Retirement in Spain vs. Portugal: Visas, Taxes, & More

In recent years, Portugal and Spain have become popular retirement destinations. It’s easy to see why — both countries boast rich cultures, natural beauty, great weather, and dedicated retirement visas. But when it comes to retiring in Spain vs. Portugal, which option should you choose? 

To help you decide, we’ve put together a high-level guide to retirement in the two different countries. Read on for side-by-side comparisons of both Spain and Portugal, taking into account factors like quality of life, cost of living, residency options, tax implications, and more.

Retiring in Spain

Expats flock to Spain for its sunny weather, relaxed pace of life, and safety. Popular pastimes include going out for tapas, exploring beach towns and historical villages, cheering for the local fútbol team, and playing pádel (a sport similar to pickleball).

A few potential drawbacks of living in Spain include a tough job market, relatively low English proficiency, and bureaucracy, but most expats find the pros outweigh the cons.

Cost of living

Spain’s cost of living is significantly lower than that of the US — 29.7% lower, by some estimates. Of course, expenses vary by location and lifestyle. Rural areas with lower populations tend to be cheaper, while cities and areas popular among tourists tend to be more expensive. 

In general, couples can live comfortably on about €2,000 (~$2,216) to €2,200 (~$2,438) per month.

Below are country-wide averages for some common expenses in Spain:

• 1 BR apartment rent: €956 (~$1,055) in city center; €720 (~$795) outside 
• 3 BR apartment rent: €1,491 (~$1,645) in city center; €1,053 (~$1,162) outside
• Utilities: €132.91 (~$146.70)
• Gym membership: €39.08 (~$43.13) 
• Mid-range, 3-course meal for 2: €50 (~$55.18)

Residency & visas

Spain’s most popular visa for retirees is the non-lucrative visa. Investors may be interested in Spain’s golden visa, while remote workers may want to consider the digital nomad visa.

The main requirement for the non-lucrative visa is to earn at least 400% of Spain’s Public Income Indicator for Multiple Effects (IPREM) in passive income per month. Currently, this is equal to:

• €2,400 (~$2,653) per month/€28,800 (~$31,832) per year — or the equivalent in savings for the duration of your visa
  • To bring family members with you, you must earn an additional 100% IPREM, currently equal to €600 (~$663) per month/€7,200 (~$7,958) per year 

Upon approval, the visa lasts for one year. Afterward, you can extend it for two more years if you continue to meet the qualifications. When that period ends, you can extend the visa once more for an additional two years. After five years of living in Spain total, you can apply for permanent residency. Five years after that, you can apply for citizenship.

After applying for the visa, you’ll typically hear back within three months. That said, gathering all of the required documentation can take time.

Tax implications of living in Spain

Those who spend over 183 days in Spain, maintain financial interests in Spain, or live in Spain with a Spanish spouse or dependent children qualify as Spanish tax residents. As such, they are subject to taxation on their worldwide income — including foreign retirement income. 

Residents pay taxes at two different rates:

• General income: 19% to 47%, depending on overall taxable income
  • Applicable to employment income, retirement income, rental income, etc.
• Savings income: 19% to 28%, depending on overall taxable income
  • Applicable to capital gains income, dividends, interest income, etc.

Non-tax residents, on the other hand, pay taxes only on Spanish-sourced income at the following rates:

• Retirement income: 8% to 40%, depending on overall taxable income
• General income: 24%
• Capital gains, interest, & dividends: 19%
• Royalties: 24%

Healthcare

Spain has a great healthcare system that’s significantly more affordable than that of the US. In 2023, it was named #26 on the Legatum Institute’s ranking of global health systems. 

The public healthcare system (aka el Sistema Nacional de Salud, or SNS) provides low-cost, high-quality coverage to Spanish taxpayers. Quality can vary somewhat by location, with more modern facilities and extensive treatment options generally found in bigger cities and more affluent areas. Wait times can also sometimes be long, especially for specialists. 

