Americans in Portugal: Essential U.S. Tax Rules & Reporting Guide

1. Introduction

Before we get started, a quick but important compliance note - this guide is written specifically for US individuals living in Portugal. If you’re based elsewhere, I’m afraid this isn’t quite the article for you. (But don’t worry, I may write one for your country too.)

Now, a bit about me. I’m a Portuguese-British financial planner, having spent roughly half my life in sunny Portugal and the other half in the slightly less sunny UK. I’m trained through the CISI to Certified Financial Planner™ (CFP) level and hold Chartered MCSI status. I’m regulated to provide advice in the UK, US, EU, and the rest of the world, which means I spend a good portion of my time helping globally mobile individuals - like many of my American clients - navigate the financial maze of living or retiring abroad.

Over the years, Portugal has become something of a magnet for US people, and it’s not hard to see why. Your money simply goes further here. Whether it’s enjoying a leisurely espresso in a Lisbon café or a sunset walk on the Algarve coast, the quality of life Portugal offers is exceptional.

Some of the main draws include:

• Sunshine - Portugal enjoys more than 300 days of sun a year.

• Cost of living - Generally lower than many parts of the US and Western Europe, especially when it comes to healthcare, groceries, and dining out.

• Healthcare - The public system is strong, and private healthcare is high quality and affordable.

• Safety - Portugal consistently ranks among the safest countries in the world.

• It’s also the perfect gateway to Europe - well connected, culturally rich, and increasingly international.

However, before you get too comfortable picturing yourself with a pastel de nata and a glass of vinho verde, there’s a serious side to consider. Tax rules and paperwork matter. They can make or break your entire financial and retirement plans, and ignoring them is a mistake I’ve seen far too often.

In this guide, we’ll break down the key US tax concepts that every retiree in Portugal needs to understand. We’ll keep it clear and practical, so you can enjoy your life here without accidentally upsetting the IRS.

2. Key US Tax Concepts Every American in Portugal Must Know

If there’s one thing the IRS does exceptionally well, it’s never forgetting you exist - no matter where you live. One of the most common surprises for Americans retiring abroad is discovering that moving overseas doesn’t free you from US tax obligations.

Let’s break down the essentials.

Worldwide taxation still applies

As a US citizen, you’re taxed on your worldwide income - full stop. Whether your pension is paid in Dallas, dividends come from a brokerage in New York, or you rent out a little flat in Porto, it all remains reportable to the IRS.

Even if you’ve officially become a Portuguese tax resident, this does not sever your US tax obligations. Unlike many countries, the US follows citizenship-based taxation. That means you file annually with the IRS regardless of where you live, even if you haven’t set foot on American soil for decades.

FATCA and FBAR reporting

On top of income tax returns, you also have additional reporting requirements designed to combat offshore tax evasion. Two of the most important are:

• FATCA (Foreign Account Tax Compliance Act) - This requires foreign financial institutions to report information about US account holders to the IRS. If you hold more than $50,000 in foreign financial assets (thresholds vary depending on filing status), you may also need to file Form 8938 yourself.

• FBAR (Report of Foreign Bank and Financial Accounts) - If you have more than $10,000 in aggregate in foreign bank accounts at any point during the year, you must file an FBAR (FinCEN Form 114). This includes current accounts, savings, and even some investment accounts.

Even if you’ve moved to Portugal permanently, if you open a local bank account or invest through a Portuguese platform, these rules still apply. If you’d like a more UK-centric explanation of FATCA, you can read my detailed guide for Americans in the UK.

Double taxation: how the treaty helps

The good news is that you’re not taxed twice on the same income - at least, not usually. The US and Portugal have a bilateral tax treaty to avoid double taxation.

Here’s how it typically works:

• You pay tax in Portugal as a Portuguese tax resident.

• You then file your US tax return, but you can often claim foreign tax credits for the taxes already paid in Portugal.

• This credit offsets your US tax liability, so you don’t end up paying tax twice on the same income.

There are also foreign earned income exclusions and other provisions, depending on your situation. But the paperwork needs to be done properly, and that’s where many retirees trip up.

Penalties for non-compliance can be severe

This is not an area to take lightly. The IRS is famously unforgiving when it comes to offshore reporting failures.

Some examples:

• FBAR non-willful failure to file can lead to penalties of up to $10,000 per violation.

• Willful failure can reach the greater of $100,000 or 50% of the account balance.

• FATCA penalties can also be steep, starting at $10,000 and escalating quickly for continued non-compliance.

• Interest charges and potential criminal penalties can also apply in serious cases.

Portugal’s banks are now well integrated into FATCA systems, and the IRS receives data automatically. So “forgetting” to file is not a good strategy.

3. The Portugal-US Tax Treaty (Dual-Taxation Agreement)

When you’re a U.S. citizen living in Portugal, the U.S.-Portugal Income Tax Treaty becomes one of your best allies. Its role is to allocate taxing rights between the two countries, reduce withholding rates, and help prevent you paying tax twice on the same income. But it’s not magic - there are caveats, complex rules, and traps. Let’s unpack what you really need to know.

Key Provisions That Matter for Retirees

Pensions & Retirement Income

Under the treaty, pensions and other similar remuneration are typically taxable in the country of residence - so if you live in Portugal, Portugal generally has the right to tax your U.S. pension distributions (private plans). The U.S. may still tax certain portions depending on how contributions and earnings are treated. (Treaty Article 17)

However, public pensions (for U.S. government employees) may still be taxed in the U.S. first, with Portugal giving relief via credit or exemption. The treaty also preserves the U.S. “savings clause”.

Social Security Benefits

U.S. Social Security payments are treated slightly differently. Usually, Social Security is taxable only in the U.S., but the treaty allows for exemptions or adjustments depending on your total income and local Portuguese tax law. (In short, Portugal generally gives you credit or exemption so you’re not heavily double taxed.)

Dividends, Interest & Royalties

These are “passive incomes,” and the treaty imposes maximum withholding rates when one country pays to a resident of the other:

• Dividends: Up to 15% withholding, possibly reduced to 5% if you own a significant share (often ≥ 25%).

• Interest: Up to 10%. Some interest (e.g. long-term loans of 5+ years) may be exempt entirely.

• Royalties: Also capped at 10%.

These lower rates only apply if you make the proper treaty claims (i.e. you file the right forms, prove residency, etc.).

How the Treaty Helps You Avoid Double Taxation

• Foreign tax credit / deduction: If Portugal taxes your U.S.-sourced income (e.g. dividend, pension), you can generally offset that tax in your U.S. return using Foreign Tax Credit (Form 1116). The treaty ensures you won’t be taxed twice on the same income.

