guide to buying property in

everythingoverseas.com This guide sets out essential information for people wanting to purchase property in Portugal, including advice on the buying process, legal guidance, taxation, mortgages, setting up a local bank account and currency exchange, as well as retirement and pensions. Buying guide for Portugal

Contents

Buying process...... 7 Buying costs • Top 10 tips for buying property in Portugal Legal matters...... 8 The solicitor • The Power of Attorney in Portugal • Legal process • Phase 1: Preliminary promissory buying and selling contract • Phase 2: Completion

Taxation...... 10 Tax number (‘Numero Fiscal de Contribuinte’) • Property Transfer Tax (PPT) • Stamp Duty (‘Imposto de Selo’) • Double taxation treaty • Municipal Property Tax (‘IMI’) • Utilities and taxes check Mortgages...... 11 Lending terms • Deposit • Fixed- or variable-rate? • Repayment or interest-only? • Lending criteria Documents • Insurance • Bank properties • Warning Retirement in Portugal...... 12 Living expenses • Financing your retirement • Currency matters • Your pension • Life certificate Rates of state pension • Payment of your pension • Levy on your state pension • Non-UK residents • Useful health phrases in Portuguese • Help in emergencies Banking in Portugal...... 14 Choosing a bank • Resident and non-resident accounts • Opening a bank account

Currency exchange...... 16 Expert advice • Selling a home in Portugal • Servicing your mortgage or sending everyday funds Tailored service • Spot contracts • Forward contracts • Frequent transfers • Limit orders Main reasons for using a FX firm • Keeping an eye on the markets • What rate do you want?

everythingoverseas.com 1 Buying guide for Portugal

The Portuguese property market and buying process

Portugal has a magical appeal. There is they increased by 5%. Construction is picking everything from timewarped sleepy villages, up again and interest is coming from the and busy with its rumbling trams, French, the Scandinavians and, for the first to the miles of sandy beaches along the time, the Chinese. rugged coast. It’s a laid-back land with an This growing international demand, combined outdoor lifestyle that embraces watersports, with a limited supply of property, means cycling and hiking, as well as fresh, regional, that prices are likely to continue rising for tantalising food and drink. the foreseeable future. Interest rates are Portugal has seen its economy start to grow, low and the Golden Visa scheme means albeit more slowly than its neighbour Spain. foreigners who spend more than €500,000 The OECD (Organisation for Economic Co- on property are given residency permits. operation and Development) has pronounced Those who rent out homes attract a simplified its growth momentum as stable. Austerity tax scheme, whereby 85% of rental income measures by a centre-right government is classed as expenses. Tax is paid on the helped it exit its bailout scheme in 2014 and remaining 15%. There’s also the Non-Habitual the socialist party voted in last year aims to Residents Tax (NHR) scheme, which has ease the strings on the public purse. attractive tax advantages. Property here has always been popular with the British. There are 20,000 property- owning Brits in Portugal. Prices dropped by up to 50% in the years following the crash in 2008 and, although they remain cheap by many standards, they are rising. In 2015,

2 everythingoverseas.com And did we mention the 300 days of sunshine? Buying guide for Portugal

Top 10 locations to live bougainvillea. Tables spill out of tiny bars and restaurants, and life takes place in the open air. 1. Lapa, Principe Real, Barro Alto, and the Tejo The Algarve has long been a favourite among River are among the most popular places to Brits. Our love affair spans more than 40 buy property in Lisbon. years; back to the days when Portuguese entrepreneur Andre Jordon founded the 3. Quinta do Lago property scheme in the region. Head west from Lisbon in the heat of summer, Located in the south of Portugal, the sunny with the smell of the ocean in your nostrils, Algarve is packed with some of the country’s and you come to Cascais, a bustling seaside finest beaches and is essentially considered resort. Its three beaches glow gold in the to be Europe’s premier golfing destination, sunset as the bars start to pulse. There’s with an array of first-class courses to choose a glossy marina here, and surfers love the from. This has traditionally attracted overseas shore just north of here. property buyers, driving property prices in the region beyond the national average. 4. Silver Coast The most desirable and expensive place to Just 30 minutes north of Lisbon is the Silver own property is typically in and around the Coast, which has grown in popularity in Golden Triangle in Central Algarve, a popular recent years. The medieval walled village of celebrity haunt, where home prices can cost Obidos is enchanting and now it’s easy to tens of millions of pounds. get to, too, since the new motorway linking However, since the A22 trans-Algarve Lisbon and was opened. The coastline motorway was built in the 1990s, a growing is popular with lovers of watersports and the number of residential developments and summer temperatures are not as high as infrastructural improvements have been further south. made to the west and the east of the region, easily accessible from Faro airport. 5. A university city with centuries of pedigree, 2. Lisbon Coimbra is both charming and lively. The Located in the heart of the country, the historic streets echo with the haunting Portuguese capital of Lisbon has undergone melodies of the fado as night settles into a spectacular change in the past 15 years, every crevice of the ancient walls. The with elegant shops, charming hotels and university moved here from Lisbon in 1537 fashionable restaurants opening up in and and its magnificent library is well worth a around the city centre. Trams trundle over the visit. During term-time, the students add a streets where the warm stone houses tumble vibrancy to the city, although they also drive down to winding cobbled alleys draped in up property prices to a certain extent.

