Portugal’s best cities to live in: where to move to in 2025

Portugal continues to attract investors from all over the world due to its favourable tax system, warm climate and stable property market. Purchasing a home in this country entitles you not only to a comfortable stay, but also to additional benefits with proper planning. Before buying, it is necessary to carefully study what property taxes Portugal imposes on residents and non-residents, as well as how to optimise the financial burden.

Portugal’s tax system: general principles

Portuguese tax legislation is governed by the Serviço de Finanças, which establishes compulsory payments for owners. The structure of the system includes both mandatory one-off contributions and annual fees depending on the characteristics of the property.

There are three main taxes to consider when purchasing a home:

1. IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis) – for property transfers, charged on purchase.
2. IMI (Municipal Property Tax) – ежегодный.
3. IS (Imposto de Selo) – stamp duty, which is paid when a transaction is concluded.

In addition to these fees, tax residency status affects the amount of mandatory deductions.

Buying a property in Portugal: taxes and additional costs

There are significant costs involved in formalising a property title. The first mandatory fee in Portugal is the IMT property transfer tax, which varies from 0% to 8% depending on the price of the property and its type. For example, when buying a property worth up to 92,407 euros, the fee is not charged, while for luxury apartments – over 1 million euros – the rate will be 7.5%.

Next is the stamp duty (IS), which is paid when signing the sale and purchase agreement. It is calculated as 0.8 per cent of the value of the property and is payable in a lump sum. In addition, it is necessary to take into account notary and registration fees, which can vary from 500 to 2,000 euros depending on the complexity of the transaction.

Annual property tax in Portugal (IMI)

Once contracted, owners are required to pay an annual fee known as IMI. Its rate is:

• 0.3% to 0.45% for urban facilities,
• 0.8 per cent for agricultural land,
• 7.5% for real estate registered in offshore jurisdictions.

The amount of tax is based on the cadastral value, not the market price of the property. For example, if you own a flat in Lisbon with a price of 200,000 euros, the annual fee will be between 600 and 900 euros. There is a benefit for new residents: exemption from IMI for 3 years for dwellings up to 125,000 euros if they are used as a primary residence.

Portugal’s exceptional tax regime: NHR programme

To attract foreign capital, the government has developed the NHR (Non-Habitual Resident) system to minimise the tax burden on income earned abroad.

The main benefits are:

1. 0% inheritance and gift tax on real estate in Portugal for immediate family members,
2. 10% commission on pension payments,
3. 20% levy on income from the activities of highly qualified professionals (e.g. IT, finance, medicine).

NHR status is granted for 10 years, after which the commitment is reviewed.

Property taxes for non-residents in Portugal: features and key rates

Foreign investors acquiring property in the country face different tax conditions than local residents. Taxation varies depending on the nature of ownership of the property – rental, sale or long-term ownership without income. The main liabilities include tax on rental income, capital gains on sale and annual property tax (IMI).

Charge on rental income: 28% of profit received

If the property is rented out, a non-resident of Portugal is liable to pay 28% tax on rental income. The amount is charged on the net income after deducting allowable expenses, which include:

1. Utility bills (if paid by the landlord).
2. Housing maintenance and repair costs.
3. Fees to management companies (if the property is rented through an agency).

For example, if you rent a flat in Lisbon for €1,500 per month (€18,000 per year) and have allowable expenses of €3,000, your taxable income would be €15,000 and tax would be €4,200. There are no progressive tax rates for non-residents, so optimisation of payments is only possible through proper cost accounting or registering the property through a legal entity.

Capital Gains Tax: 28% of the difference between purchase and sale

When selling property, non-residents are required to pay a commission, which is calculated as the difference between the purchase and sale price less allowable expenses.

Example of calculation:

1. The original cost of the flat is 300,000 euros.
2. The selling price is €450,000.
3. Costs for renovation and legalisation of the transaction – 20 000 euros.
4. The taxable base is EUR 130 000 (450 000 – 300 000 – 20 000).
5. The final tax is €36,400 (28% of 130,000).

Residents of the country can reduce the tax burden if they reinvest in new housing, but there is no such benefit for foreign investors.

Tax liability that arises each year

The fee is charged annually and is calculated on the basis of the cadastral value of the object.

IMI rates depend on the location of the dwelling:

1. For urban properties, 0.3%-0.45%.
2. For agricultural plots, 0.8 per cent.
3. For objects registered in offshore jurisdictions – 7.5%.

For example, if the cadastral value of a flat is €250,000, the IMI would be €750-1,125. The authorities of some municipalities provide incentives to new owners, exempting them from paying the commission for 3 years, but this rule does not apply to non-residents.

Investing in real estate: benefits for investors

Portugal continues to attract foreign investors due to sustained growth in property prices, strong rental demand and favourable tax conditions:

1. High rental demand. The country’s main cities of Lisbon, Porto and the Algarve remain popular with tourists and expats, keeping rental demand strong. In central Lisbon, the average rental rate for a one-bedroom flat is €1,500-2,000 per month, giving an annual yield of 6-10%.
2. Golden Visa Programme. Investors purchasing property in the country for an amount of 500,000 euros or more (or from 280,000 euros in regions with low population density) can apply for the Golden Visa – a residence permit with the possibility of obtaining citizenship after 5 years.

