Living in Portugal: the financial decisions, in the order you have to make them
Last reviewed: 22 August 2026. Every figure below carries the date it applies to and the instrument it comes from. Where we could not confirm something from a government source, the article says so rather than filling the gap.
Information and education only
This article is information and education. It is not financial advice, and nothing in it is a recommendation to do, buy, transfer, sell or arrange anything. It does not take account of anyone's circumstances, because we do not know them.
Paratus Wealth is a cross-border financial planning firm. Nothing here is personal tax advice, and no figure in it is a calculation of anyone's liability. Some of what this article describes is not our work at all: a Portuguese income tax return is filed by a Portuguese contabilista, a Portuguese will is drawn by a Portuguese notary or lawyer, and the residence permit is a matter for AIMA and the Portuguese consulate. What we do is the financial planning that sits across all of those, and the cross-border reporting that goes with it: where income comes from, in which currency, in what order, and what it leaves behind.
Paratus Wealth does not offer services to residents of the United Kingdom.
Key takeaways
The D7 income requirement for 2026 is 920 euros per month for the first adult, set by reference to the Portuguese national minimum wage under Decreto-Lei n.º 139/2025 and confirmed by two Portuguese government bodies. It is indexed and it resets each January.
A second adult adds 50 per cent and each child adds 30 per cent, so a couple with no dependants needs 1,380 euros a month, or 16,560 euros a year, evidenced for at least 12 months.
The test is set in euros and a British pension is paid in sterling, so the exchange rate is part of the eligibility question. A person with 850 pounds a month clears 920 euros at 1.18 and does not at 1.07. Those are illustrative points, not a range we expect.
A new UK-Portugal Double Taxation Convention entered into force on 29 December 2025. It applies in Portugal from 1 January 2026 and to UK income tax from 6 April 2026. The 1968 Convention is finished except for income arising before those dates.
Under Article 17, private pensions, drawdown, occupational scheme pensions and the UK State Pension paid to a Portuguese resident are taxable only in Portugal. There is no separate social security article and no lump-sum carve-out.
Under Article 18(1), a UK government service or local authority pension stays taxable only in the UK, and moving to Portugal does not change that.
Portuguese state healthcare turns on legal residence, not on drawing a pension. There is no contributory condition. The trap is administrative, not legal: your patient record has to reach the status the state pays for.
Naturalisation now takes 10 years for a British citizen, following Lei Orgânica n.º 1/2026, in force 19 May 2026. Permanent residence remains at 5 years. The "five years to a Portuguese passport" line that appears across most published guidance is no longer right for a British reader.
Portugal has no inheritance tax and no wealth tax. It has a 10 per cent stamp duty on gratuitous transfers, from which spouses, children, grandchildren, parents and grandparents are exempt.
Leaving the United Kingdom does not end UK inheritance tax exposure. Since 6 April 2025 the test is long-term UK residence, and a person resident in the UK for 10 of the previous 20 tax years stays inside the net for up to 10 further tax years after departure.
What this article covers
By the end of it you will know: what the D7 asks for in 2026 and what it does not ask for, despite what is widely repeated; which treaty article governs each type of UK pension you hold; what actually happens to your access to Portuguese healthcare if you retire before State Pension age; roughly what a real British pension income pays in Portuguese tax, expressed as an effective rate rather than a top band; what happens to protection policies and ISAs that made sense in the UK; and how two inheritance systems overlap for a decade.
You will also find, in several places, a sentence saying we looked for something and did not find it. Those are deliberate. On a subject where most published material cites nothing, the boundaries of what is actually sourced are worth showing.
Contents
The eighteen months before you go
Can you qualify, and in which currency?
What you do with your pension before you land
Healthcare, and the thing it actually turns on
What your income will be, net, in euros
Everything that is not a pension
Your estate, in two countries
Currency as a discipline, not a transaction
If it does not work out
Frequently asked questions
Sources and disclaimer
1. The eighteen months before you go
The order of these decisions matters more than any single one of them, because several of them stop being available on a date rather than after a warning.
Most published guidance on Portugal falls into one of two halves. One half explains how to get in: the visa, the appointment, the tax number, the paperwork. The other half explains what it costs once you are there: the tax rates, the treaty, the filing. Very little of it joins the two, and the two are joined in practice. The residence visa timetable sets your arrival date. Your arrival date sets the day Portuguese tax residence begins. And Portuguese tax residence begins, under artigo 16.º n.º 3 of the Código do IRS, on the first day of the period of stay, not at the start of a tax year and not when you get round to registering.
That is the whole reason a sequence exists. Decisions that are freely available in month one are decided for you by month fourteen.
Four things changed recently, and most of what is currently published pre-dates them.
What changed | When it took effect | Instrument |
|---|---|---|
The UK-Portugal double taxation treaty was replaced | In force 29 December 2025; applies in Portugal from 1 January 2026 and to UK income tax from 6 April 2026 | 2025 UK-Portugal Double Taxation Convention, Article 28 |
The D7 income reference rose from 870 to 920 euros a month | 1 January 2026 | Decreto-Lei n.º 139/2025, de 29 de dezembro |
Naturalisation for a British citizen went from 5 years to 10 | 19 May 2026 | Lei Orgânica n.º 1/2026, de 18 de maio |
Most unused UK pension funds and death benefits come inside the UK inheritance tax estate | 6 April 2027 | Finance Act 2026, Royal Assent 18 March 2026 |
If you are reading a Portugal guide that does not mention the first of those, it was written against a treaty that no longer applies to your pension. That includes some very well-ranked pages, and it includes the UK government's own living-in-Portugal guidance, which still refers to "the double taxation agreement" without saying which one.
One more thing to settle early, because it governs which country taxes what in the year you move. Whether you remain UK resident for the whole of the tax year of departure is decided by the UK Statutory Residence Test, not by the date on your flight, and the split-year treatment a retiree usually needs is the one that turns on ceasing to have a home in the UK. A retiree who keeps a UK house often does not get it. If you are working through that, how the UK decides whether you are still resident is the longer explanation. The practical consequence is that a period of dual residence, UK for the tax year and Portuguese from the day you land, is the ordinary outcome rather than a mistake, and it is resolved by the treaty rather than avoided.
