Banks & Finances Portugal

A brief overview of the most popular banks among expats:

Caixa Geral de Depósitos (CGD): the largest state-owned bank in Portugal; has an extensive branch network throughout the country; offers a wide range of services from personal banking to investment products; considered a reliable choice for foreigners, but it's worth noting that the service can be slow and some services have high fees.

Millennium BCP: one of the largest private banks in Portugal; offers innovative digital solutions and excellent customer service in English; provides a variety of products for personal and corporate use.

Novo Banco: actively offers its services to foreigners and provides modern banking solutions with a focus on digital products.

Banco Santander Totta: one of the most internationally oriented banks in Portugal; offers a wide range of financial services for expats; well-suited for international transfers and maintaining accounts in multiple currencies.

BPI: the fourth largest bank in Portugal; offers flexible banking solutions and a wide selection of products, including investment funds; provides convenient conditions for foreigners to open accounts.

Online banks such as N26, Revolut, and Wise are also popular. They offer the possibility of opening accounts online, which makes them attractive for digital nomads and those who cannot immediately visit a bank branch. These banks offer low fees and convenient international transfers.

The procedure for opening a bank account in Portugal can be completed at a bank branch or online, depending on the bank.

Required documents:

- Identification: passport, residence permit, or EU identification card.

- Tax Identification Number (NIF): a mandatory document issued by the Portuguese tax authorities required for all financial operations.

- Proof of address: for example, a utility bill (electricity, water) or a rental agreement issued within the last three months.

- Proof of income or professional activity: this could be a letter from your employer, pay slips, or a tax return. For retirees, documents verifying the receipt of pension are suitable.

- Portuguese phone number (sometimes required for online banking and receiving confirmation codes, although some banks may accept foreign numbers).

Account opening: visit a bank branch or open an account online through an app; for online account opening, a video call with a bank employee for identity verification may be required.

A minimum deposit, usually around 250–300 euros, is required to open an account, depending on the bank's conditions.

Additional tips

If you are not a resident of Portugal, the process may take longer, and additional documents such as a tax residence certificate from your country might be needed.

It is also important to pay attention to monthly fees, which can range from 5 to 7 euros depending on the type of account.

This process is standard for most banks in Portugal; however, it is always recommended to check the current requirements with the chosen bank.

How to withdraw cash

Use Multibanco ATMs: In Portugal, there are over 12,000 Multibanco ATMs, which accept cards from international payment systems such as Visa and MasterCard. These ATMs usually do not charge additional fees for cash withdrawals with foreign cards, unlike other networks such as Euronet, which can charge high fees (up to 13%).

Withdrawal limits: Typically, you can withdraw up to 200 euros per transaction, with a daily limit of 400 euros. If you need more cash, you can make multiple transactions on different days.

Avoid currency conversion at the ATM: When withdrawing cash, the ATM may offer to convert the currency to your card's currency (e.g., dollars or pounds). Always choose the option to withdraw in euros to avoid unfavorable exchange rates. Your bank will offer a better rate than the ATM.

Support for 4- and 6-digit PIN codes: Most ATMs in Portugal support both 4-digit and 6-digit PIN codes, so your standard PIN will work.

What to avoid

Euronet ATMs: These are widely present in tourist areas such as airports and major shopping centers, but charge high fees for each transaction.

Airport ATMs: These machines often charge additional fees, so it is better to use an ATM in the city.

If you have a card that offers free international transactions (for example, Wise, Revolut, or N26), this can help avoid extra costs for cash withdrawals.

Bank Transfer

The traditional method of sending money abroad is through a bank transfer using the SWIFT system. This is the most reliable method for large sums but can be slow (up to 5 business days) and expensive. Fees vary by bank and can range from 20 to 130 euros per transfer, depending on the amount.

For the transfer, you will need:

- Recipient's name;

- BIC/SWIFT code of the recipient's bank;

- IBAN (International Bank Account Number).

SEPA Transfers

For countries within the EU and the Eurozone, a cheaper option is available — SEPA transfers. This method allows you to transfer money in euros with minimal or no fees, but it is only suitable for countries that support the euro.

Online Money Transfer Services

Modern online services like Wise, Revolut, Remitly, and PayPal offer fast and convenient ways to send money worldwide. These platforms often charge lower fees compared to banks and provide a favorable exchange rate.

