What’s the cost of living in Portugal?

Warm weather and high quality of life make Portugal an attractive destination to work, study, and live.

It may be small compared to some of its European neighbours, but it’s visually stunning and very affordable.

If you’re thinking about buying a home in Portugal, our in-depth guide will tell you everything you need to know about the cost of living in this beautiful country.

Cost of living in Portugal vs cost of living in Europe

According to Numbeo’s cost of living index, Portugal ranks 22nd out of 40 countries in Europe.

While you might think this makes Portugal on the higher side for cost of living, it actually has the lowest cost of living in Southern and Western Europe. 

It’s cheaper than its neighbour Spain while enjoying many of the same benefits of their location, like sandy beaches and warm weather.

Expatica compared four main cities in Portugal to several European capital cities to give you an idea of how much cheaper it is to live in Portugal:

Lisbon

Portugal’s coastal capital city is:

• 45% cheaper than London
• 33% cheaper than Paris
• 22% cheaper than Munich
• 14% cheaper than Brussels
• 9% cheaper than Madrid

Porto

This Northwest coastal city is:

• 49% cheaper than London
• 39% cheaper than Paris
• 28% cheaper than Munich
• 21% cheaper than Brussels
• 16% cheaper than Madrid

Coimbra

This riverside city in central Portugal is:

• 55% cheaper than London
• 46% cheaper than Paris
• 37% cheaper than Munich
• 31% cheaper than Brussels
• 27% cheaper than Madrid

Cascais

This Southern fishing and holiday resort town is:

• 44% cheaper than London
• 32% cheaper than Paris
• 21% cheaper than Munich
• 12% cheaper than Brussels
• 7% cheaper than Madrid

As you can see, many areas of Portugal have a lower cost of living than most major cities in Western Europe.

Living expenses in Portugal

Numbeo puts the average monthly cost of living in Portugal at around 529.59€ for a single person and 1,858€ for a family of four, not including rent or mortgage payments.

Living costs vary from city to city in Portugal as with any country, so your income and outgoings will depend on where you choose to live in Portugal.

Here’s a breakdown of the average costs of the most common living expenses in Portugal.

Portugal average income and social security

According to the Organisation for Economic Co-operation and Development’s (OECD) employment statistics for 2020, Portugal’s employment rate was around 69% - just above the EU average of 68.4%, and up to 10% more than other countries in Western Europe.

Portugal’s largest employment sector is services, so the most common work opportunities are in restaurants and hotels.

Outside of tourism, Portugal is developing its industries in construction, energy, health, education, and communications.

Plenty of international companies operate in Portugal if you require an English-speaking job.

Your salary will depend on your industry and seniority level, but the average monthly earnings in Portugal are 1,314€.

This would be equivalent to an annual salary of 15,768€, or £13,578.

While this might seem very low compared to other European countries, this is because the cost of living is extremely low in Portugal, so this is reflected in Portuguese salaries.

Whatever amount you earn, if you register for Portugal’s social security system then you must contribute 11% of your earnings each month.

This goes up to 29.6% if you’re self-employed, as the employer usually also makes a contribution on the employee’s behalf.

You’ll have to pay these contributions if you want to claim benefits from the Portuguese government in case of unemployment, maternity, illness, or pensions.

Portugal property prices

Whether you decide to buy or rent, homes in Portugal are generally very affordable outside of the hotspot areas like coastal towns and city centres.

According to Numbeo, the average Portugal property rental prices can range from €300-€900 a month for one bedroom to 500€-1,700€ a month for three bedrooms depending on location.

Rent will of course be lower for unfurnished properties, but you’ll have to factor in the cost of buying your own furniture.

Apartments in Portugal cost from 1,450€ - 5,000€ per square metre in city centres or from 1,000€ - 3,000€ per square metre outside of city centres if you’re looking to purchase.

Portugal’s National Institute for Statistics (INE) provides these latest figures for the overall average value of property sale prices:

And here are the average values for several main cities in Portugal according to INE:

The difference in price from a major city to a less ‘fashionable’ one can be over 2,000€ per square metre, so it really is all about location.

It’s possible to save a lot of money by looking at properties a bit further inland, while still being within driving distance of the coast and everything it has to offer.

Purchasing property in Portugal is a way to fast-track residency through the Golden Visa scheme.

Portugal food prices

The cost of groceries in Portugal depends on your dietary preferences and habits, but Expatica suggests an average monthly food budget of 200€ - 300€.   

This is around the same as the average monthly food spend in the UK, which ranges from £175-£262 (203€-304€) for a single person.

Local markets make it easy and cheap to get fresh fruit, vegetables and seafood in Portugal, and there are recognisable discount shops like Aldi and Lidl for shopping on a budget.

The only downside is that branded products tend to be much more expensive as they’re imported from other countries so home comforts will cost you more.

If you like to dine out a lot, coffee and lunchtime menus are very affordable and for dinner, excursions traditional Portuguese cuisines and house wines tend to be quite cheap.

More upmarket venues will be more expensive, especially for non-Portuguese cuisines if current food trends are driving up prices.

Overall, maintaining a healthy lifestyle with occasional luxury items and eating out is easy to do on most budgets in Portugal.

Utilities in Portugal

Portugal has a mild climate, so your utility bills will depend on how much you use air conditioning in the summer and heating in the winter.