2. Can you qualify, and in which currency?
The D7 residence visa asks you to evidence passive income of at least 920 euros a month for 2026, for a minimum of twelve months, and the figure resets every January.
The 920 euros is the Portuguese guaranteed minimum monthly wage for mainland Portugal, set by Decreto-Lei n.º 139/2025 de 29 de dezembro and published by DGERT. The visa service at the Ministério dos Negócios Estrangeiros uses the same figure, net of social security contributions, as its means-of-subsistence reference. It rose from 870 euros, which was the 2025 figure and which is still what a great deal of published material, including at least one prominent automated answer, currently says.
The household multipliers are set by the visa service: 100 per cent for the applicant, 50 per cent for each additional adult, 30 per cent for each child or dependent adult child.
Table 1: D7 income requirement by household, 2026
Household | Per month, EUR | Per year, EUR | Per month, GBP | Per year, GBP |
|---|---|---|---|---|
One adult | 920 | 11,040 | 786 | 9,436 |
Two adults | 1,380 | 16,560 | 1,179 | 14,154 |
Two adults, one child | 1,656 | 19,872 | 1,415 | 16,985 |
Two adults, two children | 1,932 | 23,184 | 1,651 | 19,815 |
The euro figures are the requirement. The sterling column is illustration only, converted at 1 GBP = 1.17 EUR, approximately the level through mid-August 2026 on European Central Bank euro reference rates. It is a conversion, not a forecast, and it will be wrong by the time you apply.
The move nobody makes: the test is in euros and your income is in sterling
A single applicant with a UK pension of 850 pounds a month produces 1,003 euros at 1.18 and 909 euros at 1.07, two illustrative points rather than a forecast range. The threshold is 920. The same person, the same pension, the same paperwork, passes on one date and fails on another, and the break-even is around 1.082 euros to the pound. Nothing about them changed.
For a couple the exposure is larger in absolute terms. At 1,380 euros a month, the sterling cost of the same requirement is about 1,150 pounds a month at 1.20 and about 1,314 pounds at 1.05, a difference of roughly 1,970 pounds a year in what you must be able to show, driven by nothing you control. Those two rates are chosen to bracket the arithmetic, not to predict anything: no figure in this article is a forecast of any exchange rate.
Two practical consequences follow, and neither is a recommendation. The first is that headroom above the threshold is doing a job, and how much headroom is a decision rather than an accident. The second is that the same question arrives twice: at the initial application, and again at renewal, on a different date at a different rate.
What the D7 does not ask for, despite what is widely repeated
We read the official consular checklist in full (the MNE document dated 28 May 2025) and two things commonly stated about the D7 are not in it.
There is no proof-of-accommodation requirement listed for the retiree or own-income routes. Accommodation appears in the rules as a mechanism that can reduce the subsistence requirement, and on that checklist it is printed under a different applicant category. We could not establish whether that reduction is available to a D7 retiree, because the underlying portaria was not obtainable. So we are not telling you that securing accommodation halves your income requirement. Ask the consulate.
No Portuguese government source we opened states a savings or bank-balance threshold. The frequently repeated claim that you must hold twelve months of income in a Portuguese account was not substantiated by anything we could read. What the checklist requires is proof of income for at least twelve months, and proof that the income is available in national territory. A Portuguese bank account is a practical necessity for the second of those. A minimum balance is not something we can source.
Stated processing time for the visa is 60 days, per the Portuguese government services portal. On what happens after arrival, AIMA's own website was unreachable across two research passes, so we are publishing nothing about appointment waits or permit processing times. Anyone who quotes you a number for that is quoting somebody else.
The citizenship timeline changed in May, and for a British citizen it doubled
Lei Orgânica n.º 1/2026 came into force on 19 May 2026 and raised naturalisation to 7 years for nationals of Portuguese-speaking countries and EU member states, and 10 years for everyone else, which includes British citizens. Periods of legal residence are added together within a maximum 12-year window. Permanent residence is unchanged at 5 years of temporary residence.
Applications already pending on 19 May 2026 continue under the previous law. But "five years to a Portuguese passport", which is still the standard line across this subject, is now wrong for a British reader by five years, and if a passport timeline is load-bearing in your thinking it is worth knowing that before rather than after.
3. What you do with your pension before you land
Which country taxes your pension is decided by which article of the 2025 Convention it falls under, and that is decided by who paid for it, not by where you live.
Table 2: pension type to treaty article
What you hold | Article | Where it is taxable | Note |
|---|---|---|---|
Personal pension, SIPP, drawdown | Article 17 | Portugal only | The UK gives up the taxing right |
Private sector occupational scheme | Article 17 | Portugal only | |
UK State Pension | Article 17 | Portugal only | There is no separate social security article in this Convention |
Civil service, local authority, police, fire, armed forces pension | Article 18(1) | UK only | Paid by or out of funds created by the State or a local authority for services rendered to it |
NHS pension | Article 18, but fact-sensitive | Needs individual checking | See below |
Article 17 reads, in the Convention's own words: "Subject to the provisions of paragraph 1 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State, shall be taxable only in that State."
We checked the Convention and its Protocol specifically for a social security provision, a source-state right over pensions, or a lump-sum carve-out. There is none. That is worth stating because it is counter-intuitive: the UK State Pension is paid gross by the DWP and is taxable only in Portugal for a Portuguese resident.
Article 18(1) is the exception and it is where published guidance most often goes wrong. A retired civil servant, police officer, firefighter, local-authority teacher or armed forces veteran keeps their pension inside UK taxation, and moving does not change it. The proviso in Article 18(1) does not rescue them either: it bites only where the individual is not a national of the paying State but is a national of the other one. A British citizen who has not naturalised in Portugal is a national of the paying State, so the proviso is not engaged. That last point becomes live again if Portuguese citizenship is ever taken, which, as above, is now a ten-year road.
On NHS pensions there is no general answer. Whether an NHS pension is government service for treaty purposes turns on the employing body and on Article 18(2), which applies Articles 14 to 17 to services rendered in connection with a business carried on by a State or local authority. We did not research HMRC's position on NHS pensions under the 2025 Convention, so we are not stating one. It is a question to put to a tax adviser with your scheme paperwork in front of them, and it is not a question with a general answer.
