, more energy efficient space. You really need a realistic budget based on how you actually plan to live there.
Speaker 2:Okay, so the numbers, they look promising. With those caveats You've decided Portugal seems financially doable. What's one of the very first practical things you need to do?
Speaker 1:Setting up a bank account right.
Speaker 2:Exactly. Opening a Portuguese bank account is like step one for almost everything else Getting a lease, paying bills, even some of the visa or residency stuff relies on it.
Speaker 1:And who can actually open one? Is it just for residents?
Speaker 2:No Good news there. Both residents and non-residents, including US citizens, can open accounts. Banks often have specific account types for non-residents, which might be the easiest way to start. What sort of documents do you need to get together? Sounds like a bit of a checklist.
Speaker 1:There is. Yeah, You'll definitely need your US passport. That's your main ID. Then, crucially, the NIF, the Portuguese tax ID number. We'll talk more about getting that, but it's essential. You also need proof of address. Initially, your US address usually works like a recent utility bill or bank statement, but eventually you'll need to update it to a Portuguese one. Then proof of income or employment pay slips, a work contract If you're a student or not working, you might need other docs and finally, a phone number. Some banks might prefer a Portuguese one.
Speaker 2:And the actual process. Do you have to physically go into a branch?
Speaker 1:Well, you certainly can. That's the traditional way Walk in with your original documents, fill out forms, make an initial deposit, maybe 50-year to $300. But lots of banks now let you open an account online or remotely, even if you're not a resident yet, provided you have your NIF Banks, like Activo Bank, Millennium BCP, Novo Banco, CGD they reportedly offer. This usually involves uploading documents and maybe a video call to verify who you are. There are also digital first options like N26 or Nickel, and Millennium BCP actually has representative offices in some other countries. That might help start the process.
Speaker 2:Seems like there are quite a few banks. How do you pick the right one?
Speaker 1:Yeah, several big ones are popular the XPAS, millennium, bcp, noble, banco, santander, toto, cgd, bpi. Actival Bank, which is actually part of Millennium, often gets recommended because it's digital, focused, often has lower fees, maybe easier online setup. Key things to look for Do they have staff who speak English? Is there online banking in English? Check the monthly maintenance fees Five to ten euro a month is pretty common, unless you meet certain conditions like minimum balances. Make sure they connect to the Multibanco ATM network. That's huge in Portugal. And obviously do they offer other services you might need later, like mortgages or business accounts?
Speaker 2:Now our sources mentioned something important kind of recent feedback Potential hiccups, even if you technically have everything they ask for.
Speaker 1:Yes, this is a really key practical point. So officially, your passport and NIF should be enough for a non-resident to open an account, but anecdotally, some branches seem to be getting stricter, especially for non-EU folks. They might ask for proof of your visa or your residency application status, like showing your residence permit, or even just proof you have an appointment booked with AMA, the immigration agency. Even for just opening the basic account, it might be about increased regulations. So the advice is, if you hit a wall at one branch, don't give up. Try another branch or specifically target those banks known to be easier for online or expat openings, like Activo Bank. Maybe Using a fiscal representative might also help, particularly for remote opening.
Speaker 2:That's really useful practical advice. Okay, bank account hopefully sorted. Now the bit that often feels intimidating taxes. Let's start with the Portuguese side.
Speaker 1:Right. It's so important to get your head around both the Portuguese tax system and your ongoing US tax duties. Focusing on Portugal first, you generally become a tax resident if you're there more than 183 days in a calendar year or if you have what they consider a permanent home there by December 31st. And once you're a tax resident, portugal typically taxes your worldwide income.
Speaker 2:And the main income tax is called IRS.
Speaker 1:That's the one Imposto Sobre o Rendimento das Pessoas Singulares. It's progressive, so the more you earn, the higher the rate. For 2025, the rates go from about 13% up to 48% at the top end, plus there's an extra solidarity rate for really high incomes. This IRS applies to all sorts of income your salary, self-employment earnings, pensions, rental income, investments, capital gains pretty much everything.
Speaker 2:Let's break down a few of those. What about income from renting out a property you own in Portugal?