• “Deemed to arise in” rule: For U.S. citizens who reside in Portugal, the treaty allows certain income, taxed only by the U.S (by reason of citizenship), to be treated as if it arises in Portugal to avoid double taxation - as long as the U.S. tax you pay is not less than the tax Portugal would impose under treaty rules.

• Exemptions in source country: The treaty often limits the tax rates that the source country (e.g. U.S. paying you dividends) can impose. That means the U.S. cannot withhold at a punishing domestic rate if treaty rules apply.

Treatment of IRA / 401(k) Withdrawals - The Ambiguities

This is one of the trickiest areas for retiring Americans. The treaty does not explicitly address every type of U.S. retirement account (IRAs, 401(k)s, etc.). Whether Portugal or the U.S. gets to tax the withdrawal can depend on:

• The character of the distribution (return of principal vs earnings)

• The origin of contributions (pre-tax vs post-tax)

• How Portugal’s domestic law treats pensions vs investment income

  
  

In practice, many U.S. expatriates find their IRA/401(k) withdrawals taxed in Portugal if Portugal deems the payment pension-like. But the U.S. may still try to tax portions under domestic rules. This is an area where expert structuring and opinions matter - you don’t want a surprise from either side when you start drawing.

Treaty Tie-Breaker / Residency Rules

There are times when both Portugal and the U.S. might consider you a tax resident, leading to dual residency. The treaty includes a tie-breaker hierarchy to decide which country “wins” for treaty benefits (Article 4).

Steps in that hierarchy include:

1. Permanent home - where your home is.

2. Centre of vital interests - where your personal, social, economic ties are stronger.

3. Habitual abode - where you physically live more days.

4. Nationality - in case the first three don’t decide.

5. Mutual agreement - where each country’s competent authority resolves it.

These tie-breaker rules exist so you don’t get stuck without treaty benefits or in a dispute every tax year.

4. Visas and Residency Options in Portugal for Americans

Getting tax, banking, and compliance right is one thing - but none of that matters if you don’t actually have legal status to live in Portugal. Fortunately, there are several visa and residency routes suited to retirees, remote workers, and investors. Each has strengths, limitations, and recent changes to watch out for.

In this section, we’ll cover:

• The Golden Visa (investment route) and its recent reforms

• The D7 Visa (passive income / retirement)

• The D8 / Digital Nomad Visa (especially useful for remote or hybrid retirees)

• New legal changes and procedure updates

• The path to Portuguese citizenship

Let’s dive in.

Golden Visa (Residency by Investment) for US Persons

For many non-EU nationals, the Golden Visa (Portuguese: “Visto de Residência para Atividade de Investimento” or ARI) has long been the go-to pathway. It offers flexibility, access to EU residency, and a route to citizenship.

Who qualifies?

Originally, applicants could choose from several investment routes - real estate purchase or rehabilitation, capital transfer, or fund subscription. But in response to housing concerns, major reforms now reduce or eliminate many of the real estate options. Real estate investments now no longer qualify under many schemes.

Current qualifying options typically include:

• Investing in a Portuguese fund / VC / business fund

• Donation to cultural, scientific, or heritage projects

• Business investment or job creation in Portugal

• Other capital contributions to approved national programmes

Recent changes & reforms

As of October 6, 2023, the “Mais Habitação” law removed real estate purchases, real estate-linked funds, and capital transfers from qualifying Golden Visa routes.

The golden visa programme has not been fully eliminated, but its routes are now more selective and geared toward real economic contribution rather than property speculation.

Advantages & challenges

• Attractive: minimal stay requirement (just a few days per year)

• EU travel via Schengen, access to Portugal’s public services

• Can lead to permanent residence and citizenship in 5 years (subject to satisfying conditions)

• Drawback: cost, complexity of qualifying routes, and ever-evolving regulation

• Political climate: immigration and Golden Visa reforms are politically sensitive. Some segments of the Portuguese public and lawmakers challenge perks given to foreign investors.

In short: the Golden Visa is still viable, but its real estate paths are largely closed off. For US retirees, fund or business-based routes are now the main options.

D7 Visa (Passive Income / Retirement Visa) for US persons

If you already have regular passive income (pensions, dividends, rental yield, etc.), the D7 visa may be your best bet. It’s often called the “retirement / passive income visa.”

Eligibility & requirements

• You must demonstrate a reasonable net regular passive income, such as a pension, returns from financial investments, real estate rentals, or royalties.

• You typically apply via the Portuguese consulate in your home country; after that, you apply for a residence permit once in Portugal.

• The D7 permit is initially granted for two years, and may be renewed in subsequent three-year periods.

• After five years of legal residency under D7, you may apply for permanent residence or citizenship (if you satisfy language and integration requirements).

Strengths & trade-offs

• Low cost compared to investment visas

• No requirement to maintain large capital commitments

• You can bring dependents (spouse, minor children, sometimes older children or parents)

– You must show genuine, stable income

– Might be less generous in some taxing or benefit contexts compared to investment visas

– Processing and bureaucracy can be slow

Need help getting your wealth right in Portugal?

We specialise in supporting U.S. expats in Portugal with every aspect of their move - from taxes to investments.

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D8 / Digital Nomad Visa for US persons

In recent years, Portugal introduced a remote work / digital nomad visa, often referred to as the D8 visa. This is ideal if you generate income remotely from non-Portuguese clients or platforms.

Key features

• You must satisfy income thresholds (often tied to remote earnings)

• You may remain legally resident while working remotely for foreign clients or companies

• Some versions of the digital nomad permit may lead to long-term residency records (but not always citizenship).

• Not designed primarily for retirees, but some retirees use it if they have remote income streams

Limitations

• Some versions do not allow you to take up local employment

• The route to Portuguese citizenship via digital nomad visa is uncertain or limited in many cases.

• It’s a newer regime, so legal certainty is lower

Steps to Get Portuguese Residency (Recent Law Changes)

Getting from “foreigner with visa” to full resident requires navigating SEF (Portuguese immigration authority), documentation, and legal timing. Some recent issues to note:

1. Visa → Temporary Residence Permit (TRP)

   After entering Portugal on a valid visa, you apply for a residence permit (autorização de residência) via SEF. Processing times are widely reported as delayed (some waiting months).

2. Renewals

   You must renew periodically (depending on visa type: D7, D8, Golden).

3. Residence obligations / minimum stay

   Many visas require minimal physical presence (e.g. a few days per year). Exceed absence thresholds, and you risk losing status.