In practice, where Article 17 gives Portugal the exclusive right, a UK payer will usually keep deducting PAYE until HMRC issues an NT code following a treaty claim. We have not published the form number or the process, because we did not fetch it.
The lump sum, and the date that fixes how it is treated
Two things about a lump sum are firmly established. What it costs is not one of them.
Two things are firmly established. First, under Article 17 the UK has given up the taxing right over a pension paid to a Portuguese resident, and there is no lump-sum exception anywhere in the Convention or the Protocol. Second, Portuguese law does not recognise the UK's tax-free characterisation. CIRS artigo 11.º n.º 2 says, in terms: commutation or any other form of early availability of pension income "does not change its nature as a pension". So a UK pension commencement lump sum taken by a Portuguese tax resident is, in Portuguese law, category H pension income.
What it costs is a different question, and it is the one we cannot answer responsibly. Relief may be available under CIRS artigo 54.º, which separates the capital element from the income element and, where the two cannot be identified separately, deducts a fixed proportion. But artigo 54.º carries exclusions at n.º 3 and n.º 4 which look, on their face, capable of applying to a UK scheme funded by employer contributions and by tax-relieved member contributions. We searched for a published binding ruling from the Autoridade Tributária applying artigo 54.º to a UK pension lump sum. We did not find one.
So: we can tell you that the timing of a lump sum relative to your change of residence is the decision, and that the decision is fixed by a date rather than by a preference. We are not going to publish a percentage or a worked figure for it, because to do that we would have to guess at the one thing nobody has settled, and this is a payment you get to make once.
If a transfer is part of your thinking rather than a drawing decision, the overseas transfer charge position also changed in a way that is still widely misreported. From 30 October 2024 the EEA and Gibraltar exclusion from the charge was removed, so a transfer to an EEA-based QROPS attracts the 25 per cent charge unless the member is resident in the same country as the scheme. Transitional protection is narrow: the transfer had to be requested before 30 October 2024 and completed before 30 April 2025. This is not an allowance question and it does not turn on the size of the pot. The full explanation is in SIPP or QROPS, and what October 2024 changed.
The broader keep-or-move question is the one most published material skips altogether, and it is a genuine question rather than a foregone conclusion: a UK scheme left where it is may be the right answer, and for some people it is. Working out which, on your own scheme and your own timetable, is part of what a cross-border retirement planning conversation is for.
4. Healthcare, and the thing it actually turns on
Access to the Portuguese state health service turns on legal residence, not on age and not on drawing a pension. A British person holding a valid Portuguese residence permit is a beneficiary of the Serviço Nacional de Saúde on the same footing as a Portuguese citizen. That is the position under Base 21 of the Lei de Bases da Saúde, applied by artigo 4.º n.º 1 of the Estatuto do SNS (Decreto-Lei n.º 52/2022), and it is set out in those terms by the Portuguese health regulator, the ERS.
There is no contributory condition. You do not need to have paid into Portuguese social security, and being retired and economically inactive does not change your position. The regulator's wording is that financial responsibility is assumed by the SNS for a qualifying record "independently of benefit from any public subsystem".
This matters most for a specific group that the rest of the internet leaves hanging: people retiring before UK State Pension age. Almost every guide explains the S1 route, which requires you to be drawing a UK State Pension, and then simply stops. The implication a reader takes away is that an early retiree is locked out of the state system and dependent on private cover indefinitely. On the sources above, that is not the position.
The trap, and it is administrative rather than legal
Getting a número de utente, a patient number, is not the same as getting the state to pay. Your record in the national patient register takes a type, and the type decides who bears the cost.
To reach "registo atualizado", the category the SNS pays for, your record needs an identification document, which for a foreign national means a valid residence permit, a Portuguese NIF, and a complete address in Portugal. Below that status, the regulator's own wording is blunt: registration in the register "does not mean that the SNS will assume all the costs", and an incomplete record means the SNS does not assume them and you cannot enrol in primary care at all. A provisional record lasts a maximum of 180 days before it lapses into an incomplete one.
So the practical sequence is: residence visa, then AIMA residence permit, then NIF, then present yourself at the health centre for your area with permit, tax number and address, then enrolment in primary care. Enrolment makes you eligible for a family health team; assignment of a family doctor depends on vacancies, which is true for Portuguese citizens too and is not an expatriate rule.
What it costs to use
Since June 2022, user charges in the Portuguese state system apply in one situation only: attending a hospital emergency department without having been referred there first. If you were referred, or if the visit results in admission, there is nothing to pay. Consultations, tests and hospital care are not charged.
The amount for an unreferred emergency attendance is roughly 14 to 18 euros depending on the type of unit, plus up to 40 euros for tests carried out during that attendance. Those figures come from Portaria n.º 64-C/2016 as published by ACSS; we could not confirm whether they were uplifted for 2026, so treat them as the order of magnitude rather than as this year's tariff.
Being a pensioner is not an exemption category. It has not been for years, and it does not appear on the current list. Since 2022 there is very little left to be exempt from.
The S1, and the absence of a rescue route
If you are drawing a UK State Pension, the S1 is a genuinely useful thing and the application process has changed. You can now apply online, up to 90 days before you move, using a temporary address in Portugal if that is all you have, and you can ask for it to be sent to a UK address so that it can go into your visa file. It has to be registered with the Portuguese authorities once you arrive; it is not automatic. It does not cover private treatment.
Portugal's own visa guidance recognises it: the note against the travel insurance requirement for national residence visas names the United Kingdom S1 as an example of an arrangement that can displace that requirement.
For someone retiring before State Pension age, there is no other UK benefit that produces an S1 in practice. Disability Living Allowance, Personal Independence Payment, Carer's Allowance and Attendance Allowance have not generated a new S1 since 1 January 2021. The routes that remain, posted workers, Maternity Allowance and certain bereavement benefits, do not describe a retiree. That person's route is Portuguese legal residence and the SNS, as above.
