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Writer's pictureAlejandra Bernard

5 Reasons Expats are Choosing Portugal Instead of Spain

Updated: Oct 25

When expats think of Southern Europe, Spain has long dominated the conversation. The allure of its culture, food, vibrant cities, and sunny weather made it a prime destination. But lately, Portugal has emerged as the rising star in the region, capturing the hearts of international transplants from all walks of life.


What’s behind this growing preference for Portugal over its larger and perhaps more well-known neighbor? In this article, we’ll explore five surprising reasons expats are choosing Portugal instead of Spain—and why it’s more than just about lower costs. From the irresistible charm of the Algarve to the tax benefits that make settling there a dream, Portugal has a lot going for it.


Let’s uncover why so many people are making the leap to Portugal and loving every minute of it.


A breathtaking view of the Algarve coast in Portugal, featuring rugged cliffs and crystal-clear turquoise waters meeting the deep blue Atlantic Ocean. 5 Reasons Expats are Choosing Portugal Instead of Spain. Offered by the trusted real estate buyer's agent, Lagos Homes in the Algarve, Portugal.

Why Expats are Choosing Portugal Instead of Spain


1. Portugal’s Affordable Cost of Living


One of the biggest reasons expats are choosing Portugal over Spain is the affordable cost of living. While both countries offer a relatively low cost of living compared to Northern Europe or North America, Portugal edges out Spain when it comes to overall affordability—especially in housing, dining, and healthcare.


For example, living in a vibrant city like Lisbon or Porto can be significantly less expensive than Madrid or Barcelona. But what makes Portugal even more attractive is that you don’t have to sacrifice quality for affordability. The Algarve region, in particular, is known for its beautiful landscapes, incredible food, and high standard of living—all without the steep price tags found in Spain’s Costa del Sol.


In Portugal, you can enjoy the same Mediterranean lifestyle, complete with world-class food and stunning coastal views, for a fraction of the cost you’d pay in Spain. Whether you’re a retiree on a fixed income or a digital nomad looking to stretch your dollars, euros, or pounds, Portugal’s affordability is a game-changer.


Key Points on Cost of Living:





A close-up image of various Euro banknotes, showcasing denominations of €5, €20, and €50, representing financial considerations for expats choosing Portugal for its affordability. Offered by the trusted real estate buyer's agent, Lagos Homes in the Algarve, Portugal.

2. Portugal’s Generous Tax Incentives for Expats


Another major factor driving expats to choose Portugal over Spain is the Non-Habitual Residency (NHR) program. This special tax incentive program was designed to attract foreign residents and offers some of the most favorable tax conditions in Europe. Under the NHR program, new residents can enjoy substantial tax reductions on foreign income for up to 10 years.


Here’s how it works: If you qualify for the NHR, you can benefit from a 10% tax on foreign pensions, a flat rate that’s far lower than what you’d pay in Spain. Additionally, some foreign income may even be exempt from Portuguese taxes altogether. This is a huge advantage for retirees and remote workers receiving income from abroad.


On the other hand, Spain’s tax system can be more burdensome for expats. Spanish taxes tend to be higher, and the process for handling foreign income is more complex. For those who are weighing tax implications when choosing their new home, Portugal’s NHR program is a clear winner.


Benefits of the NHR Program:


  • Up to 10 years of favorable tax treatment on foreign income.

  • 10% tax rate on foreign pensions, compared to higher rates in Spain.

  • Attractive for retirees, remote workers, and high-net-worth individuals.


3. Portugal’s Growing Digital Nomad Scene 


Portugal’s rise as a destination for digital nomads and remote workers is one of the most exciting trends in recent years. With the increasing flexibility to work from anywhere, Portugal has become a hub for professionals looking for an affordable, beautiful, and well-connected base. Lisbon, in particular, is now one of Europe’s top cities for remote workers, thanks to its tech-savvy infrastructure, friendly atmosphere, and excellent public transport system.


But it’s not just Lisbon or Porto where digital nomads are flocking. The Algarve, known for its stunning beaches, laid-back lifestyle, and sunny weather, is becoming a hotspot for remote workers. The cost of living is lower than in the capital, and there are plenty of co-working spaces and cafés offering excellent Wi-Fi. Plus, the Algarve’s outdoor lifestyle, with opportunities for surfing, hiking, and exploring, makes it a perfect fit for nomads who crave a work-life balance.