Speaker 1:Okay, so rental income usually just gets added to your other income and taxed at those standard progressive IRS rates. But you do have an option you can choose to have it taxed at a flat 28% instead. Whether that's better depends on your total income level.
Speaker 2:And investment income, like dividends or interest.
Speaker 1:Similar deal sort of Typically investment income, like dividends and interest, gets hit with a flat 28% tax in Portugal. But again you have the option to lump it in with your other income and pay the progressive rates if that works out better for your overall tax bill.
Speaker 2:Capital gain is always a tricky area. Selling property or shares in Portugal Right Always a tricky area.
Speaker 1:Selling property or shares in Portugal Right For real estate. If you sell a property in Portugal, 50% half of the profit the capital gain gets added to your regular income for the year and taxed at your progressive IRS rate. There might be some relief for inflation if you've owned it for over two years and, interestingly, there are ways to potentially avoid the tax altogether, like if you reinvest the money from selling your main home into another main home in Portugal or the EUA, or if you're a retiree over 65 and reinvest in certain types of funds For selling shares or securities. Generally, it's also 50% of the gain taxed at your progressive rate, although there can be specific rules for short-term gains, especially if you're a high earner, so details matter there.
Speaker 2:Can't forget Social Security. If you're working in Portugal, what's the contribution situation?
Speaker 1:Yep, social Security is mandatory. If you're working as an employee, you typically pay 11 percent of your gross salary. Your employer pays a bigger chunk, around 23.75 percent. If you're self-employed, under what they call the simplified regime, you generally pay about 21.4% on 70% of your income if you provide services or on 20% of your income if you sell products. Yeah, and those contributions fund pensions, unemployment benefits and access to the public health care system. The S&S.
Speaker 2:Portugal also has other property taxes besides that annual IMI we mentioned.
Speaker 1:It does. Yeah, a few others to know about. First, when you buy property, there's IMT Imposto Municipal Sober as transmissions en orosis de imovés. It's a one-off transfer tax the buyer pays. The rates are progressive up to 8% based on the property value, type, location. Then there's stamp duty Imposto de SeloS, property tax. But on top of that there's AMI, additional imposto municipal sobra imovate. It's like an extra annual tax, sometimes called a wealth tax. It kicks in if the total value of your urban properties goes over $600,000 for one person or $1.2 million for a couple. Filing jointly, the rates are 0.7% up to 1.5%. Companies usually don't get that $600K allowance, by the way.
Speaker 2:What about sales tax? Is there a VAT?
Speaker 1:Yes, definitely, it's called IVA, imposto Sobre O Valor Acrescentado. The standard rate right now is 23%, but there are lower rates 13% and 6% for essentials, certain foods, books, meditans, also for things like hotels and restaurants, and the rates are actually lower in Madeira and the Azores.
Speaker 2:And inheritance or gifts, if someone leaves you money while you live there.
Speaker 1:Okay, good news. Mostly, Portugal doesn't have a typical inheritance tax between direct family spouses, kids, parents but if you inherit or get a gift from someone who isn't direct family, there's a 10% stamp duty on the value and the tax year is just the calendar year.
Speaker 2:Filing is online between April and June. It definitely sounds like there are well quite a few moving parts to the Portuguese tax system.
Speaker 1:There certainly are. You've got the income tax, the Social Security, the different property taxes, vat. It can feel pretty complex and since as a tax resident you're usually taxed on income from everywhere, keeping really good records is absolutely key. Given all this, getting professional tax advice early on from someone who really knows the Portuguese system is highly recommended. Make sure you're compliant and using any benefits correctly.
Speaker 2:Right Now, before you even worry about filing those taxes, you need that NIF number we mentioned earlier. It seems like the absolute first step. How does a US citizen actually get one?
Speaker 1:The NIF, yeah, número de Identificación Fiscal. It's your nine-digit Portuguese tax ID, and our sources are clear. It's the absolute, crucial first thing you need for basically any official or financial step in Portugal.
Speaker 2:Why is it so critical Like what can't you do without it?
Speaker 1:Oh, the list is long. You needed to open that bank account we talked about, to sign a lease or buy a property, to get utilities like electricity or water turned on, to register for health care, to apply for residency, to work legally, to pay taxes, obviously, even for simple stuff like buying a car or getting a phone plan.