Private cover, stated carefully
The health insurance a D7 applicant is asked for is part of the visa file. Portugal's own guidance frames it as travel insurance covering urgent medical care and repatriation, tied to the application. None of the Portuguese government guidance on residence permits or renewals that we were able to access imposes a continuing obligation to hold private medical insurance once you are resident. We put it that way rather than flatly, because the permit statute itself, Lei n.º 23/2007, could not be opened from any government source across two research passes.
Many people hold private cover anyway, for speed of access, for dental, which the state service does not usually cover, or for the gap between arrival and a completed record. That is a preference with a price attached, not a legal requirement, and it is worth knowing which of the two you are buying.
One smaller point: a Portuguese-issued European Health Insurance Card additionally requires registration with Segurança Social. We did not verify whether an economically inactive resident can register voluntarily for that purpose, so we are not describing a route for it.
5. What your income will be, net, in euros
Portuguese income tax on pension income runs on the ordinary progressive scale, and the effective rate a British retiree actually pays is a long way below the top band that gets quoted.
There is no shelter, so the number below is the number
The long version of the regime question is elsewhere. In short: the non-habitual resident regime closed to new entrants, and its successor, IFICI, created by artigo 263.º of Lei n.º 82/2023, is a regime for researchers, highly qualified employees and startup staff whose foreign-income exemption expressly carves pensions out: in the tax authority's own words, exemption from IRS "except in the case of category H income", and pension income is category H. If you want the detail on which of the three possible positions you are in, what the end of NHR means in practice sets it out in full.
Table 3: Portuguese IRS bands for 2026
Artigo 68.º n.º 1 of the CIRS, as amended by Lei n.º 73-A/2025 de 30 de dezembro, the State Budget for 2026.
Taxable income, EUR | Normal rate, column A | Average rate, column B |
|---|---|---|
Up to 8,342 | 12.50% | 12.500% |
8,342 to 12,587 | 15.70% | 13.579% |
12,587 to 17,838 | 21.20% | 15.823% |
17,838 to 23,089 | 24.10% | 17.705% |
23,089 to 29,397 | 31.10% | 20.579% |
29,397 to 43,090 | 34.90% | 25.130% |
43,090 to 46,566 | 43.10% | 26.472% |
46,566 to 86,634 | 44.60% | 34.856% |
Above 86,634 | 48.00% |
The mechanism at artigo 68.º n.º 2 is not the UK's. Taxable income above the first bracket is split in two: the part equal to the ceiling of the largest bracket that fits is taxed at that bracket's column B average rate, and only the excess is taxed at the column A rate of the next bracket up. That is why the top figure in the table is not what anyone pays on their whole income.
The 48 per cent figure applies to taxable income above 86,634 euros. Quoting it as what a British retiree pays in Portugal, which a good deal of published material does, is not a summary of the table. It is the opposite of one.
Two worked examples
Portuguese pension income carries a specific deduction under CIRS artigo 53.º, set as a multiple of the IAS index. We could not confirm the 2026 euro value of the IAS from a government source, so we have not published the deduction figure. Both examples therefore start from taxable income after that deduction has been applied, and the effective rates below are rates on taxable income. Your gross pension will be higher than the figures shown, and your effective rate on gross will be lower than the ones shown.
Margaret, 68, single, retired to the Algarve. Taxable income of 14,200 euros.
The largest bracket ceiling that fits is 12,587. That part is taxed at column B of that bracket, 13.579 per cent, giving 1,709.19 euros. The remaining 1,613 euros is taxed at column A of the next bracket, 21.20 per cent, giving 341.96 euros.
Illustration: total Portuguese tax about 2,051 euros, an effective rate of 14.4 per cent on taxable income.
David and Susan, 67 and 65, near Tavira. A split household, and not one of the fifteen assets we surveyed works one through. David has a private drawdown pension and his State Pension, both Article 17, both taxable only in Portugal. Susan is a retired local-authority teacher: her teachers' pension falls under Article 18(1) and stays taxable only in the UK, and her State Pension is Article 17.
David's taxable income in Portugal: 24,000 euros. The 23,089 ceiling at column B of 20.579 per cent gives 4,751.49 euros; the remaining 911 euros at 34.90 per cent gives 317.94 euros. Illustration: about 5,069 euros, an effective rate of 21.1 per cent on taxable income.
Susan's taxable income in Portugal is her State Pension alone: 9,500 euros. The 8,342 ceiling at 12.500 per cent gives 1,042.75 euros; the remaining 1,158 euros at 15.70 per cent gives 181.81 euros. Illustration: about 1,225 euros, an effective rate of 12.9 per cent on taxable income.
Illustration: across the household, on the 33,500 euros Portugal taxes, about 6,294 euros, an effective rate of 18.8 per cent on taxable income. This does not reflect how Article 21 relieves Susan's UK-taxed pension, which we have not established and which could raise it. Susan's teachers' pension is taxed separately in the UK, where her UK personal allowance is still doing work.
We have modelled the two of them separately. Portuguese couples may elect to be assessed jointly, and that election changes the arithmetic; we have not modelled it.
And there is one thing about Susan's position we are deliberately not stating. Portugal taxes its residents on worldwide income, so her UK-taxed teachers' pension is not simply invisible to the Portuguese system. Article 21 of the Convention decides how Portugal relieves it: by exempting it while still counting it when setting the rate on her other income, or by giving a credit. We did not read the text of Article 21, so we are not telling you which. The difference is not academic. One of those two methods pushes the rest of her Portuguese income up the scale and the other does not, and for a household in Susan and David's shape it is one of the larger open variables on the page. It is a question for a Portuguese tax adviser with the Convention open, and it is the sort of thing that is much cheaper to establish before the first return than after it.
Two other figures for context, and neither is arithmetic you should run yourself. There is a mínimo de existência at artigo 70.º of the CIRS, with a reference value of the greater of 12,880 euros or a formula linked to the IAS, and it expressly protects taxpayers whose income comes predominantly from pensions. And a solidarity surcharge exists at high income levels; we did not fetch its thresholds, so we have not stated them.
A reminder, since we are now past the arithmetic. The figures above are illustrations built from published Portuguese law on stated assumptions. They are not a projection of anyone's tax bill and they are not advice. Nothing here is personal tax advice.
Every dated decision in this section sits on a single spread in the Portugal guide, with the date each one closes.