Results

Foreign investors planning to buy property should take into account the peculiarities of taxes in Portugal. Commissions for non-residents in the country are higher than for residents, but competent use of preferential regimes allows to minimise costs. Optimisation of tax liabilities requires a professional approach and planning, so it is recommended to consult with lawyers and qualified specialists before buying.

The decision to move to another country is rarely taken impulsively. More often, after a series of logical “ifs” and practical “whys”. Whether it is worth moving to Portugal is a question that combines climate, taxes, citizenship and cost of living multiplied by personal ambitions. The answer is not in generalised ratings and tourist photos, but in numbers, systematicity and nuances, which are not shouted about in advertising brochures.

Quality of life and the cost of living

The cost of living in Portugal is characterised by moderation in basic expenses and unpredictability in additional costs. Lisbon and Porto lead the way in terms of prices: renting a flat in the centre starts at €1000 per month, lunch in a café at €10, and a bus pass at €40. In rural areas the figures are almost halved.

Moving to Portugal often starts with a look at the cost of living – a key factor for families and freelancers. The budget for one person with modest consumption is from €800 per month, including rent in the suburbs, food, transport and mobile phones. An extra €300-500 for comfort.

Law and order: what gives you a residence permit in Portugal

The Portuguese residence permit programme opens access to the labour market, education, medicine and movement within the EU. There are options through investment, contract, study or even passive income from remote activities. The most popular route is through a D7 visa: you just need to prove a monthly income of €820 (minimum), rent a home and open an account.

The residence permit is issued initially for 2 years, then extended. After 5 years, you can obtain a permanent residence permit or apply for citizenship, provided you pass a basic language proficiency test. The procedure itself takes about 6 months with proper preparation.

Weather without winter and hot summers

Climate remains one of the most underrated factors in the question of whether it’s worth moving to Portugal. Unlike neighbouring Spain, it has mild winters (up to +15°C) and mild summers (average +28°C). The Atlantic Ocean mitigates temperature spikes and the level of sunshine is over 270 days per year.

This stability makes it possible to utilise the sun’s energy all year round, save on heating, get around on foot or by bicycle. In rural areas of the south, heating costs almost disappear – an important economic advantage.

Should you move to Portugal: the pros and cons from an expat’s point of view

Reviews of real people from different countries record high adaptation. Many note the friendliness of the locals, tolerance and unhurried pace of life. The country’s rating is consistently high, as well as the level of security – it is among the top 5 countries in the world.

However, the disadvantages of life in Portugal are also present. Slow service, bureaucracy, closed labour market for unskilled specialists are common complaints. Especially often – from young people without knowledge of Portuguese.

Immigration requires not only documents, but also resistance to mental restructuring. It is difficult to expect European service at the Latin American speed of work of institutions. For example: registration at the tax office sometimes takes a week if you have all the papers.

Work and taxes: who benefits

The IT sector, online services, tourism and agriculture are the main areas for expats to work in. The minimum salary in 2025 is €820. The average is €1400-1600, but only in major cities.

Taxes remain a hot topic. Residents are obliged to pay up to 48% income tax (on a progressive scale), but the NHR (Non-Habitual Resident) programme allows you to optimise deductions for 10 years. It is especially favourable for pensioners and freelancers with income outside the country.

Business is actively developing: the small and medium segment receives subsidies and access to EU funds. Opening a company takes up to 3 days if you have an NIF and a local account.

Where to live: cities with character

The cities of Portugal are not alike. Lisbon is dynamic, Porto is traditional, Braga is religious and technological, Coimbra is the student capital, Faro is beachy.

Moving to Portugal to smaller cities can reduce housing costs by 30-40%, but limits access to work and medical centres. But quietness, safety and greenery are in abundance.

Health and education: expectations and reality

Health care in the country is public and private. Free basic care is available through the SNS number, but queues for specialists reach several weeks. Private clinics are faster, with the price of a visit starting at €60.

Education depends on language and age. Public schools accept free admission, but instruction is in Portuguese only. Private and international institutions require contributions from €400 to €1200 per month.

Expats are actively investing in their children’s education in international schools because of the flexibility of programmes and the possibility of transferring to European universities without language barriers.

What the numbers say: a final breakdown

The advantages of living in Portugal are obvious: access to the EU, climate, moderate spending, tax preferences, security. The country offers easy integration for freelancers, retirees, start-ups.

On the other hand, living in the country the pros and cons are unevenly distributed. Not everyone will get quick access to the labour market, not everywhere quality medicine is available. Moving without preparation is a risk.

Assessment by key parameters:

1. Cost of living: moderate, but varies by region.
2. Climate: mild, with minimum fluctuations.
3. Safety: high, especially in small towns.
4. Taxes: optimisation is possible.
5. Citizenship: after 5 years.
6. Education and medicine: high quality but nuanced.
7. Feedback: positive, subject to adaptation.

Whether it is worth moving to Portugal depends on your specific goals and willingness to change. The country offers a comfortable environment, but requires awareness when choosing a region, status and income model. A move with a clear strategy will have maximum effect.

Whether it is worth moving to Portugal: conclusions

Whether it is worth moving to Portugal depends on your goals and readiness for change. The country offers access to the EU, a mild climate and favourable living conditions, but requires adaptation and a clear strategy. The move is justified if you take into account not only the advantages, but also the hidden nuances: taxes, bureaucracy and peculiarities of local life.