Digital Nomad In Portugal

Portugal fascinates digital nomads due to its favorable premises: picturesques nature scapes, mild climate, plentiness of possibilities for hobbies and sports.  

Anyway, the sunshine paradise has its own shadow spots. It is nothing that can’t be avoided, but you have to arrange things carefully not to find yourself in a tricky situation.

Admittedly, most of diginomads settle in Lisbon (or Porto), although the metropolitan area is not the most ideal in terms of climate. To see the best of Portugal it is worth locating in Algarve. In any case, research the location carefully: working internet connection is not obvious everywhere in Portugal. Bandwidth can be absolutely inappropriate for fulfilling your job, while in theory coverage is provided.

Digital Nomad in Portugal, Lisbon, Christmas 2018

EEA CITIZENs

For permanent residents of the EEA (EU countries as well as Norway, Switzerland and European microstates), moving to Portugal is unobstructed and simple. If you have no intention to stay in the country for more than 6 months, no one will ask a question. Unless your employer is Portuguese. In that case, a CRUE (Certificado do Registo de Cidadão da União Europeia) is usually required by the employer.

If your salary will come from the Portuguese employer, you won’t be able to avoid being taxed in Portugal. So, about 24% tax will be applied (based on 20 000€ annual salary which is considered a good income there). The final tax rate can vary significantly, depending on whether the person has a family and children, how much local services they use, and so on. But is doesn’t usually go under 18%. In other words, in the meaning of taxation, Portugal is no paradise at all.

In case the employer is a foreign entity, the person is self-employed or freelancer, remember not to move your funds to the Portuguese account (if you have one). In that case Portuguese taxation may apply. 

By the way, Portuguese Tax Number (Número de Identificação Fiscal or Número de Contribuinte or NIF) itself doesn’t put you under the national taxation system. For EEA citizens at least, I do not recommend opening a separate bank account in Portugal unless your employer demands it or you plan to stay in the country for a longer period. Signing up for facilities can require a Portuguese bank account.  

As you’ve definitely noticed, there are a lot of maybes in the above paragraphs. The truth is, Portuguese taxation system is pretty complicated, and it has its own purpose. It is designed to favour the locals, and to make foreigners to hire a tax representative and an accountant just not to mess up with it. Namely, during the existence of the CRUE, all income must be declared to the Portuguese authorities. Also income received from abroad. Penalties are hefty. Unless you adopt an NHR status.

And in case you love to live in Portugal as a digital nomad, you definitely need an NHR (Non-Habitual Residence).  NHR is a legal loophole, which gives you the possibility to keep your foreign income away from Portuguese taxation system. The solution isn’t very cheap to implement, but it’s pretty essential for well-earning diginomads. In this way, citizens of some EU countries are able to avoid any taxation (e.g. UK entrepreneurs).

The NHR status gives a lot of benefits in the meaning of taxes, but it excludes you from the national healthcare system. It is possible to join it voluntary, but I personally don’t see any benefits from it. It is a quite expensive solution, which ties you to your local health center, and public health services in Portugal are far from perfection.

It’s worth securing yourself with proper health insurance. EHIC doesn’t give anything other than an access to the Emergency Room. While private healthcare in Portugal is not very expensive in comparison with other Europe, it still may accumulate thousands of euros to pay. 

Digital Nomad in Portugal, Non-EEA, Shanghai Pearl, China

NON-EEA Citizens

People from non-EEA areas need a visa to enter Portugal. It will be a Schengen visa, which allows you to stay in Portugal or travel around Europe for 90 days (valid during normal,  non-COVID-19 times). Basically, an ordinary tourist visa doesn’t legally allow digital nomads to do any job during their stay, but I guess this rule is commonly broken. Anyway, it is rather hard to prove that a diginomad does any job in a certain period of time. It demands a legal sanction to interfere with the private area (as laptop is) and normally applied only in case of criminal investigation.

To work in Portugal legally, a person needs a work permission or work visa. It is relatively easy to get one, even if you are a freelancer or self-employed. The list of opportunities to obtain a work visa is pretty generous, and the rules – liberal, so whoever can find a box to tick in the visa application. The bunch of papers to fill will be impressive, but if the visa requirements are fulfilled, the permission will be granted. Portugal needs more inhabitants and more taxpayers. 

The urge to get more income attracting foreign citizens and investors to the country didn’t go as straightforward as Portuguese government anticipated in 2012. Covered by NHR status, many newcomers could escape taxation completely. So, their investments ended up as a one-time splurge on a fancy house or non-existent business. Freelancers can avoid any taxation sheltering under this status.

Anyway, it is too late to change the rules, as a lot of foreign companies founded their branches in Portugal counting on the country’s low income level, cheap work force and easy visa regime, which allows to hire staff from the third countries. The layout is falling apart now: Portugal is catching up with other European countries in the price level, while salaries are still quite low. So, those companies struggle to find workers, even if they are ready to cover the flight tickets. Remoters and Freelancers would be a solution for this problem, but for some reason employers are not willing to go for it. Probably, there is some point in the Portuguese corporate law, which prevents using foreign workforce. 

The thing that differs Portugal from many other EU countries, is the law on which elderly parents and grandparents can come along with the person, who gets work permission in Portugal. Their health insurance will be on the supporter’s expense, no governmental services offered. 

Private Health insurance is the only way to protect your back. While EHIC guarantees access to the first aid for EU citizens, non-EU folks are on their own in all cases. (Read more about Insurance).