6. Everything that is not a pension
Two things that work quietly in the UK stop working when you become resident somewhere else, and neither of them sends you a letter about it.
Protection and life cover
Not one asset in the fifteen we surveyed for this article asks what happens to existing UK life cover, critical illness cover or income protection on emigration. It is a genuine blind spot in the published material, and it has two parts.
The first is the policy you still pay for. Many UK protection contracts carry residency conditions, notification requirements or travel and residence limits, and a change of country of residence is the kind of event those clauses are written for. Whether yours does is a question about your policy wording, not about Portuguese law, and the answer is in a document you already own.
The second is the cover you no longer have and may not have noticed losing. Death-in-service benefit ended on the day the employment did, usually several years before the move, usually without a letter. It is often the single largest life cover a person has ever held, and for many people it disappeared while they were thinking about something else.
The point in a Portuguese context is that the arithmetic underneath the cover changes too: a surviving spouse's income would be drawn in euros, from pensions taxable in Portugal, in a country where they may or may not yet have a completed health record and a family doctor. Cover written in one country and lived in another is a different exercise from cover arranged at home, and so is life cover after you leave an employer scheme.
The ISA, and what replaces it
Portuguese law has no equivalent of the ISA and gives no relief for one. This is not a rule we can cite, because it is the absence of one. An ISA is a creature of UK law; nothing in the Portuguese income tax code exempts income or gains because they arose inside a foreign wrapper. What applies instead is the ordinary Portuguese treatment of the underlying income.
For a Portuguese resident, that means investment income not subject to Portuguese withholding is taxed at an autonomous rate of 28 per cent under CIRS artigo 72.º n.º 1 alínea d), with an option under n.º 13 to aggregate it with your other income and be taxed at the progressive rates instead if that produces a better result. Gains on shares and securities are taxed on the positive balance of gains and losses, also at 28 per cent, under artigo 72.º n.º 1 alínea c). Under Article 13(5) of the 2025 Convention, gains on securities are taxable only in the state of residence.
One rule deserves singling out because it is a decision you control. Under artigo 72.º n.º 14, aggregation is mandatory, not optional, where the assets were held for less than 365 days and your taxable income including the balance reaches the top bracket. A Portuguese-resident retiree who rebalances a portfolio inside twelve months and has enough income to reach the top bracket does not get the flat 28 per cent; the gain is pulled into the progressive scale. The Portuguese system rewards holding periods, and that is a fact about calendars rather than about products.
On the reassuring side: Portugal has no wealth tax. There is no tax on net worth, on portfolios, on pensions in payment or on non-Portuguese assets. What exists is AIMI, an additional property tax charged on the rateable value of Portuguese urban residential property only, with a 600,000 euro deduction per individual and a base rate of 0.7 per cent. Married couples and unidos de facto opting for joint assessment have the threshold doubled to 1.2 million euros of combined deduction. AIMI is charged on rateable value, the valor patrimonial tributário, not on market value, and in Portugal the two are frequently a long way apart. Whether the deduction covers your own property is a question about the VPT on your caderneta predial, which is a document you can obtain.
How all of this is treated once you are resident is one of the things investment planning across two tax systems has to take account of from the start rather than retrofit.
7. Your estate, in two countries
Leaving the United Kingdom does not take your estate out of UK inheritance tax, and buying a house in Portugal brings a second set of rules over the top of the first. These are the two facts that no asset we surveyed puts on the same page, and the overlap between them runs for about a decade.
The UK half
Since 6 April 2025 the old domicile test is gone. UK inheritance tax now keys to long-term UK residence: an individual is a long-term UK resident if they were resident in the UK for at least 10 of the previous 20 tax years before the chargeable event, under IHTA 1984 section 6A. While that applies, worldwide assets are within the UK inheritance tax net, including a house in the Algarve.
And there is a tail. Someone who was UK resident for 10 of the previous 20 years and then leaves stays a long-term UK resident for a further period: a minimum of 3 tax years for those resident 10 to 13 years, rising by one tax year for each additional year of residence, to a maximum of 10 tax years.
Read that against the usual case. A British person who worked in the UK their whole life and retires to Portugal at 65 is at the top of that scale. On that history, their estate would stay inside UK inheritance tax for up to ten further tax years after they leave. They will very likely have bought a Portuguese house in year one of those ten. The longer version of the residence test is in long-term UK residence, not domicile.
Layered on top: from 6 April 2027, under Finance Act 2026, most unused pension funds and pension death benefits count in the value of the estate for UK inheritance tax. Pensions passing to a surviving spouse or civil partner keep the spousal exemption, and death-in-service lump sums are excluded. For a couple where one spouse expects to leave a substantial undrawn pot, that change lands in the middle of the ten-year tail. Pensions inside the estate from April 2027 covers the mechanics.
The Portuguese half
Portugal has no inheritance tax. What it has is stamp duty on gratuitous transfers, at 10 per cent under verba 1.2 of the Tabela Geral do Imposto do Selo, and spouses, civil partners, children, grandchildren, parents and grandparents are exempt under artigo 6.º alínea e) of the Código do Imposto do Selo.
That exemption is generous and it is also narrower than people assume. Siblings, nieces, nephews, stepchildren who were not adopted and unrelated beneficiaries are not in the direct line and do pay. Where the asset is Portuguese immovable property, verba 1.1 at 0.8 per cent is added, giving 10.8 per cent on Portuguese property passing to a beneficiary outside the exempt group.
We could not verify the territorial scope of that charge, meaning whether it reaches only Portuguese-situs assets, because the relevant article of the stamp duty code was not obtainable. The commonly stated position is that it applies to assets situated in Portugal. We are flagging it rather than asserting it, and for a British estate the answer matters.
We also could not establish whether the UK and Portugal have a standalone estate or inheritance tax convention. The 2025 Convention covers taxes on income and on capital gains, which does not include inheritance tax. That question was not researched here, and it is a real one for anyone whose Portuguese property might be caught by both systems at once.