As a result, many expats choose to supplement their SNS coverage with private insurance. Premiums vary according to factors like your age and general health but can cost as little as $56 per month. Popular private insurers in Spain include Sanitas, MAPFRE, and Adeslas.

Real estate & housing

Unlike some foreign countries, Spain has no restrictions on foreigners owning property. 

Expats can browse popular Spanish real estate websites like Idealista and Fotocasa or choose to work directly with a real estate agent. Alternatively, you can work with a real estate firm. International firms (e.g. Sotheby’s, Engel & Völkers, RE/MAX) often have English-speaking agents.

Real estate prices in Spain have increased in recent years, but are still generally lower than they are in the US. The average price per square meter for an apartment is:

• €3,550 (~$3,933) in city centers
• €2,091 (~$2,316) outside of city centers

Some of the hottest destinations for retirees in Spain include:

• Costa del Sol: A stretch of Andalusian coastline known for its stunning beaches, friendly locals, flamenco dancing, and fresh seafood
• Madrid: The bustling, cosmopolitan capital city of Spain, where culture (think: fine art museums, theaters, Michelin-starred restaurants) abounds
• Valencia: A relaxed but thriving seaside city home to paella, lively festivals, and a charming historical quarter

Retiring in Portugal

Portugal offers many of the same benefits as Spain: great weather, beaches, large expat communities… That said, there are still subtle differences. According to the Global Peace Index, Portugal is the seventh-safest country in the world — making it even more secure than Spain (#23), although both significantly outrank the US (#132). A few other differences:

• Portugal generally has a higher level of English proficiency than Spain
• Some consider the Portuguese to be more reserved than their Spanish neighbors
• Due to its Mediterranean coastline, Spain has warmer waters than Portugal
• Spain’s economy and job market are generally stronger than Portugal’s

And of course, Portugal has its own distinct culture and vibe. Compared to Spain, the Portuguese speak português instead of castellano; nosh on pasteis de nata (custard tarts) and bacalhau à brás (flaked salted cod with scrambled egg) instead of tapas; listen to fado instead of flamenco music; and have Manueline vs. Moorish architecture. 

Cost of living

By some estimates, Portugal’s cost of living is about 33% lower than that of the US, making it even more affordable than Spain. Just as in Spain, costs are higher in big cities and areas popular with tourists. Still, couples can get by on about $2,100 to $2,200 per month in a big city like Lisbon, or as little as $1,700 a month in more insular areas.

Below are country-wide averages for some common expenses in Portugal:

• 1 BR apartment: €958 (~$1,062) in city center; €732 (~$811) outside
• 3 BR apartment: €1,698 (~$1,881) in city center; €1,232 (~$1,365) outside
• Utilities: €115.90 (~$128.39)
• Gym membership: €37.03 (~$41.02)
• Mid-range, 3-course meal for 2: €40 (~$44.31)

Residency & visas

Portugal’s go-to retiree visa is the D7 visa. Like Spain’s non-lucrative visa, this visa is for those who earn enough in passive income — or have enough in savings — to financially support themselves. Portugal also offers a golden visa and a digital nomad visa.

The minimum income requirements for Portugal’s D7 visa are significantly lower than the ones for Spain’s non-lucrative visa. D7 visa applicants only need to bring in:

• €760 (~$842) per month/€9,120 (~$10,102) per year, or the equivalent in savings for the duration of your visa
  • Bringing a spouse requires an extra 50%, while a child requires an additional 30%

Once granted, the D7 visa lasts one year and can be extended for two years at a time. After five years, you can apply for Portuguese permanent residence or even citizenship if you take and pass the naturalization exam. Portugal’s D7 visa usually takes about four months to process but again, putting your application together takes some time in itself.

Tax implications of living in Portugal

The Portuguese government defines tax residents as anyone who:

• Stays in Portugal for over 183 days per year (consecutive or not) within a 12-month period starting or ending in the fiscal year, OR
• Maintains a habitual residence in Portugal at any time within a 12-month period starting or ending in the fiscal year

Like in Spain, Portuguese tax residents pay taxes on their worldwide income, which includes foreign retirement income. Tax rates for residents vary from 13.25% to 48%, depending on overall income.