4. Political & social context

   - Immigration is a politically sensitive topic; some opposition exists to preferential treatment via Golden Visa.

   - Changes to nationality law are under discussion, potentially increasing the years needed for citizenship (from 5 → 10 years).

5. Permanent Residence / Citizenship Application

   After meeting residency time, language, clean criminal records, and other integration requirements, you may apply for Portuguese citizenship.

   - Golden Visa holders: traditionally apply after 5 years.

   - D7 holders: apply after 5 years of legal residency (if conditions satisfied).

   - Language test (A2 basic level), clean criminal history, evidence of integration (“ties to Portugal”) are usually required

Because laws evolve, it’s critical to stay updated each year or consult local counsel.

5. Types of Investment Vehicles Available for US Expats

Once you’ve got your residency sorted and understand your tax treaty, choosing where and how to invest becomes the next big decision. Not all vehicles are created equal, especially when you straddle the U.S. and Portuguese systems. Below are key investment types you’ll encounter as a U.S. expat in Portugal - along with benefits, pitfalls, and tax implications.

U.S. Retirement Accounts in Portugal: IRA, 401(k), Roth

IRA / Traditional 401(k)

• These remain valuable tools for U.S. citizens abroad because contributions and growth remain tax-deferred in the U.S.

• However, once you retire (or take distributions abroad), things become complex: distributions are ordinary income to the U.S. and may also be taxable by Portugal under certain circumstances, depending on the treaty and how Portugal classifies them.

• There’s often a risk of double taxation unless properly structured (i.e. you claim foreign tax credits or treaty relief).

Roth Accounts

• Roth IRAs / Roth 401(k)s have the benefit of tax-free withdrawals (if qualified) in the U.S.

• But Portugal does not always respect the “Roth advantage.” Portuguese tax authorities may treat Roth earnings as taxable income because they view them as investment gains.

• That disparity is a source of confusion and risk. Before relying on Roths abroad, you need expert opinions in your specific locale.

In short: U.S. retirement accounts can be powerful, but they require careful planning so you don’t inadvertently turn a tax-free U.S. account into a taxed foreign asset.

Portuguese Investment Funds & PFIC Risk for US persons

One of the most misunderstood and dangerous pitfalls for U.S. expats is investing in Portuguese investment funds (or local UCITS / mutual funds). Many of these funds fall under U.S. PFIC rules (Passive Foreign Investment Company). PFIC taxation is notoriously punitive:

• High “excess distribution” tax rates

• Complex reporting (Form 8621)

• Interest charges on gains

• Loss of favourable capital gains treatment

Even if a Portuguese fund is solid, the PFIC trap can turn it into a tax nightmare. It’s not enough that a fund looks good - you must vet whether it’s PFIC-compliant or structured in a U.S.-friendly wrapper.

Direct Real Estate in Portugal for US persons

Real estate often feels secure and tangible. Many retirees look at Portuguese property as both a home and an investment. There are pros, but also significant cautions:

Benefits

• You live close to your investment (no remote landlord headaches).

• Potential rental income streams.

• In inflationary times, real property often holds value better than cash.

Pitfalls

• Portugal is experiencing a housing boom in many parts - overpricing is real, especially in Lisbon, Porto, and the Algarve.

• Bureaucracy is a real headache: approvals, building permits, taxes, registration, and red tape can take months or years.

• Maintenance and local property management issues, especially if you're abroad part of the year.

• U.S. tax implications: depreciation, passive activity loss rules, and U.S. estate tax exposure.

In short: real estate can work, but it demands either local expertise or careful structuring (e.g. via SPVs or trust ownership, albeit trusts aren’t recognised under Portuguese common law) so you don’t get trapped by bureaucracy or double compliance.

How U.S. Brokerage Accounts While Abroad Work

Good news: many U.S. brokers support expat accounts. I work with Fidelity, Schwab, and other international arms of U.S. brokerage houses. These accounts offer:

• Familiar platforms and U.S. equity access

• Lower PFIC risk (if you stick to U.S. securities, ETFs, large mutual funds)

• Easier U.S. tax reporting

That said, you must ensure your broker continues to support your resident country. Some U.S. brokers restrict services to U.S. addresses, which is a pain if you’ve already got rid of your U.S. property. Also, you’ll still face Portuguese taxation on gains, dividends, and possibly withholding, so structure with care.

Alternative Investments for US persons in Portugal: Art, Gold, Crypto, etc.

Many clients are tempted to diversify into alternatives. But these come with special cautions:

• Art and collectibles: high transaction costs, hard to value, and in some jurisdictions taxed heavily on gains or inheritance.

• Gold / precious metals: often considered a store of value, but gains may be taxed in Portugal and the U.S. (and some countries treat gold gains as ordinary income).

• Cryptocurrency: The wild west. Some countries treat it favorably; others severely. Both the U.S. and Portugal may tax gains, impose reporting, or even consider mining/income as ordinary income.

These are best treated as satellite positions - not your core - especially in a cross-border context where tax complexity and audit risk multiply.

6. Practical Tax Compliance: Portuguese IRS vs. US IRS

Let’s be honest - tax compliance isn’t exactly the most glamorous part of retiring abroad. But it’s the foundation that keeps everything else stable. Getting your filings right is what allows you to enjoy that sunset glass of wine without a letter from either tax authority ruining the moment.

As a US citizen living in Portugal, you’re essentially dealing with two tax systems at once. They operate independently, with their own deadlines, forms, and rules. Coordinating these properly is the key to avoiding double taxation, nasty surprises, and sleepless nights.

Portuguese IRS: Filing Deadlines and Obligations for US Expats in Portugal

Portugal’s tax authority is called the Autoridade Tributária e Aduaneira (AT), or simply “Finanças.”

• Tax year: January 1 to December 31 (same as the US, thankfully).

• Filing deadline: Typically between 1 April and 30 June of the following year, depending on the type of income.

If you are a Portuguese tax resident, you must file an annual IRS return declaring worldwide income, including pensions, rental income, dividends, and capital gains. This catches many new arrivals by surprise - yes, even your US investments need to be reported in Portugal.

Key things to note:

• Returns are usually filed online via the Finanças portal (you’ll need a Portuguese tax number - NIF).

• Portugal often applies progressive tax rates on worldwide income, which can go up to around 48% for higher incomes, plus possible surcharges.

• There are some deductions, allowances, and exemptions, but the system is quite different to the US one, and more paperwork-heavy.