Who inherits, which is a different question from who pays
Portugal reserves a share of an estate for protected heirs, and that reserved share cannot be given away by will. The protected heirs are the spouse, the descendants and the ascendants. We are not publishing article numbers or a table of fractions for this, because the sources available to us returned Civil Code article numbers that did not reconcile with each other and the Portuguese primary texts could not be opened. Who is protected is settled. The precise arithmetic is a question for a Portuguese notary or lawyer with your family circumstances in front of them.
What we can be precise about is the mechanism that lets a British national displace it, because it is an EU instrument that is published in English and it still works after Brexit.
Under Article 21(1) of Regulation (EU) No 650/2012, the law that governs a succession is the law of the state where the deceased was habitually resident at death. But Article 22(1) allows a person to choose the law of the state whose nationality they hold, at the time of making the choice or at the time of death. Article 20 provides that a law designated by the Regulation applies whether or not it is the law of a member state, which is why a British national can make the election even though the UK never participated in the Regulation. The Regulation is applied by the Portuguese authority dealing with the estate, and Portugal is bound by it. And Article 34(2) switches off renvoi for a law chosen under Article 22, which stops English private international law bouncing the Portuguese house back into Portuguese law.
The trap is in the next sentence. Article 22(2) requires the choice to be made expressly in a disposition of property upon death, or demonstrated by its terms. A UK will drafted before the move, containing no election, does not make it. Nobody makes it for you, it cannot be inferred from your nationality, and it cannot be added after death. A will decides who inherits; it does not decide what they pay. Getting a will that works across two jurisdictions is a legal exercise, and it needs to happen while it can still be signed.
If there is a US person anywhere in the family, whether a spouse, a child or a grandchild, a third regime arrives with its own thresholds. The US estate tax position for non-US persons is a genuinely different set of numbers and it does not wait to be asked.
The interaction of all of this across one family's actual assets is what a UK inheritance tax planning conversation is for, because both regimes are published and neither of them is the answer on its own.
A second reminder. Everything above is a description of published rules. It is not a recommendation about wills, pensions or estates, and Paratus Wealth does not give legal advice or draw wills.
8. Currency as a discipline, not a transaction
A sterling income spent in euros is not a transaction you do a few times, it is a structural feature of the next twenty-five years, and almost everything published about it treats it as a shopping decision.
Start with a number the DWP publishes about itself. If you take your UK State Pension paid into a bank in the country you live in, "the amount will usually be converted into your local currency using the exchange rate at the time of the conversion", and there is a conversion charge of 0.39 per cent. Payments are made every 4 or 13 weeks. You can instead have it paid into a UK bank.
That 0.39 per cent is not a large number on any one payment. What it is, is 39 basis points applied on every payment for the whole of retirement, at a rate and on a date you do not choose. Thirteen payments a year across twenty-five years is three hundred and twenty-five conversion events, none of them decided by you. That is not a criticism of the DWP, whose job is to pay the pension. It is an observation that a default has been selected, and that selecting a default is a decision even when nobody experiences it as one. This figure is specific to the DWP's overseas payment service and does not generalise to private pension payments.
One thing genuinely runs in Portugal's favour here. Portugal is on the DWP's list of countries where the State Pension is increased every year. A retiree in Portugal gets the annual uprating. A retiree in Canada, Australia or New Zealand does not, and their pension is frozen at the rate it was first paid. Over a long retirement that difference compounds. The country list is the DWP's current published position and is not a guarantee of future policy. The mechanics of the UK State Pension paid abroad are worth understanding on their own terms.
Then there is the point from section 2, which is the one nobody joins up: the exchange rate is part of your visa eligibility, not just part of your shopping. The D7 threshold is a euro number met by a sterling income, tested at application and again at renewal, on dates set by the Portuguese authorities rather than by you.
We are not going to tell you where the rate is going, because nobody knows. No figure in this article is a forecast of any exchange rate, and we would treat a published forecast on a page about your retirement income as a reason to ask what it rests on. What can be said without forecasting anything is that the questions are structural rather than tactical: how much of your euro spending is fixed and how much is discretionary, how far ahead your conversions run, whether a rate move changes your budget or your eligibility, and how many separate decisions you want to be making a year at seventy-eight.
That is a different exercise from finding a better rate on one transfer, and it is why moving money between sterling and euros is worth setting up as a process rather than repeating as an errand.
Finally, the calendar. Portugal's tax year is the calendar year, 1 January to 31 December, and the UK's runs 6 April to 5 April. They do not line up, and the mismatch is where things get lost. There is a hard administrative deadline that catches new arrivals more than any other: once you meet either limb of the Portuguese residence test, you must notify your Portuguese residence and update your registration with the tax authority within 60 days. Running Portuguese and UK filing obligations side by side for the first two years is mostly a question of not missing a window.
9. If it does not work out
A recurring thread in unmoderated forum discussion about Portugal, and one we read a good deal of while researching this article, is people who went back. We have not counted it and we are not putting a proportion on it. It is written about far less often than the decision to go.
If a person did decide to return to the United Kingdom, the position would not be a simple reversal of the one they left.
Portuguese tax residence would end on the last day of the period of stay, under CIRS artigo 16.º n.º 4, which means a part-year Portuguese position in the year of return rather than a clean break at a year end. UK residence would be decided by the Statutory Residence Test, over a period rather than on a date, and the split-year cases that would be in play are not the same ones that applied on the way out.
The long-term UK residence test for inheritance tax would still be running in the background. Someone who left the UK after a lifetime there and returned within a few years would, in most cases, never have got out of the ten-year tail in the first place, and the return would restart the clock on the residence count itself.
The Portuguese house would remain a Portuguese asset with a Portuguese tax profile, whether it were sold or kept. If it were kept and let, that would be Portuguese-source income with its own filing obligation. If it were sold, the timing relative to the change of residence would matter, in the same way and for the same reason as it did on the way in.
The choice-of-law election in a will, if one had been made, would sit inside a document drafted for a set of circumstances that no longer applied, and a will does not update itself.
And healthcare would run the other way: the Portuguese record would lapse, and re-establishing NHS entitlement would be its own separate exercise.
None of that makes returning a bad decision. It makes it a decision with the same structure as the outward one: a sequence, with a date on several of the steps, and an order that is easier to arrange in advance than to unpick afterwards.