Speaker 2:It really is the key to unlocking everything OK.
Speaker 1:so who needs one? Do you have to live there already? Nope, not at all. Anyone who has financial or legal stuff happening in Portugal needs one, regardless of nationality or residency status. Even if you're not living there yet, you can, and often must get a NIF.
Speaker 2:So how does a US citizen get a NIF, especially if they're still in the US?
Speaker 1:Okay, two main ways for US citizens as non-residents. Option one if you're physically in Portugal, you can just go to a local finances office that's the tax office or a loja de cidadão, a citizen service center. Might be a wait, but if you have the right documents, they usually issue it right there and it's free. Option two apply remotely from the US. To do this, you need to appoint a fiscal representative in Portugal. This could be a lawyer, an accountant or one of those services that specialize in getting NIFs. You give them power of attorney, send your documents and they apply for you. Usually it takes a few days, maybe up to a week.
Speaker 2:What documents specifically does a US citizen need for that non-resident NIF application?
Speaker 1:You'll need a good, clear copy of your valid passport. You also need official proof of your current US address, like a recent bank statement or utility bill. Works, and if you're doing it remotely, via a representative, you'll need their details and that signed power of attorney form allowing them to act for you.
Speaker 2:This fiscal representative thing sounds important, especially for applying remotely. Why is it required?
Speaker 1:Yeah, under Portuguese tax rules, if you're a tax resident outside the EU or EEA, which includes the US, you generally have to appoint a fiscal representative. If you own assets, have income or any tax obligations in Portugal, they're basically your official contact person with the Portuguese tax authority, the AT. Since getting a NIF is often the first step towards having those financial ties, it becomes a practical requirement for US citizens applying remotely. Without one, they likely won't process the application. If you do have tax obligations later and don't have a rep when you're supposed to, you could face penalties. Now, once you become a tax resident in Portugal and update your address with the finances, you might not need the rep anymore, unless you leave Portugal but still owe taxes there.
Speaker 2:Getting the NIF remotely isn't free, then because you have to.
Speaker 1:Exactly. The NIF itself is free if you get it in person, but doing it remotely means paying the fiscal representative for their service. Definitely budget for that. Costs can vary maybe 100 euro up to 350 or even more initially, and some reps might charge an ongoing annual fee too. So it's really important to choose someone reputable.
Speaker 2:OK, we've covered the basics of Portuguese taxes and getting your NIF. Now let's talk about those special tax regimes. People often hear about the NHR scheme and whatever came next.
Speaker 1:Right. This is a really key area because these regimes were designed specifically to attract foreigners with some pretty significant tax breaks. Let's start with the original one the non-habitual resident, or NHR, scheme.
Speaker 2:Yeah, that's the one that got a lot of attention. What's the situation with it now, if someone's thinking of moving?
Speaker 1:Okay. So the original NHR scheme. It officially closed for new applications on January 1, 2024. Big change. However, if you were already registered under NHR before then, you get to keep its benefits for your full 10-year period. There was also sort of grace period, a transitional rule for people who met very specific conditions by the end of 2023. They might still be able to apply until March 31st 2025. But for most new movers, nhr is off the table.
Speaker 2:And for those who did get in under the original NHR, what were the main advantages?
Speaker 1:The original NHR was pretty generous for 10 years. The big draws were a flat 20 percent income tax rate on Portuguese earnings from certain high value added activities, plus potential exemptions on most foreign income things like dividends, interest, royalties, capital gains, foreign rent but this often depended on tax treaties between Portugal and the income source country. Foreign pensions got a really sweet deal a flat 10% tax rate and no wealth tax under NHR, plus gifts and inheritances to direct family were tax-free in Portugal.
Speaker 2:And the basic requirements were just becoming a tax resident and not having been one in Portugal for the five years before.
Speaker 1:Exactly Pretty straightforward criteria. Now let's shift to what replaced it for new residents the tax incentive for scientific research and innovation. People often call it ICI, or sometimes NHR 2.0.
Speaker 2:Right, the new regime from 2024 onwards. How is it different from the old NHR?