Portugal is efficient at cross-checking foreign income thanks to the automatic exchange of information under the CRS (Common Reporting Standard). However, while most countries participate in CRS, the United States does not. Instead, the US operates under FATCA (Foreign Account Tax Compliance Act), which focuses on reporting information about US persons to the IRS - not the other way around. This means that if you “forget” to declare your US accounts, Portuguese Finanças may not automatically receive that information through CRS, although they can still obtain it through other means, such as targeted information requests or bilateral agreements.

US IRS: Ongoing Obligations Abroad

Here’s the bit many Americans misunderstand: moving abroad does not remove your US tax filing obligations. The US taxes based on citizenship, not residency.

You must continue to file annually with the IRS, reporting your worldwide income, regardless of where you live.

Typical filing requirements include:

• Form 1040 (annual income tax return)

• FBAR (FinCEN Form 114) if foreign accounts exceed $10,000

• FATCA Form 8938 if you hold substantial foreign financial assets

• Additional forms depending on business ownership, trusts, PFICs, etc.

The good news is that Americans abroad get an automatic two-month filing extension to 15 June (though any tax due must still be paid by 15 April to avoid interest). You can also request additional extensions to October.

Coordinating the Two Systems

This is where things can get tricky. The goal is to avoid double taxation, while staying compliant in both countries.

• File in Portugal first: Since Portugal’s deadline is later in the spring, you usually have your Portuguese tax return completed before finalising your US one. This allows you to correctly calculate foreign tax credits.

• Use the tax treaty & credits: The US-Portugal tax treaty and the Foreign Tax Credit system allow you to offset Portuguese taxes paid against your US liability.

• Currency conversions: The IRS requires income to be reported in USD, so careful exchange rate calculations are important (they don’t always match Portuguese numbers neatly).

Filing Jointly with a Non-US Spouse

Many Americans married to non-US citizens wonder if they should file jointly. The answer: it depends.

You can elect to treat your non-US spouse as a US tax resident and file jointly, which sometimes brings tax benefits. But this also pulls their worldwide income into the US tax net, so it must be considered carefully.

Alternatively, you can file as Married Filing Separately, which avoids taxing your spouse but can reduce some deductions and credits.

Portugal, for its part, allows joint or separate filing, and sometimes it’s beneficial to file jointly to smooth out progressive rates. Coordinating both systems simultaneously can be fiddly, but worth the effort.

Foreign Earned Income Exclusion (FEIE) vs Foreign Tax Credit (FTC)

These are two key tools Americans abroad use to reduce double taxation:

• FEIE (Form 2555) allows you to exclude up to $130,000 (20254) of earned income if you meet residency or physical presence tests. Note this applies to earned income (e.g. salaries), not pensions or investment income - so many retirees don’t benefit.

• FTC (Form 1116) gives you credit for foreign taxes paid, offsetting US tax liability on the same income. This is the main tool for retirees in Portugal, since pensions and investment income usually don’t qualify for FEIE.

In practice, most retirees in Portugal use FTC rather than FEIE, because their income is passive rather than earned. Using FTC properly, combined with the tax treaty, is what usually prevents double taxation headaches.

Tax compliance across two systems is complex but manageable with good planning. Once you understand the moving parts - and keep on top of deadlines - it becomes routine. And it’s far easier to stay ahead than to clean up a mess afterwards.

I would always advise to employ a CPA in both the US and Portugal who specialises in Americans. I have several professional colleagues who would be able to assist you with this should you so wish.

7. Banking & Money Management for US Persons in Portugal

Once the visas are sorted, the tax treaty understood, and the investments chosen, most retirees hit the same practical wall: banking.

Opening, managing, and moving money between US and Portuguese systems can be surprisingly complicated - especially as a US citizen. FATCA has made many banks cautious, and currency conversion costs can quietly eat into your retirement budget if you’re not careful. Let’s break down the options and common pitfalls.

Portuguese Banks: The Traditional Route

If you plan to live in Portugal long-term, you’ll almost certainly need a local Portuguese bank account. Some of the main players include:

• Millennium BCP - one of Portugal’s largest private banks. Popular with expats, offers English-language services and digital banking.

• Caixa Geral de Depósitos (CGD) - the state-owned bank. Reliable and widespread, though customer service can be bureaucratic.

• Novo Banco - another major retail bank with decent expat-friendly branches, though service quality can vary.

Opening an account typically requires:

• A Portuguese NIF (tax number)

• Passport and proof of address

• Residency permit or visa (though some allow pre-residency accounts)

  
  

Portuguese banking tends to be more paper-heavy than Americans are used to. Don’t be surprised if you’re asked to physically sign forms you thought were already online.

Why use a Portuguese bank at all?

• Paying bills (utilities, taxes, local services) is easier in-country.

• Many services, like healthcare payments or direct debits, may require a Portuguese IBAN.

• Currency exchange costs can be reduced by timing and controlling transfers locally.

International Banks with Expat Services

Some international banks provide expat banking solutions that straddle borders, often making it easier to manage dual-country finances.

Well-known options include:

• HSBC Expat - based in Jersey, offers multi-currency accounts and integration with global services.

• Santander International - provides euro and dollar accounts, sometimes with linked credit cards for international spending.

• Barclays International - caters to globally mobile clients, though access sometimes depends on minimum balances.

These services can help smooth transfers, allow you to hold both USD and EUR in one place, and provide a familiar English-language interface.

However, they can come with higher minimum balance requirements and sometimes monthly fees. For wealthier retirees or those with complex structures, though, the convenience is often worth it.

Digital Banks & Apps

Fintechs have changed the game. For many retirees, digital banks offer cheaper, faster currency transfers and more flexibility:

• Wise (formerly TransferWise) - excellent exchange rates, low fees, and quick transfers between USD and EUR. You can hold balances in multiple currencies and get local bank details.

• Revolut - good for everyday spending, transfers, and budgeting tools.

• N26 - a German-based challenger bank popular across Europe, including Portugal.

Digital banks are particularly good for:

• Converting USD to EUR at competitive rates

• Avoiding hidden spread fees

• Spending locally with cards that use live exchange rates

The main limitation is that some of these accounts aren’t technically “bank accounts” under Portuguese law - so for certain legal or tax functions, you’ll still need a traditional bank.

What to Watch Out For

Banking as a US expat comes with some unique complications. Here are the key ones:

FATCA Compliance

FATCA (Foreign Account Tax Compliance Act) means foreign banks must report accounts held by US persons to the IRS. Some Portuguese banks are reluctant to open accounts for Americans because of the compliance burden.

If a bank seems slow or unenthusiastic when you mention your US passport, this is why.

