A Guide to Retiring to Portugal
By Maria Thermann

A Guide to Retiring to Portugal

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Sun, beach, the azure Algarve - who wouldn't want to retire to Portugal, when their home country is in cold and rainy Northern Europe? Blessed with a fantastic climate, brimming with culture and heritage, not to mention a fabulous cuisine, Portugal is one of the most popular retirement countries in Europe, especially since living costs are lower than many places in Spain, as are purchase costs of real estate.

Whilst people relocating for work purposes tend to buy in property hot spots like Porto and Lisbon, retirees can take their pick and usually choose the sunny Algarve. Widely regarded as a less hectic environment and blessed with a gentler, less developed coastline than Spain's Costa del Sol, the Algarve offers many attractions and amenities. From world-class golf resorts and other sports facilities to family amusement parks, water parks and zoos to stunning historic architecture and world-class marinas, the Algarve has it all.

Before booking your flight and packing your suitcase though, there are a few considerations to be made on transferring UK pensions and receiving healthcare, not to mention wills and taxation.

Transferring your UK pension to Portugal

Brits retiring to live in Portugal, who are in receipt of a UK State Pension, can choose to receive it into their UK bank or their Portuguese account. Be sure to apply for non habitual residency status, as this can make your pension exempt from taxation in Portugal, if you qualify for the scheme.

Before you leave, claim your UK state pension by contacting the International Pension Centre in the UK. There are different ways to receive it, either in the UK or directly in Portugal. For non-EU countries it will depend if there is an agreement in place between your country and Portugal and for British expats it remains to be negotiated what that agreement is going to be in a post-Brexit world.

An important factor to consider is the value of your pension, once exchange rate variances have been applied. If you decide to have your pension paid into your UK bank account in Sterling, the rate received when you transfer it into euros will obviously vary, depending on the exchange rate of the Pound versus the Euro. However, if you use a currency transfer (or FX company) to send euros into your Portuguese account, they can set up a regular payments plan for transfers that will help you budget every month. Again, it remains to be seen how this will be affected by Brexit for UK retirees, as Britain's financial institutions are likely to lose their passporting rights under which such transfers are currently being made within EU member states.

Using a broker means usually getting a better exchange rate than one gets with one's bank. This is also true when transferring money to make the initial purchase of a retirement villa or apartment in Portugal. It typically works out more advantageous to use a broker when making any larger transfers, regular or one-off lump sums. Whatever you, it is imperative to seek taxation advice from a specialist law firm, as Portugal's tax system differentiates between State Retirement and Occupational Pensions, Government Service Pensions and Personal Pensions. Given that many people have more than one source of pension income these days, taxation payable on pensions can turn out to be a complex issue.

Healthcare Matters

As an EU citizen should be treated in the same way a Portuguese citizen would, but although state-provided healthcare in Portugal is generally free of charge via the National Health Service - Serviço Nacional de Saúde (SNS), there is a patient contribution, which varies depending on how you access the health service. For example, GP consultations cost less than a consultation at the accident and emergency department of a hospital and X-rays, scans and other tests require a monetary contribution.

Whatever services you require, English is widely spoken and services are excellent. According to the World Health Organisation, Portugal's National Health Service ranks at number 12, while the UK trails behind in 18th place.

If you are a national of one of the European Union countries, Iceland, Liechtenstein, Norway or Switzerland, you must show your European Health Insurance Card or EHIC (which can be obtained in your country of origin) and your passport or identification document in order to gain access to free or the type of low-cost healthcare referred to above.

Overseas citizens holding Portuguese residency permits must be registered at a health centre (centro de saúde). They must also hold a "User's Card", which may be obtained at the Health Centre by presenting a document showing proof of residence authorisation. Non-EU expats must also show a social security card.

Settling into your Portuguese Property

It's a good idea to register online with one or two expat organisations such as Internations.com or expatsportugal.com, which offer expatriates valuable advice in their forums as well as the opportunity to attend events held locally. The best way to get to know your neighbours is to hold a barbeque party and invite everyone. Joining a few clubs and local organisations, especially if you play tennis or golf or love horse riding or cycling, is also a good idea, as making new friends quickly helps to overcome any homesickness that might be brewing after the initial euphoria has died down a little.

Local estate agents are usually a fount of information and assistance, helping not just with finding a dream home in the Algarve, Lisbon or Porto, but also with mundane matters as where and how to register for utilities or how to get broadband or how to find tradesmen who will help fit new kitchen units or repair faulty plumbing. Most important of all, be sure to learn at least the basics of Portuguese, as the willingness to learn your host country's language and essentials of its culture will stand you in good stead when it comes to integrating into the wider society of your new home.

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