They’ll be higher if you have a larger property with extra features like a pool.

There are several electricity and gas suppliers to choose from in Portugal, with metered options and monthly or bi-monthly billing.

Mains water is supplied by local water boards with fixed metered payments.

Gas tanks and water tanks are often used in more rural areas.

These are the kinds of utility costs you can expect in Portugal according to Numbeo, Portugalist, and Dispatch Europe:

Like in the UK, it’s possible to save money by opting for a broadband, phone, and TV bundle.

Portugal has a good internet infrastructure, so broadband is widely available.

Depending on your individual usage habits, you can expect to pay somewhere between 150€ - 200€ a month to cover the above utilities.

This is cheaper than the UK average of £187 (217€) a month for the same utilities.

Transportation in Portugal

Buses and trains are the most popular forms of public transport in Portugal, with main cities like Lisbon and Porto also having metro and tram lines.

Buses are the primary option for connecting towns and rural areas.

Numbeo states that public transport prices range from 1-2€ for a single ticket, with monthly passes available from 30-40€.

If you need to get a taxi in Portugal, fares start from 3€ and add around 0.50€ per kilometre.

If you drive a car, you’ll pay around 1.56€ per litre for petrol in Portugal, compared to £1.26 (1.46€) in the UK.

Though petrol is slightly more expensive in Portugal, public transport is cheaper there than the UK average prices.

Education in Portugal

State-funded schools are free to attend in Portugal, but lessons are taught in Portuguese.

Most expatriates prefer to send children to private international schools, where the Portuguese curriculum is taught in multiple languages.

However, private schools are expensive, starting from 8,200€ - 12,100€ a year according to Expatica (around the same or slightly cheaper than the UK).

Homeschooling is also a possibility if you prefer.

University education is much cheaper in Portugal than in the UK, with tuition costing around 950€ – 1,250€ a year for public universities.

Private universities cost a bit more, at around 3,350€ – 3,900€ per year, which is still far cheaper than the £9,000 a year in England.

Lots of courses are available in English.

Health insurance Portugal

According to data from the World Health Organisation, Portugal ranks 12th in the world out of 191 WHO member states for healthcare system efficiency.

This is 6 spots ahead of the UK, though Portugal’s healthcare system is very similar to the NHS.

Portugal has high-quality health services, though public services can suffer from long waiting times like in the UK.

The Portuguese public health service (SNS) is accessible for residents registered in the social security system who pay health insurance contributions from their monthly wages.

Healthcare is free for children under 18 and adults over 65, with minimal costs for consultations and treatments for everyone else.

This is usually around 5-20€ for doctor’s appointments and basic procedures.

Prescription medicines are graded into four different classes which decide how much you need to pay for them, ranging from 10-85% of the cost.

If you don’t qualify for public healthcare or would rather spend more to skip waiting times, private health insurance is also available.

For comparison, this can cost 30€ - 75€ per appointment, with private hospital procedures costing hundreds to thousands of euros.

Money and tax in Portugal for expats

Living in Portugal requires opening a Portuguese bank account if you intend to finance property or set up direct debits for bills.

Most banks in Portugal charge a small monthly fee for running a bank account, around 5€ - 10€.

For international transfers or currency conversions to euros, you might have to pay around 15€.

Any credit card, overdraft, or loan fees will depend on the specific bank.

If you live in Portugal for more than 183 days a year, have a permanent residence in Portugal, or work for the Portuguese state, then you’re classed as a tax resident.

This means you have to pay tax on global income, though international tax treaties prevent some foreign citizens from having to pay tax on the same income twice.

The Portuguese tax year is simply the same as the calendar year, starting on 1st January and ending on 31st December.

The window for submitting income tax returns for the previous tax year is from 1st April to 1st June the following year, with penalties starting from 200€ for failed or late submissions and payments.

Non-residents are charged a flat rate of 25% of their total income, while the income tax rates for Portuguese residents are progressive.

This tax applies to all income from employment (including self-employment), pensions, investments, and capital gains.

Income from property rental is taxed at a flat rate of 15%.

Additionally, property owners in Portugal have to pay a local tax called IMI, which is the equivalent of council tax in the UK.

This varies from 0.3-0.8% of the property value depending on the area, with deductions available for dependants, low income, or energy efficiency.

Properties with a value below 125,000€ may be eligible for a 3-year exemption if the owner lives in the property themselves.

Anyone moving to Portugal can apply to the Non-Habitual Resident scheme to qualify for tax exemptions for their first 10 years living in the country.

Non-Habitual Residents are eligible for a flat tax rate of 20% regardless of income amount, with no tax on investments or foreign pensions.

Where to live in Portugal

The cost of living in Portugal depends on the lifestyle and environment you’re looking for, and your budget for making it happen.

As a general guide, here are some of the cheapest cities to live in Portugal and some of the most expensive according to the Economic Research Institute.

And here are examples of the living costs in 12 of the most popular cities to move to in Portugal, as estimated by Nomad Guide:

You may prefer to pay the higher prices to experience the bustling scenes of the coastal cities, or steer further inland into central Portugal for the cheaper laid-back countryside lifestyle.

There are gorgeous landscapes and historical attractions wherever you go in Portugal, and sandy beaches are never too far away.

If you’re interested in moving to Portugal or purchasing property there, contact Ideal Homes Portugal to help you find the perfect property in your ideal area.