Persistence and patience help. Some banks simply have designated branches or teams to handle US clients.

Currency Conversion Costs

Small conversion spreads add up quickly. If you’re moving a pension or investment income from USD to EUR monthly, even a 1–2% fee can quietly cost thousands per year.

Using specialist providers (like Wise) or holding a multi-currency account can give you more control. Timing transfers strategically also helps - don’t just accept your bank’s default rates.

Reporting Requirements (FBAR / FATCA)

Finally, don’t forget: opening a Portuguese bank account creates new US reporting obligations.

• If your total foreign bank balances exceed $10,000 at any point in the year, you must file an FBAR (FinCEN Form 114).

• If you hold more than $50,000 in foreign financial assets ($100,000 for married joint filers), you may need to file FATCA Form 8938.

These thresholds are aggregate, not per-account. Even a modest savings account plus an investment fund can push you over.

Practical Tips

• Open one local Portuguese account for daily expenses and bills.

• Keep a US brokerage or bank account for investment activity and income.

• Use a digital platform like Wise to handle transfers intelligently.

• Always stay on top of your reporting requirements - the IRS doesn’t do “I didn’t know” as a defence.

Banking and money management might not be the most exciting thing (well, for me it is), but getting this right makes everything else smoother. A few smart structural decisions can save you thousands in fees, hours of bureaucracy, and potential compliance headaches.

8. Required Forms for Americans in Portugal

If there’s one thing Americans abroad can’t escape, it’s paperwork. Retiring in Portugal is wonderful - but it comes with a healthy dose of tax forms from both sides of the Atlantic.

To keep the IRS and the Portuguese tax authorities happy (and to avoid nasty fines), it’s essential to understand what you’re expected to file each year.

On the US Side

As a US citizen, you’re taxed on your worldwide income, no matter where you live. That means your annual US tax return doesn’t stop when you move abroad - it just gets a bit more interesting.

Here are the main forms most people will encounter:

• Form 1040 - Annual Individual Income Tax Return

  This is your standard tax return. You’ll report your worldwide income here, including pensions, Social Security, property rental income, and any Portuguese earnings.

• Form 1116 - Foreign Tax Credit

  Used to claim credits for taxes paid to Portugal, helping avoid double taxation. Most retirees rely on this more than the FEIE.

• Form 2555 - Foreign Earned Income Exclusion (FEIE)

  If you still have earned income (not pensions) while abroad, this can exclude up to $120,000+ from US taxation. It’s less relevant for pure retirees but can apply in some cases.

• FBAR (FinCEN Form 114)

  Required if your total foreign account balances exceed $10,000 at any time during the year. This includes Portuguese bank accounts, investment accounts, and even some pensions. Penalties for forgetting to file can be brutal - up to $10,000 per non-wilful violation.

• Form 8938 - FATCA Foreign Assets Reporting

  Similar to FBAR but with higher thresholds ($50,000 single / $100,000 joint). This form is filed alongside your tax return and covers a broader range of financial assets.

• Form 8621 - PFIC Reporting

  This is a big one for anyone investing in Portuguese mutual funds or ETFs. The IRS treats most non-US funds as Passive Foreign Investment Companies (PFICs), which come with punitive tax rules and reporting obligations. It’s one of the main reasons we encourage clients to avoid Portuguese retail funds altogether.

On the Portuguese Side

Portugal has its own set of filing obligations, handled through the Autoridade Tributária (the Portuguese IRS). The system isn’t as intimidating as the US, but it does require careful attention, especially if you have multiple income streams.

• IRS Modelo 3 - Annual Portuguese Tax Return

  Every resident files this. It includes income from pensions, employment, real estate, and investments, both domestic and foreign.

• Annexes and Schedules

  Depending on your situation, you may need to attach various annexes for:

  • Pensions (Annex A or J, depending on source)

  • Real estate income (Annex F)

  • Foreign income and investments (Annex J)

Portuguese tax filing typically happens between 1 April and 30 June for the previous calendar year. Fortunately, the system has improved in recent years - a lot can be done online, and refunds are often processed quickly.

Professional Support

The reality is that US-Portuguese cross-border tax planning is complex. Between FBARs, FATCA, PFIC rules, and Portugal’s annex system, even experienced accountants can get tangled.

That’s why we partner with trusted Portuguese CPAs who:

• Speak fluent English

• Work extensively with American clients

• Understand both Portuguese tax law and the intricacies of US reporting

They make sure everything is filed correctly, deadlines are met, and you stay compliant on both sides. This kind of expertise pays for itself many times over - especially given the IRS’s fondness for penalties.

If you'd like to get some professional support, we'd be happy to offer you a free call to discuss your requirements. Simply book in via the form below.

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Key Takeaways

• You’re dealing with two tax systems, not one.

• Missing forms can trigger severe penalties, especially from the US.

• PFIC reporting is a hidden trap for many retirees.

• Good professional advice is worth its weight in gold here.

This section is arguably one of the most important. Getting your tax filings right keeps your retirement stress-free - and ensures you can spend your time enjoying Portugal’s beaches rather than reading IRS penalty letters.

9. Lifestyle & Practical Considerations for Americans in Portugal

Let’s be honest - very few people move to Portugal purely for the tax rules. You’re probably reading this because you want a better lifestyle. Sunshine. Slower pace. Lower costs. Good food. And ideally, less stress.

That’s exactly why Portugal consistently ranks among the best countries in the world for American Expats. But to make your move a success, there are a few practical lifestyle factors to consider carefully.

Healthcare Access - Public vs. Private

Portugal’s public healthcare system (SNS - Serviço Nacional de Saúde) is well-regarded, affordable, and available to legal residents. However, it’s not perfect:

• Waiting times for non-urgent procedures can be long.

• Many doctors in the public system don’t speak fluent English.

That’s why most US retirees opt for private health insurance. The costs are far lower than in the US - often between €100–€250 per month, depending on age and coverage - and you’ll get:

• Access to English-speaking doctors and specialists.

• Shorter waiting times for appointments and procedures.

• Modern facilities, particularly in Lisbon, Porto, and the Algarve.

For more complex medical issues, many expats keep Medicare coverage active in the US, combining it with international health insurance for peace of mind.

Language - Do You Need to Speak Portuguese?

Portugal is one of the most English-friendly countries in continental Europe, especially in major cities and expat areas. You can live in Lisbon, Cascais, Porto, or the Algarve and get by comfortably in English.

