One foot in the Algarve – number of Brits living in Portugal jumps by 34%

The number of British citizens officially registered as living in Portugal shot up by more than 30% between 2019 and 2020, well beyond anything that has been seen in recent years.

That’s according to the latest Immigration, Borders and Asylum Report for 2020 from Portugal’s borders and immigration service, SEF, which revealed a 34.6% increase.

The increase has been caused by several factors, including Brexit and Portugal’s generous non-habitual resident tax scheme, which enables many foreigners (including Brits) who move to Portugal to benefit from huge reductions in their income tax bills.

Introduced in 2009 to help with the recovery from the global financial crisis, the non-habitual resident tax incentive (often known simply as the NHR scheme) exempts individuals with certain sources of income from overseas (including pensions) from paying tax on that income.

Portugal replaced the exemption with a 10% tax rate in its 2020 budget, but this is still well below what would be payable in many other countries.

Unsurprisingly, Brexit has also played a key role in pushing many families towards Portugal. In the four years from 2011 to 2015, the number of Brits living in Portugal either reduced, or grew by a maximum of 4% per year. Then, in 2016, came the referendum and Britain voting to leave the EU.

In that year, the number of Brits living in Portugal shot up by 13% and it rose again, by 16%, in 2017 and then by 18% in 2018. The latest SEF report has now shown a rise of 34.6% from 2019 to 2020, meaning a total of 46,238 Brits are officially resident in Portugal in 2020. There will be many others who are still waiting on residency – delayed by Covid issues and other factors – and those who have taken advantage of the country’s Golden Visa scheme (open to Brits since January this year) where official residency is not required.

Nevertheless, even if the official number and actual number don’t fully align, the figures provided by SEF still make Britons the second largest group of foreigners resident in Portugal, only behind Brazilians who have deep cultural, historical and family ties to the Iberian peninsula’s smaller nation.

Back in 2016, by way of comparison, Britons made up only the sixth largest group of foreign residents in Portugal.

The two countries have long had an association with each other, forming the world’s longest-running alliance – dating back to May 1386 and the Treaty of Windsor – and in more recent years being closely tied by tourism and investment.

“Portugal’s lifestyle benefits have long made it an attractive destination for British retirees and we’ve seen a notable increase in those looking to enjoy their retirement here over the past few years,” Christina Hippisley, general manager of the Portuguese Chamber of Commerce in the UK, said.

“The affordability of life in Portugal and the longer life expectancy here both play into this. At the same time, we’ve seen a rising number of younger families moving to Portugal, attracted by the country’s excellent international schools, laid back pace of life and – for many – its location within the Schengen Zone.”