Speaker 1:Well, ifesa is much more targeted. Much narrower Eligibility still requires becoming a tax resident, not having been one in the previous five years. But here's the huge difference. Your income has to primarily come from very specific eligible professional activities linked to scientific research and innovation. We're talking things like higher education, teaching or research, specific qualified jobs and investment projects, certain highly qualified professions listed in an ordinance, jobs in R&D-focused companies under a specific program, cfi-2, roles in certified startups, jobs linked to certain investment support agencies like AICIP or IAPEE, and some specific roles in Madeira or the Azores, and you have to be actively working in one of these qualifying roles each year to keep the benefit.
Speaker 2:And if you do qualify for IFI-SAI, what are the tax benefits?
Speaker 1:IFIs also last for 10 consecutive years. You get a flat 20% income tax rate, but only on the Portuguese income you earn specifically from those eligible research and innovation activities. Any other income you have is taxed at the standard progressive Portuguese rates. There's also an exemption for certain foreign income, similar in concept to the old NHR, but again the exact details, especially for dividends, interest capital gains, might depend on tax treaties.
Speaker 2:What are the biggest drawbacks or changes with IFSI compared to the old NHR that people really need to know?
Speaker 1:Okay. Probably the single biggest change and a major drawback for many is how foreign pensions are treated Under IFSI. Foreign pensions no longer get that nice 10% flat rate, they're just taxed at Portugal's standard progressive income tax rates. That makes IFSI much, much less attractive for retirees. Also because the list of eligible jobs is so specific and, frankly, quite limited. A lot of people who might have qualified for the old NHR under the broader high value added definition probably won't meet this stricter IFSI criteria.
Speaker 2:So if you're planning a move now, you absolutely have to check if your specific job or plan work in Portugal fits exactly into one of those defined IFESI categories. If not, you're likely looking at standard Portuguese taxes on your earnings.
Speaker 1:Precisely, and if you think you might qualify for IFESI, you need to really dig into the details and verify that your qualifications, your exact role, your employer everything lines up perfectly with the criteria. Applying for IFESAI is done online through the tax authority site, Quartal das Finanças, after you register as a tax resident, usually done by the end of March the following year.
Speaker 2:Okay, wow, we've navigated the Portuguese tax maze, including that big NHR to IFESAI shift. But as a US citizen there, the tax story isn't over, is it? You've still got Uncle Sam to think about.
Speaker 1:Absolutely right. Moving to Portugal does not get you off the hook for US taxes if you're a US citizen or a green card holder. The US taxes its citizens and permanent residents on their worldwide income, no matter where they live.
Speaker 2:So even living and paying tax in Portugal, you still generally need to file a US federal tax return, a 1040 every year.
Speaker 1:Yes, that's usually the requirement. You have to file a Form 1040 if your total gross income meets the filing threshold for your status single married, etc.
Speaker 2:Even if all your income was earned abroad and taxed in Portugal? What about deadlines for filing US taxes when you live overseas?
Speaker 1:US expats get an automatic two-month extension, so the filing deadline is usually June 15th, not April 15th. You just need to attach a statement saying you were living outside the US on the regular deadline. You can also get a further extension to October 15th by filing Form 4868 before that June 15th deadline. But and this is critical these extensions are for filing, not for paying. If you owe US tax, it's generally still due by April 15th to avoid penalties and interest. And don't forget state taxes. Their deadlines vary, so check your last state of residence.
Speaker 2:Okay, the million-dollar question how do you avoid being taxed twice, once by Portugal and again by the US, on the same income?
Speaker 1:Right. The US tax code has a couple of main tools for this. First is the Foreign Earned Income Exclusion, or FEIE. This lets qualifying expats exclude a certain amount of income earned from working abroad, like salary or self-employment income, from their US taxable income. For 2025, that amount is $130,000. To qualify, you need to meet either the physical presence test being physically outside the US for 330 full days in a 12-month period or the bona fide residence test, being a genuine resident of a foreign country for a full tax year. You claim it using Form Trump 555. Big caveat FEIE only applies to earned income, not passive income like interest, dividends, capital gains, rent or pensions, and it doesn't get you out of US self-employment taxes.
Speaker 2:Okay, so FEIE is one option. What's the other main way to avoid double taxation?