However, learning Portuguese will make your life richer and smoother. A few points worth knowing:

• Portuguese from Portugal is quite different from Brazilian Portuguese - think British vs. American English, but with a stronger twist.

• Many apps like Duolingo focus on Brazilian Portuguese, which can be confusing. Apps like Drops offer European Portuguese, which is what you’ll actually hear day to day.

• Locals really appreciate even a basic effort to speak the language. A polite “Bom dia” goes a long way.

Realistically, many retirees never become fluent - and that’s fine. But a little effort makes everything easier, from ordering coffee to dealing with bureaucracy.

Food in Portugal - A Pleasant Surprise

One of Portugal’s quiet superpowers is its food culture. Granted, I may be biased - since I am Portuguese, and grew up with grandma’s food - but it has notoriously great food.

• Fresh fish and seafood are abundant, especially sardines, cod (bacalhau), and octopus.

• Fruit and vegetables are local, seasonal, and often far cheaper than in the US.

• Wine is excellent and extremely affordable - you’ll find bottles of quality vinho verde for under €5.

• Eating out is often cheaper than cooking in the US. A decent three-course meal at a local restaurant can still be had for €15–€25 per person.

Portions are generous, ingredients are simple and fresh, and meals are meant to be enjoyed slowly. If you’ve grown tired of rushed dinners and inflated prices in the US, this alone can feel like a major lifestyle upgrade.

Cost of Living - Portugal vs. the US

Portugal’s cost of living remains one of its biggest attractions for American retirees.

While costs have risen in recent years, they are still far below those in most major US cities. Here’s a rough comparison:

Category	Portugal (Lisbon)	US (National Avg.)
Rent (1-bed city centre)	€1,000–€1,500/month	$1,800–$2,500/month
Private health insurance	€100–€250/month	$500–$1,000+/month
Meal at local restaurant	€10–€15	$20–$35
Groceries (monthly)	€200–€300	$400–$600
Public transport pass	€40–€50	$80–$120

Of course, lifestyle choices matter. Living in central Lisbon is more expensive than in rural Alentejo. But even in urban areas, most retirees find their monthly expenses drop substantially compared to life in the US - often by 30–50%.

This cost efficiency is one of the reasons Portugal remains such a popular retirement destination, even as property prices have climbed.

Quality of Life

Portugal offers something hard to quantify but easy to feel: a sense of ease.

• The climate is mild, with over 300 days of sunshine per year in many regions.

• Crime rates are low - Portugal consistently ranks among the safest countries in the world.

• The culture prioritises family, community, and enjoying the moment.

Many American retirees say that within a few months, they start to breathe differently. The slower pace, fresh food, and daily sunshine have a way of reprogramming your stress levels.

Key Takeaway

Portugal isn’t just a tax haven or a cost-saving destination - it’s a place where lifestyle genuinely improves for most retirees.

If you prepare properly for healthcare, language, and living costs, the transition can be smooth and rewarding. And once you settle in, it’s easy to see why so many Americans fall in love with life here.

10. Portugal NHR System

For over a decade, Portugal’s Non-Habitual Resident (NHR) tax regime was one of the biggest reasons Americans chose to retire here. It offered substantial tax advantages for foreign pension income, investment returns, and certain types of professional income.

However, the landscape has changed. NHR closed to new applicants on 31 December 2023, and a new framework has taken its place for arrivals from 2024 onwards.

If you’re reading outdated blog posts that promise a 10-year tax holiday - they’re probably wrong. Here’s what actually applies now.

NHR Transitional Rules

If you registered under NHR before the end of 2023, you’re still in luck. The government has introduced transitional rules to honour existing beneficiaries:

• You keep your full 10-year NHR benefit period.

• The rules that applied when you registered will generally continue to apply for the remainder of that period.

• No new applications are accepted after the deadline, so your status is effectively “grandfathered.”

This makes NHR status valuable - and worth careful tax planning if you already hold it.

Key NHR Benefits

For those still under the scheme, the NHR benefits can be substantial:

• Flat 20% tax rate on eligible Portuguese-sourced employment or self-employment income, compared to the usual progressive rates that can exceed 45%.

• Exemptions on foreign-sourced income (including pensions, dividends, interest, and rental income), depending on the terms of relevant tax treaties and whether the income is taxed in the source country.

• For many US retirees, this meant Portuguese tax on US pensions was significantly reduced or eliminated altogether, provided the treaty allocated taxing rights to the US.

In practice, this often resulted in very low effective tax rates for the first 10 years of residency - one of the main reasons Portugal became so popular with American retirees.

Treaty Interactions

NHR doesn’t exist in isolation. Its benefits depend heavily on how Portugal’s tax treaties interact with your income sources.

For example:

• US Social Security is generally taxable only in the US under the treaty.

• 401(k) or IRA withdrawals fall into a more ambiguous area, and their treatment depends on the type of account and how distributions are classified under both systems.

• Investment income like dividends and interest may be exempt in Portugal under NHR but still taxable in the US - remember, the US taxes worldwide income.

Getting this wrong can lead to double taxation, so careful cross-border planning is essential.

Enter the TISRI Regime (2024 Onwards)

From 1 January 2024, Portugal introduced the Tax Incentive for Scientific Research and Innovation (TISRI) regime. This is essentially NHR’s successor - but it’s far narrower in scope.

Key points about TISRI:

• It’s primarily aimed at attracting highly qualified professionals in specific sectors such as technology, R&D, and education.

• The 20% flat tax rate still applies to eligible Portuguese income, but foreign income exemptions are much more limited.

• Retirees are not the main target group, and most will not qualify.

In short: TISRI is not a replacement for NHR for retirees. If you’re moving to Portugal now, you’ll need to plan based on standard Portuguese tax rules unless you happen to fall into a qualifying professional category.

Key Takeaway

Portugal’s NHR regime was a game-changer for US retirees, but it’s now closed to new entrants.

• If you already hold NHR, make sure you structure your income efficiently to maximise the remaining years of benefits.

• If you’re moving to Portugal from 2025 onwards, don’t rely on NHR-style tax breaks. TISRI may apply to some, but for most retirees, proper treaty planning and smart structuring are the real keys to minimising tax.

As always, the smartest move is to get professional cross-border tax advice early. Portugal’s rules are evolving quickly, and the difference between well-structured planning and ad hoc decisions can be worth tens or even hundreds of thousands over your retirement.

11. Portugal TISRI

In 2024, Portugal introduced a new tax regime called TISRI (Tax Incentive for Scientific Research and Innovation), marking a decisive shift away from the old Non-Habitual Resident (NHR) scheme. If you’re planning a move now, this is the regime that may apply to you.