Wise: offers transparent terms with low fees, the ability to track transfers, and currency conversion at the real market rate.

Revolut, Remitly: convenient for regular international transfers, but their fees may vary depending on the destination country.

PayPal: suitable for sending money between PayPal accounts, although it charges high fees for currency conversion.

Cash Money Transfers

If you need to send money to remote regions without bank accounts, services like Western Union can be used. Money can be sent online or through a branch, and the recipient can collect cash at an agency in the destination country.

Foreigners can obtain a loan or mortgage in Portugal, and the process is quite transparent, though it has its peculiarities.

Requirements for Foreigners

Foreigners, both residents and non-residents, can apply for a mortgage in Portugal. To do this, one must have a tax identification number (NIF) and provide documents such as a passport or other identification, proof of income (e.g., salary slips or tax returns), a bank statement for the last 3-6 months, and proof of address (e.g., rental contract).

Down Payment and Conditions

Typically, foreigners are offered loans with a loan-to-value ratio of 60-70% of the property's value, requiring a down payment of 30-40%. In the case of residents, financing of up to 80-90% of the property's value is possible.

Interest Rates and Types of Loans

In Portugal, two main types of mortgages are available:

Variable rate, which is reviewed every 6 months.

Fixed rate, allowing payments to be fixed for a certain period (sometimes for the entire loan period).

Mortgage Arrangement Costs

There are additional costs when arranging a mortgage: property valuation, legal fees, notary services, life, and property insurance. Overall, these fees can amount to up to 10% of the property's value.

Many Portuguese banks like Millennium BCP, Novo Banco, and Caixa Geral de Depósitos offer mortgage products for foreigners. Each application is reviewed individually depending on the applicant's financial status and the property's value.

Real Estate Purchase

Mortgage (home loan): a payment method that can be arranged by both residents and foreigners.

Bank Transfer: The most common and safest method. You can transfer money from a foreign or Portuguese bank directly to the seller's account or notary deposit.

Check for the transaction amount: If you have an account in a Portuguese bank, you can request a bank check in the name of the seller; the check is guaranteed to be covered by the funds in your account. The check is handed over at the notary on the day of signing the purchase and sale agreement.

Payment with cryptocurrency: Some real estate agencies in Portugal accept payment in bitcoins (BTC) and ethers (ETH). However, more often than not, cryptocurrency is converted into euros before the transaction.

Important: If the amount exceeds €10,000, the bank may request documents confirming the origin of the funds.

Buying a car

The following payment methods are available for buying a car in Portugal:

Cash or transfer from an account.

Car loan: Many banks and car dealers offer loans for car purchases. You will need to provide documents such as identity proof, income verification, and information about the chosen car.

In Portugal, it is possible to make large purchases in cash, however, there are legal restrictions on the amount of such payments.

For individuals buying goods or services, the maximum amount of cash payments should not exceed 3000 euros.

If the purchase is made between an individual and a legal entity (e.g., buying real estate or a car from a company), the cash payment amount is limited to 1000 euros.

Thus, when buying real estate or a car, if the amount exceeds these limits, the remainder must be paid through a bank transfer or other non-cash methods, such as a credit card or bank financing.

In Portugal, there is a wide range of opportunities for savings and investments that suit both conservative and more risk-seeking investors. 

Deposits: One of the most popular and safest ways of saving in Portugal. Banks offer attractive rates for deposits from 12 to 36 months. Deposits are insured up to 100,000 euros, making them a reliable choice for those who want to preserve capital.

Pension plans: A voluntary savings pension program is a long-term product designed for saving for retirement; it can be either with guaranteed income or investment-based; also offers tax benefits, making it particularly attractive for those thinking about long-term savings.

Securities: Bonds are a less risky instrument compared to stocks. They represent the debt of a company or government and pay a fixed income. Stocks offer higher potential returns through company value growth and dividend payments. 

Savings certificates: These products are government-backed and offer low risk with fixed interest rates. Certificates are available for investment with small amounts and can be an excellent alternative to deposits if you want higher yields while maintaining safety.