Digital Nomad in Portugal, Ginger House

The After-Party

Now, when the official part of your stay is arranged (or left undone – your choice). So, the first 3-4 months in Portugal (as in any other EU country) can be spent without worries and any apparent consequences.

While investigating the income level issue in digital nomadity, I came to the conclusion that, at the moment, the average salary of a diginomad is around 1000€ per month. The level of income is individual of course, and there are no official statistics to show. That money allows to keep a modest middle class lifestyle in Portugal. 

Lisbon will make it pretty tough, as average lettings go about 1000-1200€ per month. Of course, you can opt for a shared accommodation. In other parts of Portugal, living is cheaper, but you have to be prepared for the fact that conditions can be… uhm, surprising.

Most usual stumbling blocks, into which newcomers hit their heads and toes, are:

  • sluggish internet connection
  • cold and mouldy rooms
  • the cost of facilities

The Internet

Internet connection is worth bringing with you. I have no experience about Lisbon and co-working spaces there, but here, in the Algarve, Internet is barely there -revelation. 

Basic provider net is enough to surf during the working day, in case you have iron nerves anyway, but in the evening it collapses. Completely. Most diginomads would not cope to fulfill their jobs with it. Some operators still have data transfer restrictions in force (like Vodafone, 100Gb / month), that is ridiculous. 

If you can afford living  in a new apartment in Vilamoura (rent from 1000€ / month), then the fiber optic cable is guaranteed. Alternatives are Vale do Lobo or Quinta do Lago (2500-10,000€ per month).

The fact that the landlord promises the cable has been installed, does not mean anything yet. You need to get the operator’s blessing to grant you the access to that lightspeed connection. Most operators require a two-year contract. If you were unable to obtain a NIF, you will not receive any contract at all.

The Housing

The year of construction says nothing about the quality of an apartment. So, ask the real estate agent directly how the building behaves in the winter and what company built it. You can also ask them to show the facility bills. Gas is the most explosive subject of the bills. Its price can vary greatly, so I advise to avoid the whole thing at all. With electricity, water heats up much cheaper and faster. The best apartment, of course, is the one that has solar electricity or solar water heating installed.

In detached and terraced houses, the fireplace is the most affordable form of heating. The next most important is the air heating pump. Its existence will save you from evidencing huge patches of mould on your walls. Dehumidification is escentual. Buy the special designated machine if the pump isn’t enough for all rooms. It’s all about being a digital nomad who works most of their time from home.

In the Algarve, getting a long-term contract can be tricky: apartments are usually rented for the winter season at a monthly rate and for the summer season at a weekly rate. So the summer seasons will cost 3-4 times more per month. In other areas, pricing is more sane. A few miles inland or north affect rental rates noticeably. The cheapest beachfront area is around Coimbra. The second most affordable place is the Tavira region.

If you want to stay on a budget, the best time to take advantage of Portugal is to come to the Algarve for a few months during the winter season, from October to April. Winter is very mild there, and in January nature begins to wake up from its sleep. Portugal is blooming. Rental rates are at its lowest, although the pools are serviced regularly. Outdoor trails are also at its best. All the tourist attractions are usually functioning, but not that desperately crowded as in summer.

While in Lisbon, Porto and Braga co-working facilities are modern, versatile, and spacy, there are relatively few co-working spaces in the Algarve and conditions are quite rudimentary.  Presumably, you will find a good internet connection, coffee and company there. They are not any cheap service (from 5€ per hour), though. Admittedly, it is a valuable service when you live in a shared cabin or want to get out from inside your four walls for any reason.

If your vehicle/cabin is always coming along with you, the Algarve is a great wintering location. There are plenty of caravan areas here, but during the high season (July-August) they are normally full. Note! Internet connection there is not guaranteed, bring your own with you. One nicely located place is the Algarve Motorhome Park.

However, Portugal is not a cheap country overall, so it is good to be at a certain income level.

Whom is Portugal suitable for as a diginomadity country? For anyone, but especially for photographers and caravan owners.

Portugal offers picturesques natural landscapes, sports (including Formula1, paragliding and surfers), events, extreme sports, tourist attractions, bloggers, influencers and celebrities.

The caravan sites are open all year round, and due to the mild climate you can live in your motorhome all the time.

Praia de Falésia, Albufeira, Algarve
Praia de Falésia, Albufeira, Algarve

The pros and cons of Portugal in terms of diginomads:

The Pros:

  • The Climate
  • The Nature
  • The Ocean
  • The Beaches
  • Beach activities for any age and physique
  • A lot of possibilities for hobbies
  • Affordable price level in shops and restaurants
  • Good quality of food
  • Most of apartments are rented furnished
  • Nice people who almost everyone speaks English
  • A huge and very active community of foreigners, and even if they aren’t proper diginomads, there are always ready to help.

The Cons:

  • A tortuous tax system that is costly to dodge
  • High rental rates in good locations
  • Stagnating Internet connection
  • Functional public transport only exists in the largest cities

That is, there are far more pros than cons. If things are arranged smartly, digital nomadity in Portugal is pure enjoyment.

Links:

How to get a Portuguese NIF for Non-Residents

Visa (Schengen)

Portugal’s work visas and permits: a guide for expats

Golden Visa Portugal 2020, The Ultimate Guide by Experts

The Ultimate Guide to the Portuguese Golden Visa

NHR – Move to Portugal to pay little to no tax on income

SAFETYWING – INSURANCE FOR NOMADS

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