What Is TISRI?

TISRI is designed to attract highly qualified professionals, researchers, and returning Portuguese citizens. It’s not aimed at retirees, and it’s certainly not a blanket low-tax scheme like NHR was.

The regime provides:

• A 20% flat tax rate on eligible Portuguese-sourced income,

• For a period of 10 consecutive years,

• Available to those who meet specific professional or eligibility criteria.

This makes TISRI broadly similar in structure to NHR, but far more targeted in scope.

Who Qualifies for TISRI in Portugal?

Eligibility under TISRI is profession-specific. It’s generally aimed at:

• Researchers and academics.

• Skilled professionals in sectors such as technology, science, and innovation.

• Portuguese citizens returning after a period abroad.

Applicants must demonstrate that their work falls under one of the qualifying categories, and they must register correctly with the tax authorities to benefit. There’s no automatic entry.

For most US retirees, TISRI won’t apply, but for those still working in research or consultancy roles, there may be pathways to qualify.

Foreign Income Exemptions Under TISRI

Foreign income exemptions still exist under TISRI, but they are:

• Narrower than those under NHR,

• More conditional on the income being taxed in the source country,

• Subject to treaty rules and Portuguese tax authority interpretation.

This means the generous “foreign income exemptions” that made NHR so appealing are now much more limited. Cross-border planning is essential to avoid unexpected Portuguese tax liabilities.

Key Takeaway

TISRI is not NHR 2.0. It’s a specialised regime for certain professionals, not a broad tax incentive for retirees or passive income earners.

If you’re a US retiree arriving in Portugal from 2024 onwards, your planning will likely rely on:

• Careful use of Portugal-US tax treaties,

• Smart structuring of income streams,

• And, where possible, professional guidance to ensure compliance and efficiency.

For those who do qualify, TISRI can still provide meaningful tax benefits, but it requires a more tailored approach than the broad NHR programme.

12. US Estate Planning in Portugal

For many American retirees moving to Portugal, estate and gift taxes are often overlooked until it’s too late. The reality is that both US and Portuguese rules may apply simultaneously, and understanding how they interact is essential to avoid unnecessary tax exposure and family disputes.

US Worldwide Estate & Gift Tax Rules

The United States applies estate and gift tax on a worldwide basis to US citizens, regardless of where they live. This means moving to Portugal does not remove you from the US tax net.

Key rules to be aware of in 2025 include:

• $13.99 million federal estate tax exemption per person. This is indexed annually, but scheduled to drop back to pre-2018 levels (c. $5–6 million) in 2026 unless Congress acts. Large estates should plan accordingly.

• Step-up in basis applies at death for US-situs assets, resetting capital gains to market value and potentially reducing future tax for heirs.

• Gift tax annual exclusion of $19,000 per recipient allows lifetime wealth transfers without using up the lifetime exemption. Married couples can effectively double this amount through gift splitting.

• No automatic marital deduction applies for non-US citizen spouses. Without a Qualified Domestic Trust (QDOT), gifts or bequests to a non-US spouse may trigger immediate estate tax.

• Trusts and foreign entities often trigger reporting on Forms 3520 and 3520-A. Failure to file can result in severe penalties, often a minimum of $10,000 per missed form.

Trust planning for Americans is complex. US tax law generally treats foreign trusts punitively, taxing undistributed income heavily and imposing complex reporting obligations. However, when properly structured - for example, with a fully compliant foreign grantor trust or an irrevocable discretionary trust with clear beneficiary designations - they can still be effective tools for asset protection and succession planning.

Portugal’s Estate & Forced Heirship Rules

Portugal’s system is very different from that of the United States. It’s a civil law jurisdiction with its own quirks:

• No Portuguese estate tax applies to non-Portuguese assets for individuals who are not domiciled in Portugal. This can be a valuable planning opportunity for US citizens structuring their estates internationally.

• However, Portugal applies forced heirship rules, which automatically allocate fixed portions of the estate to certain family members (e.g., spouses, children, parents), regardless of the will.

• To avoid forced heirship for foreign assets, a will can elect US law as the governing law of the estate under the EU Succession Regulation (Brussels IV). This must be done clearly and correctly in the will to be legally valid.

For example, without such an election, your Portuguese-situated assets could be distributed according to Portuguese civil code rules, which may not match your intentions - especially in blended families or second marriages.

Why This Matters

Without proper cross-border estate planning, American retirees in Portugal can face:

• Double taxation between US estate tax and Portuguese succession law.

• Loss of control over asset distribution due to forced heirship.

• Heavy penalties for non-reported foreign trusts or gifts.

• Liquidity issues for heirs forced to pay taxes before inheriting.

These are not theoretical problems - they happen frequently when families rely on domestic wills alone, or follow internet “finfluencer” advice that doesn’t reflect the IRS Code or Portuguese civil law.

Practical Tips for Effective Planning

• Draft a will in both jurisdictions, or a single will that elects US law under Brussels IV, reviewed by both US and Portuguese counsel.

• Review trust structures carefully. Many popular international trust jurisdictions (e.g. Cayman, Cook Islands) work well, but only if properly reported and structured with the correct beneficiaries.

• Use lifetime gifting strategically to reduce future estate tax exposure while respecting annual exclusions and QDOT rules where applicable.

• Coordinate advisors: tax attorney, financial planner, and Portuguese notário should all be aligned.

• Plan early - once incapacity or death occurs, your options shrink dramatically.

A Final Word

Estate and gift tax rules are among the most complex and punitive in US tax law, and Portuguese

succession rules can clash with them. This is not an area where “winging it” works. Proper structuring can save your family hundreds of thousands - sometimes millions - of dollars in tax and legal fees, and avoid painful inheritance disputes.

13. Conclusion

Portugal truly is one of the most attractive destinations in the world for American retirees. With its warm climate, excellent healthcare, lower cost of living, and welcoming culture, it’s easy to see why so many are choosing to spend their retirement years here.

However - and this is a crucial “however” - the move requires careful tax and financial planning. The interaction between the US tax system and Portuguese rules can be complex, and small oversights can quickly snowball into expensive problems. FATCA, FBAR, double taxation, estate tax, and forced heirship rules are not exactly topics for a light Sunday read, but understanding them is essential if you want to protect your wealth and give your family peace of mind.

The good news is that with the right planning, you can enjoy everything Portugal has to offer without falling foul of the IRS or the Autoridade Tributária. Thoughtful structuring can optimise your tax position, streamline reporting, and safeguard your estate for future generations - all while letting you focus on the important things, like finding the best pastéis de nata in Lisbon.