Many nomads find the digital nomad visa programs offered by Portugal to be another plus, allowing them to stay in the country for longer periods. With an increasing number of expat-friendly amenities in the Algarve, from international schools to English-speaking health services, it’s no surprise that this region is on the radar for digital workers from all over the world.


Why Digital Nomads Prefer Portugal:


  • Affordable living in cities like Faro and Lagos, with easy access to co-working spaces.

  • Growing international communities of remote workers.

  • Outdoor lifestyle, including surfing, biking, and exploring nature after work.

  • Visa programs designed specifically for digital nomads.



Two people standing on the coast, silhouetted against a stunning sunset over the Atlantic Ocean in the Algarve, Portugal. This serene moment highlights the region’s tranquil lifestyle, a key reason expats are choosing Portugal over Spain. Offered by the trusted real estate buyer's agent, Lagos Homes in the Algarve, Portugal.

4. Safer and Slower Pace of Life in Portugal


While Spain’s larger cities are known for their vibrant energy, they can also be overwhelming and fast-paced, particularly in tourist-heavy areas. For expats seeking a quieter, safer, and more laid-back lifestyle, Portugal—and especially the Algarve—offers exactly that.


Portugal consistently ranks as one of the safest countries in Europe, with low crime rates and a relaxed, welcoming atmosphere. In the Algarve, expats find peaceful coastal towns where crime is almost nonexistent. Whether you’re raising a family, retiring, or just want to escape the hustle and bustle of city life, Portugal’s smaller towns and villages provide the perfect setting.


The Algarve, in particular, has a reputation for being an expat-friendly haven. With its beautiful beaches, welcoming locals, and English-speaking services, it’s easy for newcomers to feel at home. Many retirees and families are opting to settle here for the slower pace of life, excellent healthcare, and high standard of living.


Safety and Lifestyle Highlights in the Algarve:


  • Portugal ranks high on global safety indexes, making it one of the safest places to live in Europe.

  • The Algarve offers a slower, more peaceful pace of life, perfect for retirees or families.

  • Small, friendly communities where expats integrate easily with locals.



5. Portugal’s Natural Beauty—From the Douro to the Algarve


Spain is undoubtedly stunning, but Portugal’s natural beauty is in a league of its own. The country boasts a wide range of landscapes, from lush, rolling vineyards in the Douro Valley to the dramatic cliffs and sandy beaches of the Algarve coast. Portugal’s mild climate means you can enjoy these natural wonders year-round, whether it’s hiking, surfing, or simply relaxing by the sea.

The Algarve, in particular, is a jewel in Portugal’s crown. It’s home to some of the most beautiful beaches in Europe, with golden sands, crystal-clear waters, and hidden coves waiting to be explored. Whether you’re into watersports like surfing and kayaking or prefer leisurely coastal hikes, the Algarve has something for everyone.


Beyond the Algarve’s beaches, Portugal offers endless opportunities for outdoor adventure. You can explore the Serra da Estrela mountains, take in the views along the Atlantic coast, or discover the country’s many UNESCO World Heritage Sites. Portugal’s outdoor lifestyle is a huge draw for expats looking to lead an active, healthy life.


Outdoor Adventures in Portugal:


  • The Algarve is renowned for its stunning beaches, cliffs, and outdoor activities.

  • Surfing, hiking, and biking are popular activities, with world-class surf spots in places like Nazaré and Sagres.

  • Year-round mild weather allows for outdoor adventures anytime, from beach days to mountain treks.


Conclusion


Portugal has quietly but steadily risen to the top of the list for expats seeking a better quality of life in Europe. From its affordable cost of living to its welcoming communities and beautiful landscapes, it’s no wonder that more people are choosing Portugal instead of Spain.

Whether it’s the laid-back lifestyle of the Algarve, the tax benefits under the NHR program, or the growing opportunities for digital nomads, Portugal has something to offer everyone. Expats looking for safety, beauty, and a slower pace of life are finding that Portugal is the perfect place to call home.


Lagos Homes is your reliable partner for all your real estate needs in Portugal. We go beyond helping you find your dream property, offering expert guidance across all aspects. Do you have any inquiries? Feel free to contact us now!


Dona Ana panoramic beach view describing the blog post conclusion offered by the independent real estate buyer's agent Lagos Homes in the Algarve Portugal

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