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6. Oporto pleasurable, year-round subtropical climate, a range of five-star leisure facilities and Portugal’s second city is a romantic mix of hotels. Not to mention a wonderfully lush and colourful houses, narrow lanes and stairways tropical landscape. It’s 620 miles from Europe zigzagging up the hills. It’s the birthplace of and 310 from Africa. port, and the wine cellars along the banks of the Douro, which are open daily for tastings. The island has long been a popular second- Its airport has won European awards for home destination, particularly with the Brits standards of service and Germans, and was a special holiday retreat for former Prime Minister Sir Winston 7. Chaves Churchill. This spa resort has been popular since Roman Some of the most popular areas to buy times. Its location in the north of the country is property in include tourist areas near the border with Spain and the mountains such as Lido and Praia Formosa, while the around it, mean the temperatures don’t get too Palheiro Estate, located on the outskirts of high in the summer. Although winters can be cold, the city, is also well-liked. there is rarely any snow. The thermal springs produce some of the hottest bicarbonate waters 10. Porto Santo in Europe. The idyllic island of Porto Santo, which lies 40 miles northeast of , remains 8. The untouched by mass tourism. Porto Santo’s These volcanic islands are spectacularly property market is far more in its infancy rugged, yet green, a blip of comforting colour compared to Madeira, and as a consequence in a wide expanse of ocean. This far-flung property prices tend to be a lot cheaper. archipelago can be found 850 miles to the west of Portugal. The islands attract tourists; whale-watchers and dolphin-followers, divers and water-sportsters. Hikers and geologists alike can strike out up the 7,713ft Mount Pico, Now is a descend into one of the world’s longest lava tubes and peek into a caldera. The cost of potentially good time living is low here and there are opportunities to negotiate a bargain for those who want to run a tourism-related business. property purchase in 9. Madeira Portugal. Madeira is the largest and most popular of all the Portuguese islands, and offers a

everythingoverseas.com 5 Buying guide for Portugal

Buying off-plan property Buying off-plan property inevitably involves higher risk than buying re-sale property. If you are considering buying off-plan in Portugal there are a number of points to consider. • Obtain a bank guarantee to cover your stage payments. • Check with the Land Registry to make sure the land which is going to be built on is registered to the developer. • Once construction has been completed, ask for proof from the seller that the construction has been finished in accordance with the description given in the plans. You can also check with the Land Registry.

Repossessed properties in Portugal Portuguese banks are offering financing for properties in Portugal in an effort to shift the last remaining discounted properties on their books. Some of these are listed for sale online on the major Portuguese banking websites, as well as dedicated Portuguese property portals.