If you’re considering retiring in Portugal, the smartest step you can take is to work with an experienced US–Portugal cross-border wealth planner. This is precisely what I specialise in. Having lived between the UK and Portugal for most of my life, and being fully qualified and regulated across multiple jurisdictions, I help globally mobile families navigate these complex systems confidently and efficiently.

👉 Book a consultation with me today to discuss your situation in detail and build a robust plan for your future.

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With proper planning, you can have the best of both worlds: a beautiful retirement in Portugal and a fully compliant, tax-efficient financial strategy.

Frequently Asked Questions - Retiring in Portugal as a US Citizen

1. Can US citizens retire in Portugal easily?

Yes, many Americans retire in Portugal each year. As long as you meet the visa and residency requirements (e.g. D7 or Golden Visa), the process is quite straightforward. The key is proper planning for tax, healthcare, and residency paperwork.

2. Do Americans need a visa to retire in Portugal?

Yes. Most retirees use the D7 Passive Income Visa, which allows individuals with sufficient income or savings to live in Portugal. Some opt for the Golden Visa, though the investment routes have changed recently - there is a 500,000€ minimum though.

3. How much money do I need to retire in Portugal comfortably?

It depends on your lifestyle and location, but most US retirees live comfortably on $2,500-$4,000 per month. Coastal cities like Lisbon and Cascais are more expensive, while rural areas and smaller towns offer better value.

4. Is my US pension taxable in Portugal?

This depends on the type of pension and the US-Portugal tax treaty. Generally, IRA/401(k) withdrawals are taxable in the US but may be declared in Portugal for treaty relief. Social Security is usually taxed only in the US, but you must still report it in Portugal. Some accounts are left ambiguous in the Dual Taxation Agreement, and careful planning is required with a Portuguese CPA.

5. Will I be taxed twice - in the US and Portugal?

No, not if you structure things correctly. The Portugal-US Double Taxation Treaty prevents double taxation, but you must file returns in both countries and claim Foreign Tax Credits or use exclusions.

6. Do I have to file US taxes if I live in Portugal?

Yes. US citizens are taxed on worldwide income, no matter where they live. You must continue filing annual IRS returns, including FATCA and FBAR forms, if applicable.

7. What is FATCA and why does it matter in Portugal?

FATCA (Foreign Account Tax Compliance Act) requires foreign banks to report US clients’ financial accounts to the IRS. Some Portuguese banks are reluctant to work with Americans due to the extra reporting burden.

8. Do I need to report my Portuguese bank accounts to the US?

Yes. If the combined balance of your foreign accounts exceeds $10,000 at any point in the year, you must file an FBAR (FinCEN 114). Form 8938 may also apply if balances exceed higher thresholds.

9. Can I keep my US bank accounts after moving to Portugal?

Yes, many expats keep their US accounts open for convenience, Social Security payments, and investment income. Make sure your bank allows foreign residency, and update your contact details.

10. Can I keep my US investment accounts (e.g. Schwab, Fidelity)?

Yes, some US brokers such as Schwab International and Fidelity support Americans living abroad. Others may restrict services once you change address to Portugal. It’s wise to update your brokerage before moving.

11. Are Portuguese investment funds a good option for US citizens?

Usually not. Most Portuguese funds are treated as PFICs (Passive Foreign Investment Companies) by the IRS, which triggers punitive US tax treatment. It’s best to avoid these unless carefully structured.

12. Can I buy real estate in Portugal as an American retiree?

Absolutely. There are no restrictions on foreigners buying property. However, be aware of high transaction costs, bureaucracy, and recent price inflation in coastal cities.

13. Is Portugal’s healthcare good for retirees?

Yes. Portugal has a solid public health system (SNS) and excellent private care, often at a fraction of US prices. Many expats choose private insurance for faster access and English-speaking doctors.

14. Do I need to speak Portuguese to live in Portugal?

In major cities (Lisbon, Porto, Cascais, Algarve), English is widely spoken. However, learning basic Portuguese will greatly improve your experience and integration, especially for dealing with bureaucracy.

15. Can I get Portuguese citizenship through residency?

Yes. After 5 years of legal residency, you can apply for citizenship, provided you meet language and integration requirements. Dual citizenship is allowed for Americans. This may be changing to 10 years with the new law proposed in 2025.

16. What happens to my US estate when I live in Portugal?

The US applies worldwide estate and gift tax, with a $13.99m exemption (2025). Portugal doesn’t apply estate tax to non-Portuguese assets for non-domiciliaries, but forced heirship rules may apply unless you elect US law in your will.

17. Are trusts useful for US expats in Portugal?

They can be, but with caution. US trusts often trigger complex IRS reporting (Forms 3520/3520-A), and Portuguese tax treatment can be unpredictable. Proper legal and tax advice is essential.

18. What are the main mistakes US retirees make when moving to Portugal?

• Not understanding FATCA/FBAR obligations

• Investing in PFICs accidentally

• Buying property too quickly without due diligence

• Poor estate planning for forced heirship rules

• Assuming Portuguese bureaucracy works like the US (it doesn’t)

19. Do Americans pay capital gains tax in Portugal?

Yes, but it depends on the asset. Portuguese residents pay tax on worldwide capital gains, though exemptions apply (e.g. main home sales). US reporting still applies too.

20. Is the Portugal NHR scheme still available?

NHR closed to new applicants after Dec 2023. Transitional rules apply for existing beneficiaries, who keep their 10-year benefits. The TISRI regime replaced it in 2024 with narrower exemptions.

21. What is the TISRI regime?

TISRI offers a flat 20% tax on eligible Portuguese income for 10 years, aimed at skilled professionals and returning Portuguese citizens. Foreign income exemptions exist but are stricter than NHR.

22. Can I use Medicare in Portugal?

No, Medicare generally doesn’t cover treatment abroad. Most retirees use private insurance or pay out of pocket for care, which is often cheaper than in the US.

23. What if my spouse is not a US citizen?

Special rules apply for estate tax (no automatic marital deduction without a QDOT), and you can choose to file jointly or separately depending on tax efficiency.

24. Are there good international schools in Portugal for grandchildren?

Yes, Portugal has many excellent international schools, particularly in Lisbon, Cascais, and the Algarve, offering American, British, and IB curricula.

25. What’s the best place in Portugal for US retirees?

Popular areas include Lisbon (cosmopolitan), Cascais (expat community), Porto (historic charm), and the Algarve (sunshine and golf). Each has its pros and cons depending on lifestyle and budget.