There are many reasons why Portugal is considered one of the best countries in the world to live or retire in. The extremely affordable cost of living is just one of them…
If you're thinking of living in a foreign country, the first thing you should ask yourself is what lifestyle do you want to have? The climate, the landscape, the food, the language... all these small details will play an important role in your everyday life, and it is the combination of what's most important for you that you should consider before deciding where to relocate.
It's no coincidence that Portugal has conquered more and more expats in search of this unique "mix" between what the country has to offer and what families are looking for. And the best part is that in Portugal all this is available at an extremely affordable cost…
Average cost of living in Portugal
From supermarket shopping to the cost of housing in general, Portugal provides a unique quality of life at a much lower price than the United States, the United Kingdom or the majority of Western European countries.
For example, in comparison to the United States, the average cost of living in Portugal is 28.33% lower (aggregate data for all cities, rent not taken into account). Rent in Portugal is, on average, 45.96% lower than in the United States. The same applies to average prices of restaurants, food, transportation and utilities, although there are differences from city to city.
The most expensive cities to live in in Portugal are Funchal (on the island of Madeira), Lisbon, Porto, Braga, Coimbra and Aveiro, although average prices in these cities are still lower than in other European capitals.
Find out more about Living in Portugal
Brian and Lisa Kahan, who are originally from the USA, share their story of finding a dream home in Portugal...
Food prices in Portugal
At a restaurant designed for tourists in Lisbon or Porto, dinner for two with a bottle of good Portuguese wine will cost about €30 (35 USD / 27 GBP).
However, if you choose a restaurant that is mainly attended by locals, the cost will be significantly lower, especially if you choose the "prato do dia" (dish of the day) which usually serves traditional Portuguese food made with the freshest local ingredients.
For example, grilled chicken with fries, vegetables or a salad will cost between 5 and 8 euros, depending on the location. Add to that a glass of wine or a beer, between 1 and 2 euros, and an espresso that will usually cost €0.60.
In supermarkets, prices are also generally lower than what most expats are accustomed to, especially if you buy Portuguese products.
Average price of food in a Portuguese supermarket
Transportation prices in Portugal
Transportation prices are also very affordable in Portugal. If you’re thinking of using public transportation, a metro ticket in Lisbon or Porto costs between €1.20 and €1.50, and a taxi starts at €3.45 plus €0.50 per kilometre.
Portugal’s main cities all have access to taxi apps like Uber, which are even cheaper, but in smaller cities or rural areas, the bus or train is the best option, with one-way tickets costing around €1.60.
Intercity bus and train travel are also very affordable. For example, a return ticket from Lisbon to Faro in the Algarve costs around €20.
If you prefer to drive, the average cost of owning a car is also cheaper in Portugal than in the USA or the UK, for example:
Average cost of owning a car per year*
To own a car in Portugal you will have the following costs:
The IUC (Imposto Único de Circulação) is a tax that must be paid annually by anyone who owns a car in Portugal. It is calculated according to the car’s engine capacity and CO2 emission. The value of this tax is updated every year by the Portuguese Government. In 2020, for example, the tax due can be as low as €11.61 or as high as €473.90.
Even if you don't leave the garage, your car must have liability insurance. The amount will depend not only on the insurance company chosen, but also on factors such as the age of the driver, previous accidents, the type of vehicle and, of course, the coverage.
The more basic the insurance, the cheaper. But the cheaper it is, the less protected you will be.
A quick online search will show you insurance from as little as 10 euros per month, but the best thing is to compare prices, see the coverage for each insurance and, of course, read the small print carefully.
All cars over four years must have an annual car inspection that is mandatory by Portuguese law. The cost of this inspection is set every year by the Government and in 2020 the price for a small passenger vehicle was €31.51.
Petrol / Diesel
Your fuel costs will depend on the type of car you own, the number of kilometres you drive per month, the fuel you use and even your type of driving.
Average fuel price in Portugal (per litre)*
Utility costs in Portugal
When it comes to service costs, the amount will depend on your household size and lifestyle.
For example, for a 100 m2 apartment you can expect a monthly average of 70 euros for electricity, water and gas costs. If you add a broadband internet service and cable TV to this, you can count on an additional 40 euros.
Property prices in Portugal
Properties in Portugal are also reasonably priced, despite the increase in demand in the last few years.
Depending on the region of Portugal, if it is inland or near the coast, the price of a new 2-bedroom apartment with access to a shared swimming pool, can cost as little as €150,000.
See property for sale in Portugal
Find your dream villa or apartment in Lisbon, Silver Coast, and Algarve Portugal with sea views, private pools, walking distance to popular beaches...
Although you can buy a house on your own, it is always a good idea to seek the help of a professional Portuguese real estate agent who will accompany you to find the best option for your lifestyle and budget.
Throughout Portugal, there are Portuguese companies who specialise in working with international clients and who will help you maximise your investment by advising you on such important matters as tax incentives specifically created for foreign investors.
As you can see, prices in Portugal are very attractive for any budget and lifestyle, allowing foreigners from all over the world to enjoy a luxury lifestyle that doesn’t cost a fortune!
Find out more about Tax Incentives in Portugal
2020 brought new changes to the NHR - Non-Habitual Residents tax regime.
Visit Portugal Accounting's website to learn more about the NHR scheme and other tax incentives for expats in Portugal...