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Section 1

Buying process Top 10 tips for buying property in Portugal

Before you do anything else, make sure and this is the point at which the property 1. Estate agents are licensed by the 7. If you are buying a condo, check what you get the official tax and registration ownership is transferred to the buyer. As with Portuguese government. Check they are extra service charges you will may incur. documentation for the property (registo the promissory contract, it is signed by both INCI trained and certified and that they There will be annual expenses that can predial and certidao predial) which will parties in front of the public notary, but only have a licence number (AMI). quickly add up. And make sure you are not ensure the property is free from any debt. In once the property transfer tax has been paid. 2. The notary represents the state. Their job responsible for covering the debts of any Portugal, any mortgage or tax debts attached The final contract is then sent to the Land is to ensure the title to the property is defaulters on the development. to the property stay with the property. Registry. With the conclusion of the public correct and that all paperwork is filed and 8. Check how much you will have to pay Next, there are two main phases in the deed the stamp duty tax should be paid. taxes paid. for purchase tax. This is set by the local purchasing process. The first is the council based on their own valuation, not 3. Use an independent, English-speaking promissory contract (‘contrato de promessa Buying costs what you have paid for the property. lawyer. Find somebody who fully de compra e venda’) between buyer and Aside from the actual purchase price, there understands the Portuguese system and 9. Buying off-plan? Get an individual bank seller. You can add any conditions at this are extra costs that you need to consider. You speaks English fluently. Whether they are guarantee to cover your stage payments point. A deposit of in the region of 15% is generally should allow 3-10% on top of the English or Portuguese, you need somebody in order to secure your deposit. Do not usually payable. Following this, your lawyer purchase price to cover things as: who is on your side. pay a second or further instalment can carry out searches and checks for unless the developer has provided one 4. Get a survey done. You wouldn’t buy a encumbrances or mortgages on the property. • Purchase Tax (IMT) which is based of these, and ask a lawyer to check it house here without it. There may be consequences for the on a sliding scale from 0% to 6.5% of the out as banks can refuse to honour the defaulting party. The buyer may lose their declared value 5. Make sure there are no debts attached to guarantee if the wording is inadequate. deposit if they pull out of the deal, while if the • Notary charges the property. These remain with a property Check out the track record and finances seller fails to comply with the obligation set and are inherited by the buyer. of the developer, too. • Stamp Duty in this contract or gives up the sale, they are 6. Each area has its own rules and building 10. If you plan to rent out the property as a obliged to pay back double the deposit. • Legal charges usually cost €700 to €1,000. legislation. Check the local town zoning holiday let or a long-term let, you will need The second phase of the transaction is the Find out how much your lawyer will charge plan to see if there are any restrictions to pay tax on any income in Portugal. ‘escritura de compra e venda’, or final deed, before you instruct them to do any work! on extending. Relief for double taxation may apply.

everythingoverseas.com 7 Section 2

Legal matters Buying a property is always one of the largest and most significant purchases you will ever make. It can be a complicated business with essential checks required to help ensure that all is in order, including the legal status of the dwelling. It’s important that you don’t let your heart rule your head. If you don’t speak the language or understand the system, you need a good solicitor.

4 everythingoverseas.com Buying guide for Portugal

The solicitor in specified transactions, but this must be Prior to the signing of the contrato de de promessa de compra e venda. This Legal matters recorded as a legal document signed in the promessa de compra e venda, your legal involves the buyer and vendor signing the Lawyers’ charges vary substantially, but presence of a Portuguese notary. representative will need to obtain the final contract, called an ‘escritura de usually cost between €700 and €1,000 for following legal documents: compra e venda’, although this can also be a property purchase. This will be money well signed on your behalf by your appointed spent, especially as a lawyer can help you Legal process Property Registration Certificate Power of Attorney. avoid some common problems with a home The legal side falls into two parts, the (‘Certidão de Teor’) purchase or sale, which may cost you more preliminary promissory buying and selling At this stage the purchaser must pay the money in the long run. contract (‘contrato de promessa de compra This check is made at the local Land Registry remaining balance of the purchase price (‘Conservatória do Registo Perdial’) to ensure (minus the deposit already paid), along It is wise to appoint a solicitor that is a e venda’) and the completion contract that the vendor has the ownership of the with all necessary taxes and notarial fees. specialist in Portugal property law and (‘escritura’). property and no one else has those rights Once this has been done and the property comfortable speaking your native language, and also if it is free of debts, including is registered at the Land Registry Office and especially if your Portuguese is not perfect. Phase 1: Preliminary promissory a mortgage. Local Tax Office, it is legally yours. Among other things, your solicitor will prepare buying and selling contract A Certidão de Teor, which describes the the signing of the Title Deed, represent you property’s legal history and provides proof at the Notary’s and register the property with Once a price has been agreed between the of ownership, is required to perform the the Portuguese Land Registry. But first they buyers and seller, both parties will sign a completion process at the Notary’s office. should check that the estate agent you preliminary promissory buying and selling are dealing with is properly authorised to act contract (contrato de promessa de compra e venda) and the buyer will make a deposit Property Tax document on behalf of the client, while ensuring (‘Caderneta Perdial’) that the contract protects your rights and of around 15%, although this figure is usually your money. significantly less on new build properties. This is an official tax document, obtainable It is The contrato de promessa de compra e venda, at the local tax office, which certifies wise to appoint a The Power of Attorney in Portugal similar to an exchange of contracts in the the inscription of the property for fiscal UK, legally secures the purchase, and purposes, the current owner and their fiscal solicitor that is not only If you want to acquire property in Portugal, number, a description of the property, and but are finding it difficult to spend the is subject to satisfactory searches having a specialist in Portugal been returned. the property’s unique fiscal number. This necessary time out there, you could document also confirms what annual taxes property law but also potentially take out a power of attorney. The Portuguese law protects both parties are payable on the property. This would enable the legal process to involved. The deposit is forfeited if the comfortable speaking continue without you being in Portugal. You purchaser does not proceed, and if the can nominate a trusted individual, such vendor withdraws double the deposit is paid Phase 2: Completion in your native as a friend, legal representative or relative to the purchaser by the vendor. This contract The completion of the purchase should occur language based in Portugal, who will represent you must be signed in the presence of the Notary. around a month after the signing the contrato

