Moving to Portugal: A Complete Guide for Digital Nomads
In 2022, it’s never been easier to become a digital nomad or a worker who leverages technology to travel worldwide. This is, in part, thanks to the rise of remote work, which is offering more and more people the opportunity to work from home or travel while living overseas.
Portugal, in particular, has become a hub for digital nomads. In fact, Forbes named it as one of the best places to relocate to post Covid-19. After all, with a great quality of life, exotic landscapes, and a perfect climate, what’s not to love?
Even further, Portugal recently announced the launch of its very own digital nomad visa – making the opportunity to explore that much more accessible.
Considering a move abroad? Curious if Portugal is the right fit? This article covers all the essentials! Here’s a quick look at what questions we’ll answer:
- Why move to Portugal?
- What are the best places in Portugal for digital nomads?
- What is Portugal’s Digital Nomad Visa?
- How do I apply for Portugal’s Digital Nomad Visa?
- Will digital nomads have to pay taxes in Portugal?
Why move to Portugal?
Digital nomads have been flocking to Portugal for quite some time. The country offers expats a high quality of life and has a relatively low crime rate.
Portugal is known for its year-round, warm climate and beautiful landscapes – from beaches to crater lakes. In fact, Portugal was voted the “Best Tourist Destination in Europe” for the fifth time in a row at the 2022 World Travel Awards.
Portugal also offers a low cost of living – 33% lower than the US. Residents also have access to an excellent healthcare system.
What are the best places in Portugal for digital nomads?
So you’re a digital nomad. You’ve decided to move to Portugal. An appropriate next question to consider… which city is best for you?
Here’s a quick list of the most common destinations for nomads:
Portugal’s capital city, Lisbon, is a go-to. Also known as the City of Seven Hills (appropriately nicknamed because of its surrounding hills and breathtaking vistas), Lisbon is also scattered with exotic beaches on the outskirts of town.
It’s a popular spot for startups and is very business-friendly – especially in neighborhoods such as Avenidas Novas, Alvalade, and Bairro Alto.
Porto is another popular city for digital nomads less than two hours south of Spain. The city is known for its Arrábida Bridge. This national monument crosses the Douro River, and quaint wine houses are tucked away on the banks.
Nomads are commonly drawn to the neighborhoods of Foz do Douro and Ribeira.
📍 Madeira Islands
This peaceful Portuguese archipelago is the ideal location for digital nomads looking for a more laid-back lifestyle. The archipelago consists of four key islands: Madeira, Desertas, Selvagens, and Porto.
The Madeira islands are surrounded by enchanting waters and offer a mild climate all year round. It’s also an excellent location for digital nomads who are into more adventurous hobbies, such as diving, snorkeling, surfing, and windsurfing.
What’s Portugal’s Digital Nomad Visa?
Does Portugal feel like the right fit? Then now it’s time to consider the logistics.
In the past, digital nomads who wanted to become residents of Portugal had to go through the country’s D7 visa, or “passive income” visa. To qualify for the program, you had to prove to have a yearly pension or income equivalent to €8,460 ($8,278.36 USD).
Note: You must prove an additional 50% of this amount for a spouse and 30% for each dependent child.
Breaking news… Portugal just announced the launch of its long-awaited digital nomad visa, which officially becomes available on October 30, 2022. The visa will allow digital nomads to live and work in Portugal for up to a year. A further bonus: it will allow visa-free access to 26 European countries in the broader Schengen area.
To qualify for Portugal’s Digital Nomad Visa, you’ll need to prove you have a monthly income that’s four times the minimum wage in the country. In USD, that adds up to around $2,750 USD per month (€2,811.26)
How do I apply for Portugal’s Digital Nomad Visa?
To apply for Portugal’s digital nomad visa, you’ll have to go to Portugal’s immigration agency Serviço de Estrangeiros e Fronteiras, or the Portuguese consulate in your own country.
Next, you’ll have to show proof of income for the last three months and a contract of employment or self-employment and tax residency documents.
Once approved, you’ll be able to stay and work in Portugal for up to one year. If you would like to stay longer, you can then apply for a residency permit after your one-year stay that you can renew for up to five years.
Will digital nomads have to pay taxes in Portugal?
Actually yes. As a resident of Portugal, you will be subject to local tax reporting rules. And if you’re a US passport holder, you won’t just have to report your income to Portugal. You’ll also have to declare your worldwide income to the IRS, even if you don’t live in the US anymore.
That’s because the US applies citizenship-based taxation. Under this taxation system, US expats must file a US tax return, regardless of where they live, to declare their worldwide income.
And because of the Foreign Account Tax Compliance Act (FATCA), Portuguese banks are obligated to report the financial activities of their American clients to the States.
However, fear not — this doesn’t mean you’ll be paying taxes twice on the same income! The IRS has various tax relief programs, such as the Foreign Tax Credit (FTC) and Foreign Earned Income Exclusion (FEIE), to reduce your US tax liability, often to zero.
Read More: What is Citizenship-Based Taxation?
Moving to Portugal? Let Us Help With Your Digital Nomad Taxes!
Is moving to Portugal the right choice for you as a digital nomad? If so, here’s a quick checklist you can follow to prepare for your move to Portugal properly:
- – Research Portuguese cities: To make the right decision before arriving, research which Portuguese city best fits your expectations and lifestyle.
- – Prepare all of your documents: Make sure you have proof of income from the last three months! Also ensure you have a contract of employment or self-employment. Also, ensure that you meet the minimum monthly income requirement of at least $2700/month.
- – Prepare for tax season: You’ll still need to file a US tax return while living in Portugal to declare your worldwide income. To save yourself time, you can hire a US expat tax advisor to handle all the required paperwork for you and stay compliant.