Investment funds and ETFs: Investing through mutual funds or ETFs allows you to diversify your portfolio with various assets, reducing risks. These products require more involvement in management, but they offer flexibility and potentially higher returns.

In Portugal, foreigners, both resident and non-resident, have certain tax obligations depending on their status and sources of income.

Tax obligations for residents

If you are in Portugal for more than 183 days a year or have permanent housing in the country, you become a tax resident. This means you are required to pay tax on all your worldwide income, regardless of where it is earned. Income tax rates are progressive and range from 14.5% to 48%, depending on the income level. Residents can take advantage of tax deductions for medical expenses, education, and mortgage interest.

Tax obligations for non-residents

Foreigners who reside in Portugal for less than 183 days a year or do not have a permanent place of residence are considered non-residents. The income tax on earnings in Portugal is 25% for salaries and 28% for income from dividends, deposit interest, and rental income. Non-residents cannot take advantage of tax deductions as residents do.

Mode for Non-Residents

A special tax regime for "non-habitual residents" is also available to foreigners, which offers tax benefits. Under this regime, one can pay a fixed tax rate of 20% on professional income, and foreign income can be tax-exempt for 10 years. This regime is particularly attractive for highly qualified specialists and retirees.

Other Taxes

In addition to income tax, foreigners must pay property taxes if they own real estate in Portugal, as well as value-added tax on the purchase of goods and services.

Thus, tax obligations depend on residency status and the type of income. It is important to consult with tax specialists to optimize tax burdens and ensure compliance with the law.

The tax declaration process for foreigners in Portugal depends on their status—resident or non-resident—and the sources of their income.

Tax Residents

Are required to declare all their worldwide income, including income from abroad. The tax return is submitted via model 3 on the Portal das Finanças website from April 1 to June 30 of the year following the reporting year. If there is foreign income, Appendix J is filled out, where you need to indicate the income and its sources, as well as possible taxes paid in another country.

Tax Non-Residents

Are required to declare only income earned in Portugal. Income such as salary or income from renting property is taxed at a flat rate of 25-28%, depending on the type of income. Non-residents cannot avail themselves of the tax benefits available to residents. The declaration is also submitted through model 3.

Residente Não Habitual (RNH) Regime

This regime offers tax benefits for highly qualified specialists and retirees. Under its framework, foreigners can be taxed at a fixed rate of 20% for certain types of activities, and foreign income can be exempted from taxation for up to 10 years.

Avoiding Double Taxation

Portugal has double taxation treaties with more than 70 countries, allowing one to avoid paying taxes both in Portugal and in the country of origin of income. If such an agreement is in place, a tax credit in Portugal can be used.

It is important to consult with tax specialists for proper declaration.

Tax Regime

Freelancers and self-employed persons are taxed under Category B (income from independent activities). Two taxation regimes are available:

Simplified regime: Applies if income does not exceed 200,000 euros per year. In this case, taxation is based on coefficients: for example, only 75% of income is taxed, and the remaining 25% are considered expenses related to activities. This regime is simpler but does not allow accounting for all actual expenses.

Organized accounting: This regime is suitable for freelancers with high income and significant expenses. Here, you can deduct all expenses, such as rent, utilities, business trips, and other activity-related expenses. In case of losses, they can be carried forward to reduce the taxable base in subsequent years.

VAT

Freelancers are exempt from VAT if their annual income does not exceed 13,500 euros. If income exceeds this threshold, it is necessary to file VAT declarations quarterly and pay it.

Social Contributions

All self-employed persons must make contributions to the social security system. The rate is 21.4% of the taxable base, but if income is below a certain level, there are benefits such as reduced contributions. In the first year of activity, it is possible to voluntarily pay contributions to receive social guarantees, such as sickness or maternity subsidies.

Benefits

Freelancers whose income is below 13,500 euros per year may be exempt from paying VAT and are not required to make advance tax payments. This significantly reduces the tax burden on newcomers and those with low income.

Income Declaration

Freelancers are required to file a tax declaration annually from April 1 to June 30. It is necessary to use Schedule B for income declaration and Schedule SS for social contributions. If you work under the simplified taxation system, part of the declaration is filled out automatically based on the data registered in the tax system.

These rules and benefits provide flexibility for freelancers, allowing them to optimize tax obligations depending on the level of income and expenses.