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PTT is levied on the property transfer value or Double taxation treaty exemptions are applicable to both residents Taxation its taxable value, computed according to the and non-residents. Municipal Property Tax (IMI, see below) Code, Britain has a double taxation agreement You will need a Portuguese tax number The amount due is calculated differently for whichever is the higher. Some of the criteria with Portugal to ensure people do not pay (‘Numero Fiscal de Contribuinte’) before homes built before 2003. to measure the tax value of a property are tax on the same income in both countries. you can acquire a property in Portugal the following: In accordance with Portuguese and because you are not permitted to complete a international law, all residents in Portugal Utilities and taxes check significant financial transaction without one, • Construction or property cost (the first one (nationals and non-nationals alike) are If there are outstanding payments on utilities either as a resident or a non-resident. is used for urban properties and the latter required to declare assets or groups of assets the debts must be settled before services for rural properties) held outside Portugal. Assets may include can be reconnected or transferred into your Tax number (‘Numero Fiscal de Contribuinte’’) • Property size (number of rooms, land area) bank accounts, securities, rights, insurance, name. Outstanding taxes must be paid before annuities and property. The declaration is a • Type of use (residential, commercial, you can take ownership of the property. Applying for a fiscal number is a simple separate exercise to the annual tax return. procedure and you will be issued with your industrial) Therefore it is important that a check is made of electricity, water, community fees, refuse number immediately. The cost of applying for • Location of property (if it’s in the suburbs or Municipal Property Tax (‘IMI’) a fiscal number is about €10. in the city centre) collection and municipal tax. Go in person to your local tax office • Quality and comfort aspects (if it is The owners of a residential property whether (‘Repartição de Finanças’). As well as proof degraded, does not have sanitary it is used by themselves or leased out, must of identity (your residency card, identity conditions, elevator) pay a local tax known as Imposto Municipal sobre Imoveis (IMI). This tax is raised and card, driver’s licence or passport), you will • Age of the property need an address in Portugal to which the spent by the town hall (‘municipio’). The tax office can send your fiscal card (‘Cartão The tax should be paid before completion as amount depends on the valuation of the de Contribuinte’). If you do not yet have a the PTT certificate will be required by property and must be paid by the end of April Portuguese address you will normally be able the notary for signing the sale and purchase each year if the amount is not greater than to use that of a solicitor, estate agent, or deed. The PTT can be paid at any local €250. a friend. tax office. Amounts over €250 are paid in two equal payments due in April and September. If the Property Transfer Tax (PPT) Stamp Duty (‘Imposto de Selo’) amount is over €500, three installments are The acquisition of properties in Portugal is Stamp duty is another tax payable when required, in April, July and September. If the subject to PPT (‘Imposto Municipal sobre acquiring property in Portugal. Stamp duty’s calculated tax is not greater than €10, no Transmissões Onerosas de Imóveis’, or ‘IMT’). taxable base is the same used for PTT payment is due. This tax is due on the transfer of property purposes and, as a general rule, 0.8% of the There are some exemptions for lower value rights over real estate or other, based on a property’s tax value is payable for property properties, those on a tourist development sliding scale of the declared value, up to 8%. acquisitions. and those with eco-credentials. These