Non-tax residents pay taxes only on Portuguese-sourced income at a flat rate of 25%.

Healthcare

Portugal also offers high-quality, affordable healthcare. At #40 on the Legatum Institute’s ranking of global health systems, it ranked slightly lower than Spain’s (#26) but significantly higher than the US (#69).

Portugal’s public healthcare system is called the Serviço Nacional de Saúde, or SNS (just like Spain’s). All residents have access to low-cost care through the SNS, although those with D7 visas must purchase private insurance until they receive their residence card. Again, healthcare quality is usually best in urban and affluent areas.

Besides being mandatory for the D7 visa application, private healthcare generally offers policyholders access to more modern facilities and shorter wait times. Monthly premiums can be as low as €20 (~$22.16) to €50 (~$55.40) depending on your age and health. Some of Portugal’s most prominent private insurers include Multicare, Tranquilidade, and MGEN.

Real estate & housing

Like Spain, Portugal has no restrictions on foreigners owning housing. Real estate prices have dramatically increased in recent years after an influx in foreign investors. Still, prices are much lower than in the US and on par with those in Spain. 

The average price per square meter for an apartment in Portugal is:

• €3,457 (~$3,832) in city centers
• €2,317 (~$2,568) outside of city centers

Idealista is also a popular real estate website in Portugal, as are Casa Sapo and Imovirtual. Again, there are many international real estate firms like RE/MAX, Century 21, and Keller Williams, all of which employ many English speakers.

Portugal’s top retirement destinations include:

• El Algarve: Known for its stunning coastlines and quaint villages, Portugal’s southernmost region is the go-to destination for retirees  
• Lisbon: Portugal’s capital boasts colorful architecture, delicious cuisine, and historic neighborhoods
• Madeira: Located northwest of Morocco, this volcanic island has a pleasant climate year-round and an exquisite namesake wine

Spain vs. Portugal for retirement: a breakdown

	Spain	Portugal
Global safety ranking	#23	#7
Top destinations	Costa del SolMadridValencia	El AlgarveLisbonMadeira
Retirement visa income requirement	€2,400 per month	€760 per month
Monthly cost of living	About $2,200 – $2,450	About $1,700 – $2,200
Tax rates on US retirement income	Residents: 19% to 47%Nonresidents: Exempt	Residents: 13.25% to 48%Nonresidents: Exempt
Global healthcare ranking	#26	#40

US tax implications of retiring in Spain or Portugal

Unfortunately, moving abroad doesn’t release you of your US tax and reporting obligations. Whether you retire in Portugal vs. Spain (or any other country), you’ll likely have to file a US tax return. This is due to the US’s citizenship-based tax system, which requires all citizens and permanent residents who earn above a certain threshold to file, and potentially pay, US taxes.

While the US has tax treaties with both Spain and Portugal, they realistically provide few benefits to Americans abroad thanks to tricky clauses. Fortunately, Americans living overseas can claim many of the same tax breaks as they would in the US. There are even a few expat-specific tax breaks.

For American retirees abroad, the Foreign Tax Credit (FTC) can be particularly valuable. The FTC offers dollar-for-dollar US tax credits on any foreign income tax credits you’ve paid. In countries with higher tax rates than the US, like Spain and Portugal, this often not only eliminates your US tax bill but also gives you excess credits to use on future ones.

Keep in mind, moving abroad may trigger or change your reporting obligations. Expats commonly have to file the Foreign Bank Account Report (FBAR) and Form 8938.

Resources:

1. Cost of Living Comparison Between United States and Spain
2. How Much Money Do You Need to Retire in Spain?
3. Health and health systems ranking of countries worldwide in 2023
4. Global Peace Index 2024
5. Retire in Portugal 2024: A New Affordable Retirement
6. Cost of Living Comparison Between United States and Portugal
7. Portugal’s NHR 2.0 Tax Regime 2025