Paratus Wealth does not offer services to residents of the United Kingdom. This section is written as information about how the rules would work, not as an offer of help with them, and we would not be able to act for someone who had become UK resident.
10. Frequently asked questions
How is my UK pension taxed if I live in Portugal?
Private pensions, drawdown, occupational scheme pensions and the UK State Pension are taxable only in Portugal, under Article 17 of the UK-Portugal Double Taxation Convention that entered into force on 29 December 2025. UK government service and local authority pensions are the exception: under Article 18(1) they remain taxable only in the UK. Portugal then taxes what it taxes at the ordinary progressive IRS rates for 2026, which run from 12.5 per cent on the first 8,342 euros of taxable income.
Do I still pay UK tax on my pension if I move to Portugal?
Not on a private or state pension, from 6 April 2026, once you are Portuguese tax resident: Article 17 of the 2025 Convention gives Portugal the exclusive taxing right and the UK gives it up. You do still pay UK tax on a government service pension, under Article 18(1), and moving does not change that. In practice a UK payer will keep deducting PAYE on an Article 17 pension until HMRC issues an NT code following a treaty claim, so the relief is not automatic.
How much income do you need for the Portugal D7 visa?
For 2026 it is 920 euros a month for the first adult, evidenced for at least twelve months. That figure is the Portuguese guaranteed minimum monthly wage set by Decreto-Lei n.º 139/2025, it is indexed, and it resets each January, which is why older pages still say 870. A second adult adds 50 per cent and each child adds 30 per cent, so a couple with no dependants needs 1,380 euros a month, or 16,560 euros a year. Because the test is set in euros and a UK pension is paid in sterling, the sterling amount required moves with the exchange rate.
How many days can I spend in Portugal before I become tax resident?
More than 183 days in any 12-month period beginning or ending in the year in question makes you Portuguese tax resident, under artigo 16.º n.º 1 a) of the Código do IRS. But the day count is not the only limb, and this is where people are caught: under artigo 16.º n.º 1 b) you can be resident on fewer days if on any day of that period you have a dwelling in Portugal in conditions suggesting an intention to keep and occupy it as a habitual residence. Residence then begins on the first day of the period of stay, not at the start of a tax year.
Does Portugal have inheritance tax?
No. Portugal abolished inheritance tax and what remains is stamp duty on gratuitous transfers at 10 per cent, from which spouses, civil partners, children, grandchildren, parents and grandparents are exempt under artigo 6.º alínea e) of the Código do Imposto do Selo. Where the asset is Portuguese property passing to someone outside that group, 0.8 per cent is added, giving 10.8 per cent. The important second half of the answer is that this does not switch off UK inheritance tax: since 6 April 2025 UK IHT keys to long-term UK residence, and a lifelong UK resident who retires abroad stays within it for up to ten further tax years.
Can my children be forced to inherit under Portuguese law?
Yes in principle, because Portuguese succession law reserves a share of an estate for protected heirs, who are the spouse, the descendants and the ascendants, and that share cannot be redirected by will. A British national can displace that by choosing the law of their nationality under Article 22(1) of Regulation (EU) No 650/2012, which still works after Brexit because Article 20 applies the Regulation's designated law whether or not it is a member state's law and the Regulation is applied by the Portuguese authority. The election must be made expressly in the will, under Article 22(2), so a UK will drafted before the move without an election clause does not make it.
Is it cheaper to retire in Portugal than the UK?
Cheaper on some lines and not on the ones people usually assume. Housing, eating out and everyday services are generally lower; imported goods, cars, electronics and heating a stone house in an Algarve winter frequently are not, and Portuguese effective income tax rates on a mid-sized pension are not obviously lower than UK ones, as the worked examples above show. The single largest variable is not the price level at all, it is the exchange rate at which your sterling income becomes euros, and that moves independently of the cost of anything. If you are weighing it against the alternative, how the same decisions work in Spain covers the other side of the comparison people most often make.
Can I get free healthcare in Portugal as a British retiree?
Yes, on the basis of legal residence rather than age or pension status: a British person with a valid Portuguese residence permit is a beneficiary of the Serviço Nacional de Saúde on the same footing as a Portuguese citizen, with no contributory condition. What you have to do is get your record in the national patient register to the status the state pays for, which requires the residence permit, a Portuguese NIF and a full Portuguese address; a patient number on its own is not enough and does not let you enrol in primary care. Since June 2022 there are no user charges except for attending a hospital emergency department without a referral. If you are drawing a UK State Pension you can also apply online for an S1, up to 90 days before you move.
Do I need a financial adviser to move to Portugal?
Not for most of the process: the visa, the tax number, the residence permit and the annual Portuguese return are administrative exercises that a great many people complete themselves or with a contabilista. What is harder to do alone is the sequencing, because several decisions are fixed by a date rather than by a preference, and because the rules in each country are individually publishable while their interaction across one family's actual assets is not a lookup. The specific things people bring to us are the order of drawing pension income, which side of a residence line a payment falls on, currency across a whole retirement rather than one transfer, and an estate that two systems have a claim on at once. A conversation about your own position is a reasonable place to start, and so is a cross-border pension review.
How to speak to Paratus Wealth
If you want to talk any of this through, a Senior Partner will go through your position with you: what you hold, where it is, what you are trying to arrange, and which of the dated decisions above are still open to you. There is no charge for that conversation and no obligation attached to it.
The guide sets the whole sequence out on a dated spread.
Every enquiry is read by a person, not routed automatically anywhere.
Sources
All URLs below were opened and confirmed to return the content described, on 21 August 2026.