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borrowing varies from 60% to 80% of the Repayment or interest-only? Documents purchase price or valuation price, depending Mortgages Portuguese lenders will require a range of on the lender, with loans available on a With banks in Portugal now adopting greater If you need to secure a mortgage in order supporting documentation in order to process variable rate or fixed rate basis. caution following the recent Portugal property finance a property in Portugal, it would be wise crash, most lenders now only offer home a mortgage application. These documents can to start arranging your Portuguese mortgage include: Fixed- or variable-rate? loans on a repayment basis – including both almost before you do anything else. interest and payment towards the capital • Copy of passport Careful due diligence will allow you to gain a Most Portuguese lenders offer different types loan amount – with borrowing rates starting • Copy of Portuguese tax number of mortgage repayment options on either a from around 6%. However, there are still some good idea of how much you can afford to pay • Proof of address (copy of recent utility bill) fixed or a variable interest rate. interest-only deals available. to purchase your Portuguese property and can • Credit report work the monthly payments. Variable-rate mortgage • Recent bank statements The interest rates of a Portuguese variable rate Lending criteria Failure to sort out the financial side of your • Recent pay slips Portuguese property purchase until the end mortgage is linked to either the three- or six- The banks will take the following two criteria month Euribor rate and increased by the margin into consideration when analysing your • Latest personal tax return may leave you in a bit of a muddle and with • Copy of tenancy agreement(s) a less attractive mortgage deal at a higher (profit) that the bank applies. The Euribor rate mortgage file for approval: financial position borrowing rate. is set by a panel of European banks on a daily and property valuation. Insurance basis and is generally an indicator as to what Financial position It is also worth noting that home and life Lending terms rate European banks will lend to each other. The early redemption penalty for a variable- The bank will require proof of your current insurance is usually compulsory for all Despite much economic uncertainty in recent rate acquisition mortgage is 0.50% as per the income earnings such as salary income, people looking to secure a Portuguese years, not to mention an unstable housing regulation of the Bank of Portugal. dividend payments, investment income, mortgage, although some brokers can market, all the major Portuguese lenders pension income and rental income. The banks arrange mortgages where this is not the case. Fixed-rate mortgage continue to provide mortgages to suitable consider the net income of each applicant that Bank properties individuals, including overseas nationals, A fixed-rate mortgage allows you to budget is confirmed by pay/pension slips, tax return purchasing property in Portugal. for future mortgage payments as the monthly and bank statements. The lender will also There are still some repossessed homes to be cost will remain constant throughout the fixed require information about any existing debts had from the banks in Portugal. Some lenders The banks typically offer loan terms of up to rate period and you are protected from future and employment history. All this information are willing to offer 100% loan-to-value (LTV) 50 years for residents and 30 years for non- increases of the European base rate. Fixed-rate will help the lender to decide if you will be mortgages in an effort to shift repossessed residents. The maximum age upon maturity mortgages are available from some lenders financially comfortable meeting the costs of properties on their books. of the loan is 70 or 80, depending on the and the fixed-rate period can range from one your monthly Portuguese mortgage. lender. to 30 years. After the fixed-rate period expires, Warning the mortgage will automatically convert into a Property valuation Your Portuguese home could be at risk if you Deposit variable rate mortgage (unless the rate is fixed The bank will commission an independent do not keep up repayments on a mortgage For a Portuguese mortgage, you will generally for the entire loan period). The early redemption engineer to value your property. The banks secured on it. Be sure you understand the need a minimum deposit of 20% of the penalty during the fixed-rate period is 2% as per are currently lending between 60-80% of the repayments and can afford them before property’s purchase price, because the the regulation of the Bank of Portugal. valuation price.. entering into any credit agreement.

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Retirement in Portugal Portugal is a popular retirement destination for people from all around the world, especially Britons. A warm climate, stunning coastline and plentiful sunny beaches make the country a haven for retirees. The Algarve and the island of Madeira are among the areas that have experienced an influx of UK retirees and property investment in recent years. Property prices and the cost of living in Portugal are still low enough to attract many retired Brits in particular. The Algarve, for instance, remains cheaper than the Costa del Sol. Seek independent“ advice as far as your Additionally, the Portuguese are a private and UK state generally warm, kind and hospitable people, welcoming visitors into their pensions are country, which is great for people looking concerned to retire there.