Speaker 1:The other major tool is the Foreign Tax Credit or FTC. This gives you a credit against your US tax bill for the income taxes you've already paid to a foreign government, in this case Portugal. It's basically a dollar-for-dollar reduction of the US tax you'd owe on that foreign income. You claim the FTC using Form 1116. Unlike the FEE, the FTC can be used for taxes paid on both earned and passive income. However, the credit you can claim is limited. It can't be more than the US tax you would have owed on that same foreign income anyway. And generally you can't claim both the FEIE and the FTC on the exact same income. You usually have to pick one. So it really sounds like you need to crunch the numbers for your own situation to see if FEIE or FTC is better Exactly, and often if you're living in a country like Portugal where income tax rates can be relatively high, especially compared to US rates at certain income levels, or if you have significant passive income, the foreign tax credit might be more beneficial.
Speaker 1:The FTC lets you use those higher Portuguese taxes you pay to directly offset your US tax. The FDIE just removes income up to the limit, regardless of how much foreign tax you paid. Plus, ftc works for passive income, feie doesn't. So yeah, modeling both scenarios, considering your income types, levels and your expected Portuguese tax, including any IFI benefit, is really crucial. Honestly, talking to a tax pro who specializes in US expat taxes is highly highly recommended here.
Speaker 2:Are there other US reporting things expats in Portugal need to know about, especially about bank accounts outside the US?
Speaker 1:Yes, definitely. Foreign account reporting is a big one. First there's the FBAR report of foreign bank and financial accounts. The total value of all your foreign financial accounts bank accounts, brokerage accounts, etc. Adds up to more than $10,000 at any point during the year. You have to file an FBAR electronically with FinCEN, that's the Financial Crimes Enforcement Network, not the IRS. The deadline is usually April 15th, but there's an automatic extension to October 15th. That's totally separate from your tax return. Then there's FASIA, the Foreign Account Tax Compliance Act. If the total value of certain specified foreign financial assets exceeds higher thresholds, which vary based on your filing status and location, you have to report them on Form 8938, which is filed with your US tax return. Fasia covers a broader range of assets than just bank accounts.
Speaker 2:And state taxes. Moving abroad doesn't automatically cut ties there either.
Speaker 1:Not necessarily no. Each US state has its own rules about tax residency, and some states are known for being sticky, meaning they might still consider you a resident for tax purposes even after you move abroad, especially if you keep ties like property, driver's license, voting, registration or family there. California, virginia, new Mexico, south Carolina are often mentioned as states with stricter rules, so it's definitely worth looking into potentially establishing residency in a state with no income tax or one with clearer rules for leaving, before you make the big move overseas.
Speaker 2:Wow, that was a ton of information but really, really valuable for anyone thinking about this. So just to quickly recap, what are the absolute must-know financial points for a US citizen considering Portugal?
Speaker 1:Okay. Key takeaways One the potential for a much lower cost of living is real, but highly dependent on where you live in Portugal and your lifestyle choices. Avoid that lifestyle inflation. Two opening a Portuguese bank account is essential early on and getting your NIF number is the absolute first administrative step. Three the Portuguese tax system is a complex income tax, social security, property taxes, vat and understand the big shift from the old NHR to the much more targeted ISSI, especially its impact on pensions. Four your US tax obligations absolutely continue. You need to file annually. Understand how to avoid double taxation using either the FEIE or the FTC, and know your reporting duties for foreign accounts via FBR and FATCA.
Speaker 2:It definitely sounds like this deep dive gives a strong foundation, but it's really just the starting point for your own research, isn't it?
Speaker 1:Absolutely. We've covered a lot, but everyone's situation is different. Right? Your income, your family, your long-term goals they all play a huge role. Your family, your long-term goals they all play a huge role. So doing more personalized research based on your specific plans and definitely definitely talking to qualified professional advisors tax advisors especially, who understand both US and Portuguese rules, is just essential before you make a move like this.
Speaker 2:So here's something to chew on. With Portugal's tax rules evolving, like the shift away from the broad NHR and the constant need to manage your US tax situation from abroad, what are the real long-term financial tradeoffs of choosing Portugal now and how might your specific situation where your money comes from, how you want to live, what your future plans are change that overall financial equation in ways maybe we didn't even cover today? That's something to really think about as you explore further. Thanks for joining us for this deep dive.