DGERT, guaranteed minimum monthly wage for 2026 (Decreto-Lei n.º 139/2025, de 29 de dezembro) https://www.dgert.gov.pt/retribuicao-minima-mensal-garantida-para-2026
Ministério dos Negócios Estrangeiros, Portal Diplomático, means of subsistence for national visas https://vistos.mne.gov.pt/pt/vistos-nacionais/documentacao-instrutoria/meios-de-subsistencia
MNE, official D7 consular checklist, document dated 28 May 2025 https://toquio.embaixadaportugal.mne.gov.pt/images/vistos/checklists/pt/residencia/pt-check_list-d7_jun_2025.pdf
MNE, instructional documentation for national residence visas, including the S1 note https://vistos.mne.gov.pt/pt/vistos-nacionais/documentacao-instrutoria/residencia
gov.pt, residence visa for retirees and people living on their own income https://www.gov.pt/servicos/pedir-um-visto-de-residencia-para-fixacao-de-residencia-de-reformados-religiosos-e-pessoas-que-vivem-de-rendimentos-proprios
Lei Orgânica n.º 1/2026, de 18 de maio (nationality) https://files.diariodarepublica.pt/1s/2026/05/09500/0000200020.pdf
gov.pt, permanent residence permit https://www.gov.pt/servicos/pedir-a-autorizacao-de-residencia-permanente
HMRC and FCDO, Portugal: tax treaties https://www.gov.uk/government/publications/portugal-tax-treaties
Text of the 2025 UK-Portugal Double Taxation Convention (note: the URL slug reads "not in force"; the Convention is in force) https://www.gov.uk/government/publications/portugal-tax-treaties/2025-uk-portugal-double-taxation-convention-not-in-force
Código do IRS, artigo 16.º (tax residence) https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs16.aspx
Código do IRS, artigo 68.º (rates, 2026, as amended by Lei n.º 73-A/2025) https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs68.aspx
Código do IRS, artigo 11.º (category H pensions) https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs11.aspx
Código do IRS, artigo 54.º (capital and income distinction) https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs54.aspx
Código do IRS, artigo 72.º (autonomous rates and aggregation) https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs72.aspx
Autoridade Tributária, IFICI FAQ (category H exclusion) https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/questoes_frequentes/pages/faqs-01018.aspx
Autoridade Tributária, IFICI information leaflet, March 2025 https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/Folhetos_informativos/Documents/incentivos_investigacao.pdf
Portaria n.º 352/2024/1, de 23 de dezembro (IFICI, citing artigo 263.º of Lei n.º 82/2023) https://files.diariodarepublica.pt/1s/2024/12/24800/0004000045.pdf
Decreto-Lei n.º 52/2022, Estatuto do SNS, artigo 4.º https://files.dre.pt/1s/2022/08/15000/0000500052.pdf
ERS, FAQ on access of foreign citizens to the SNS https://www.ers.pt/pt/utentes/perguntas-frequentes/faq/acesso-de-cidadaos-estrangeiros-a-prestacao-de-cuidados-de-saude-no-servico-nacional-de-saude/
ERS, FAQ on primary care access https://www.ers.pt/pt/utentes/perguntas-frequentes/faq/acesso-a-cuidados-de-saude-primarios-centros-de-saude/
ERS, FAQ on user charges (taxas moderadoras) https://www.ers.pt/pt/utentes/perguntas-frequentes/faq/taxas-moderadoras-do-sns/
gov.pt, guide to healthcare for migrants in Portugal https://www.gov.pt/guias/migrantes-cuidados-de-saude-em-portugal
NHSBSA, applying for healthcare cover when living abroad (S1) https://www.nhsbsa.nhs.uk/applying-healthcare-cover-living-abroad
NHSBSA, healthcare abroad for posted workers and people with some exportable benefits https://www.nhsbsa.nhs.uk/applying-healthcare-cover-living-abroad/healthcare-abroad-posted-workers-and-people-some-exportable-benefits
FCDO, Living in Portugal (last updated 10 July 2026) https://www.gov.uk/guidance/living-in-portugal
HMRC, Inheritance Tax if you are a long-term UK resident https://www.gov.uk/guidance/inheritance-tax-if-youre-a-long-term-uk-resident
HMRC Inheritance Tax Manual IHTM47020 (IHTA 1984 s.6A, the tail) https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47020
HMRC, Inheritance Tax on pensions: technical note (from 6 April 2027) https://www.gov.uk/government/publications/inheritance-tax-on-pensions-technical-note
HMRC Pensions Tax Manual PTM102400 (overseas transfer charge exclusions) https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm102400
Regulation (EU) No 650/2012, Articles 20, 21, 22 and 34, as published by legislation.gov.uk https://www.legislation.gov.uk/eur/2012/650/article/22
Código do Imposto do Selo, artigo 6.º (exemptions) https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/selo/Pages/selo6.aspx
Tabela Geral do Imposto do Selo, verbas 1.1 and 1.2 https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/selo/Pages/ccod-selo-tabgiselo.aspx
CIMI artigos 135.º-B, 135.º-C and 135.º-F (AIMI) https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cimi/Pages/cimi135b.aspx
DWP, State Pension if you retire abroad (including the 0.39 per cent conversion charge) https://www.gov.uk/state-pension-if-you-retire-abroad
DWP, countries where an annual State Pension increase is paid https://www.gov.uk/government/publications/state-pensions-annual-increases-if-you-live-abroad/countries-where-we-pay-an-annual-increase-in-the-state-pension
HMRC, tax on foreign income: UK residence https://www.gov.uk/tax-foreign-income/residence
European Central Bank, euro reference exchange rates https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/eurofxref-graph-gbp.en.html
Disclaimer
This article is provided for information and education only. It is not financial advice, tax advice or legal advice, it is not a personal recommendation, and it does not take account of any individual's objectives, circumstances or needs. No one should act or refrain from acting on the basis of it alone.
Paratus Wealth is a cross-border financial planning firm. Nothing in this article is personal tax advice. We do not prepare Portuguese domestic income tax returns, draw Portuguese wills or act as accountants or lawyers: those are matters for a Portuguese contabilista, a Portuguese notary or lawyer, and the residence application is a matter for the Portuguese authorities. Where this article links to our own tax return service, that is our cross-border reporting and treaty-claim work, not Portuguese domestic filing.
Tax treatment depends on individual circumstances and on the law and practice of more than one country, all of which can change. Currency exchange rates move, and nothing in this article is a forecast of any rate, return or price. Where a figure is stated, the date it applies to and the instrument it comes from are given with it. Where we could not confirm a point from a primary government source, the article says so, and those points should not be treated as established.
Advisers are Senior Partners of Paratus Wealth. All enquiries are reviewed by a person before any reply is sent.
Paratus Wealth does not offer services to residents of the United Kingdom.
Last reviewed 22 August 2026.
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