Jonathan” Goodman The Spectrum IFA Group

everythingoverseas.com Buying guide for Portugal

Living expenses in Portugal, subject to the necessary consent. account, or someone else’s account, subject citizen would. However, not all visits to doctors Check with the International Pension Centre to that individual’s permission. or will be free of charge. This means Retirement in Portugal Brits retiring will find that their pound (or (IPC) to see if you are potentially entitled. You require the international baking codes, you may have to make a patient contribution to euro) goes further in Portugal, thanks to the cost of your care. the country’s relatively low cost of living, Those approaching state pension age should IBAN and BIC numbers, in order to receive especially when compared with other receive a claim form four months before you payments in Portugal. If you are a non-resident, your European Health established countries in Western Europe. hit the milestone. Contact the IPC If you are still You can choose whether to be paid every Insurance Card (EHIC) will enable you to waiting for a letter three months before you four weeks or quarterly, but note that if access state-provided healthcare at a reduced Financing your retirement reach state pension age. you elect to receive the money direct into a cost, or sometimes for free. It will cover you for treatment that is needed to allow you There are various key issues that you need Portuguese account, you will be paid in euros, Life certificate which means that the amount of money you to continue your stay in Portugal until your to consider when it comes to financing your planned return. It also covers you for treatment retirement while living in Portugal. This generally To ensure that you are still entitled to receive get may fluctuate. See section 7: Currency exchange in Portugal for more details on of pre-existing medical conditions and for includes checking to see what impact a move the state pension, you may be sent a ‘life routine maternity care. will have on the benefits and pensions that you certificate’ – a form – by the Department for getting the most out of currency exchange. are entitled to receive in the UK. Work and Pensions. Levy on your state pension Useful health phrases in When retiring to Portugal, it is crucial that Do not panic if you receive a life certificate. Portuguese you “seek independent advice as far as your Simply sign it and get it witnessed – the list Over and above a certain amount of money “I feel ill.” – “Estou doente.” private and UK state pensions are concerned”, of people who can do this is the same list of that you receive as part of your state pension according to Spectrum’s Jonathan Goodman, people who can countersign a passport photo may be taxable. This will depend on your “Call an ambulance.” – “Chame uma who adds: “This would ideally happen before – and send it back. However, your payments taxable income and whether you are classed ambulância.” your arrival [in Portugal].” may be stopped if you do not submit this as a UK resident or non-UK resident when it “Where is the nearest pharmacy?” – “Onde comes to tax. fica a farmácia mais próxima?” Before moving to Portugal, it is necessary to form, in accordance with the instructions on “I would like to see a doctor.” – “Gostaria de inform the Department for Work and Pensions the form. Non-UK residents ver um medico.” that you are emigrating and provide them with your new contact details as soon as possible. Rates of state pension While non-UK residents are not required to “I would like to make an appointment.” – pay UK tax on their state pension, they may “Gostaria de marcar uma consulta.” Your state pension will increase each year, even have to pay a levy in Portugal. However, if you live in Portugal as it is within the European Currency matters they will not have to pay the tax in both Economic Area (EEA). Help in emergencies It is imperative that you take the sterling- nations due to the double taxation agreement You also need to be aware of emergency euro exchange rate into consideration when between the UK and Portugal that is in place. procedures; who to call in an emergency and moving to Portugal. Always calculate what Payment of your pension which hospitals that will be the most suitable impact any major fluctuations between Your state pension can be paid into a Healthcare in Portugal for your needs in the event of an emergency. sterling and the euro may have on your Portuguese bank or UK bank/building society. The healthcare system in Portugal is similar Portugal’s emergency number is the EU-wide lifestyle in Portugal. However, you are not allowed to elect to be to the NHS in the UK. The Portuguese Serviço emergency number 112 which is free to paid in Portugal for part of the year and the Nacional de Saúde (SNS) is the equivalent call, although in some places it is better to Your pension UK for the rest of the year. of the UK’s National Health Service, providing phone the direct. If you need general In addition to a private pension, you may be The account should with be in your name. hospital and local health centre services. You medical advice in Portugal, you can call eligible to claim a UK state pension while living Alternatively, you are allowed to use a joint should be treated in the same way a Portuguese Saúde 24 (Health Line 24) on 808 24 24 24.

everythingoverseas.com 13 Buying guide for Portugal

Section 6 Banking in Portugal You will need a Portuguese bank account to enable you to send and receive funds, not to mention make transactions whilst in Portugal. A bank account will also make your life much easier and you can set up Direct Debits to pay for numerous different things. Portugal has a state-of-the-art banking system, with various reputable banks to select from, with each offering a large network of branches and ATMs that you can use nationwide and online. Some charges and tariffs may apply and will typically vary, in accordance with each bank’s terms and conditions.

14 everythingoverseas.com BuyingBuying guide guide for forPortugal Spain

Choosing a bank • He or she has a spouse and/or children number of banking services and may utility bills, driving licence under 18 who are permanent residents not allow instant access to funds, Banking in Portugal If you present all these documents at once, Just as if you were choosing a bank in the UK, in Portugal though balances attract slightly higher that should ensure that the account is there are various factors that you must take interest rates into consideration when selecting a bank • He or she bases a business or professional opened almost immediately. A cheque book in Portugal. activity in Portugal • Deposit account, offering marginally (though cheques are not commonly used Portuguese banks offer accounts tailored higher interest rates on day-to-day in Portugal) and ATM/debit card should • Consider the size and spread of the network. to residents and non-residents. Residents banking services follow within a few days, though most Does the bank charge a commission for using will usually have access to a wider range of banks instantly provide a bank book to allow ATMs that are not a part of their own network? To open a bank account in Portugal, products and tend to get better interest rates withdrawals even before the ATM/debit If so, ensure that the bank you choose applicants must be aged at least 18, may and lower commissions and charges. card arrives. possesses a healthy number of branches and have to pay a minimum deposit to open cash points across the country Residents must prove their status by an account, e.g. €100, and will have to fill Most banks will send cheque books and ATM/ presenting the bank with their residence in the bank’s applications forms – there debit cards to overseas addresses. So if you • How’s your Portuguese? If not great, identity card (‘Bilhete de Identidade’), are typically up to three forms that the do not yet have an address in Portugal to then you may wish to choose a bank with although is currently being phased out in prospective client must fill out. The forms can send them to, they can either be collected English-speaking members of staff. This will favour of the more technologically-advanced usually be downloaded online and handed from the branch or sent to your UK address. certainly help to make life less stressful into the nearest branch. Citizen Card (‘Cartão de Cidadão’). Both Warning: It is illegal to bounce a cheque • Most banks in Portugal offer telephone contain details of their tax number (‘Numéro Applicants will have to sign the following: (i.e. write a cheque without sufficient funds and internet banking facilities. But check Fiscal de Contribuinte’) and home address. in your account to cover it) in Portugal, for to see if these services are also available • A General Application Form (‘Identificação According to Portuguese law, you must be which you can be charged with fraud. You in English de Títulares e Ficha de Assinaturas’) aged at least 18 and provide proof of identity will also have to pay 20% of the amount of • Client Details & Adherence to Products and • If your Portuguese is not the greatest, (e.g. a passport), your address in Portugal the cheque in interest and fees, and can Services (‘Dados de Cliente e Adesão a always request to see if statements and and your fiscal number. be blacklisted by the and Productos e Serviços’) other documents can be provided in refused a cheque account in the future. Non-residents are not liable for capital gains English. If you don’t ask, you don’t get • Acceptance of General Conditions and tax or submitting tax returns though they Terms (‘Condições Gerais’) • Consider the types of transactions that do need to provide their tax number when you are most likely to make and check to opening an account. The bank will provide Additionally, applicants must present see if charges will be made, such as a fixed all necessary. the following documentation at a branch of administration cost or commission the bank: Opening a bank account • Passport or Identity Card Resident and non-resident There several different types of bank (‘Passaporte’/’Bilhete de Identidade’) accounts accounts available, but the main ones you’ll • Tax Number and card (‘Numero Fiscal de In order to be considered a resident, an be considering are: Contribuinte’) individual must meet at least one of the • Current account, for everyday banking • Residency Card (‘Cartão de Residencia’) following criteria: activities. As in the UK, little or no interest is • Proof of Residence (‘Comprovativo de • He or she lives in Portugal at least 183 days paid on accounts in credit Morada em Portugal’). Any document which per year • Savings account, which with have a limited has proof of name and address such as

everythingoverseas.com 15 Section 7 Currency exchange

Changing currency values, as well as poor and Portugal even after they have moved. to pay a mortgage or simply transferring exchange rates and pointless fees from your Thankfully, a currency provider can set up a money to finance everyday living costs. bank, mean that you could lose thousands of Direct Debit for you and save you money in Whatever the circumstances, you are pounds when transferring money to and from the short, medium and long term. strongly advised to find a regular transfer Portugal to pay for a property. • In order to stay on top of what is happening service that enables you to make these types You can generally get a better exchange in the currency market, you should register of weekly, monthly or quarterly payments rate by using a foreign exchange specialist, for rate alerts email notifications and sign hassle-free. But while banks often charge otherwise known as an FX provider, to secure up to market newsletters. £20 to £40 to transfer money abroad, many a better exchange rate, not to mention FX providers do not charge anything. cheaper fees and charges. Selling a home in Portugal Tailored service For example, if you are thinking of buying The exchange rate is also important when a property in Portugal for €250,000, for selling a property in Portugal, as you may wish All sorts of overseas money transfer example, and transfer the funds with your to transfer a large sum of money back to the UK. providers offer a service tailored to help you. Research and assess your options allowing bank, it would cost you up to £198,427 Some people opt to take out a ‘forward contract’ (that’s at the average bank’s exchange rate of you to choose products that best suit your in this situation. This option will enable you, for needs and requirements. €1.274=£1*, plus a £25 transfer fee). a small deposit, to freeze today’s exchange rate But the same transaction with foreign even if you do not need to transfer your money Spot contracts exchange specialists Currencies Direct, for until a later date. It is the currency world’s example, would have cost you £195,771 (by equivalent of ‘buy now, pay later’. Purchase currency today with a view to funding something instantly. Use for: eliminating transfer fees from the picture and Alistair Cotton, money transfer expert at using a better exchange rate of €1.277=£1*). Currencies Direct, comments: “The currency • Paying bills in Portugal markets are constantly fluctuating, so when • Transferring funds instantly across your UK Expert advice moving a large sum of money, taking advantage and Portuguese accounts of exchange rates when they are in your favour • You will usually find that a foreign exchange • Sending money to somebody overseas specialist almost always offers a better could literally save you thousands.” exchange rate than a high-street bank, will Forward contracts not charge transfers fees and provides a Servicing your mortgage or You can fix a rate for up to 12 months, wider range of services designed to meet sending everyday funds by paying a small deposit now. Use for: your needs. When buying a property in Portugal, you • Purchasing or selling a home overseas • There are often ongoing expenses that may find – whether living in the country you will need to pay even after you have permanently or regularly using a holiday • Large international acquisitions completed your move. Most people will still home – that you need to make regular • Transferring all your money to another have to transfer money between the UK transfers from the UK. That could be in order country

16 everythingoverseas.com Buying guide for Portugal

Frequent transfers • No concealed costs or fees. FX providers in by setting up a rate watch which will let Currencies Direct is one of the UK’s usually do not charge transfer fees every them know what you think is an acceptable leading foreign exchange specialists and Set up a Direct Debit and even fix the time you transfer money overseas, unlike deal. The FX firm will assign a member of exchange rate for up to one year. has helped more than 150,000 people banks which generally charge an average their expert team to monitor the markets on with overseas money transfers. Use for: fee of £25 per transaction. Many charge a your behalf. • Paying your mortgage receiving fee as well. In contrast, banks generally do not offer this Visit www.currenciesdirect.com for • Pension transfers abroad • Individual service. A currency specialist will type of currency service because they do not more information. • Transferring funds for everyday cost always be available to assist you. Whether it have the time or resources. They will then of living is a one-off payment or regular transfers, they alert you when your desired rate arrives, will always guide throughout the process. and yet you are still under no obligation to Limit orders • The vast majority of FX providers offer their actually trade. You could potentially set an automated customers a round-the-clock online money currency purchase when your target transfer service that allows you trade exchange rate is reached. Use for: anywhere and at any time. • Maximum benefit when exchange rates • Swift transfers. Most FX providers can move in your favour complete a transaction within 24 to 48 hours, unlike a bank that can take up to a • Non-time sensitive transfers week to transfer money abroad. Main reasons for using a FX firm • Safeguard your money. When using an FX provider, always ensure that they Because exchange rates can rise and fall, it is are authorised by the Financial Conduct Taking advantage important that people develop a clear plan on Authority (FCA). “ how to handle their own currencies. To help of exchange rates reduce the risk of currency fluctuations and Keeping an eye on the markets when they are in your to increase the chances of securing the best rate possible, it is highly advised that you Do not worry if you do not have the time favour could literally use a currency specialist to secure the best to stay on top of the currency markets. possible deal that suits you. Foreign exchange providers are dedicated to save you monitoring what is happening in the market • Enhanced exchange rates. There are a wide on your behalf. thousands range of exchange rates available, with some of the best deals generally available through specialist foreign exchange What rate do you want? companies, and not the banks, which You can let your foreign exchange specialist Alistair” Cotton generally offer a poorer rate in comparison. know what exchange rate you are interested Currencies Direct

everythingoverseas.com 17 Everything Overseas is an independent provider of impartial guidance about purchasing property overseas. Please note that we are not recommending or encouraging readers of this guide to make financial or other decisions based on the content of the website. Everything Overseas goes to lengths to ensure that this website is as error free as possible but we cannot, however, ensure the complete accuracy of content at all times. We do not accept responsibility for any errors that do occur, or omissions to this guide. The content we provide is intended to be informative and of interest only – information offering advice on the purchase and sale of overseas property is meant as a guideline only; we do not offer advice of a legal nature, we provide content purely with the intention to inform. This is also the case with links and images – these are solely to be provided as examples and are of an informative nature. Everything Overseas provide examples of guidance for people wishing to purchase property overseas. However, as Everything Overseas cannot be aware of an individual user’s financial or social situation, this guidance does not constitute as advice or a personal recommendation to you the reader. As a result all actions and decisions arising from information received from this guide are the sole responsibility of the site user and Everything Overseas will not be liable for any claims or damages. When planning to engage in decisions of a financial nature we advise that you contact an independent financial advisor beforehand. © Copyright Everything Overseas 2014