People are FOMO flocking to Portugal

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Topic Author
stocknoob4111
Posts: 3509
Joined: Sun Jan 07, 2018 11:52 am

People are FOMO flocking to Portugal

Post by stocknoob4111 »

LA Times recently ran a piece about how Californians are flocking to Portugal in droves and driving the cost of real estate there. Home values in some areas of Portugal have supposedly gone up 300-400% in the last 2-3 years.

https://www.latimes.com/world-nation/st ... ion-lisbon

Portugal has been on my radar as well, i'm a few years away from retirement though and for me I first want to do some long term travel to check out other retirement spots, then evaluate those vs just settling down here in the US (with ACA for healthcare), and evaluate Portugal as well at that time, so definitely this is several years away for me.

However, the whole FOMO thing is alarming and now I am wondering if some of these destinations will no longer be affordable or viable (the current generous visa policies rescinded) etc.

I currently should qualify for the D7 since my taxable generates enough in income over the required limit. However, since I am still working I don't want to complicate my tax situation and I don't even know if my employer will agree to working overseas.

Thoughts? Do you think the housing inflation in Portugal is sustainable? Is there any truth to these alarmist reports that require more urgent planning so that one doesn't miss the opportunity - for instance gain residency in Portugal sooner than later and relinquish it if it no longer suits... rather than not do it and have no options later.
schmitz
Posts: 343
Joined: Thu Sep 01, 2011 5:21 pm

Re: People are FOMO flocking to Portugal

Post by schmitz »

People are moving to Portugal due to FOMO?

I wouldn’t even move one state over for that
Firemenot
Posts: 1497
Joined: Wed Apr 01, 2020 8:48 pm

Re: People are FOMO flocking to Portugal

Post by Firemenot »

My guess is Californians are looking to cash out but live in a place with a similar climate. I wouldn’t sweat it. If you are ultimately priced out of Portugal just look to places like Chile. Chile has a similar climate.

I say this as a Californian. I’ve thought about cashing out my equity and moving, but can’t find a similar climate in US with notably cheaper real estate.
Topic Author
stocknoob4111
Posts: 3509
Joined: Sun Jan 07, 2018 11:52 am

Re: People are FOMO flocking to Portugal

Post by stocknoob4111 »

thanks, I am a former Californian :) currently in Texas, like it here for the COL but hate the topography and weather. Never been to Portugal but it does seem like a place similar to CA and all the pics I have seen are gorgeous. I've been to Spain and I love it so the proximity to España would also be a positive, plus I am fluent in Spanish and could learn Portuguese I think.

I've been to Chile (northern part - from San Pedro de Atacama down to Valparaiso and Santiago), I went in the winter (June) so most of southern Chile was too cold to visit for any activities. From what I recall Chile was very expensive and this was in 2011.
Normchad
Posts: 5648
Joined: Thu Mar 03, 2011 6:20 am

Re: People are FOMO flocking to Portugal

Post by Normchad »

Not gonna lie, I’m thinking about establishing EU residency via Portugal……
adamthesmythe
Posts: 5774
Joined: Mon Sep 22, 2014 4:47 pm

Re: People are FOMO flocking to Portugal

Post by adamthesmythe »

If you can't move there now you can't move there now. Deal with it and settle on a place to retire when you can retire. Things will change.
Topic Author
stocknoob4111
Posts: 3509
Joined: Sun Jan 07, 2018 11:52 am

Re: People are FOMO flocking to Portugal

Post by stocknoob4111 »

adamthesmythe wrote: Sun Jun 12, 2022 4:25 pm If you can't move there now you can't move there now. Deal with it and settle on a place to retire when you can retire. Things will change.
Yes, that is the common sense thing to do, however, I have seen opportunities go away. When I moved to California in the late 90s most middle class people could easily buy homes - teachers etc. Now, only the rich and famous can buy even an entry level place.

if one is still renting in the US, I think housing inflation is extremely alarming and returns in the stock market are hugely trailing appreciation in rents and real estate.

I think the FOMO is that one will be permanently priced out of any good options. Portugal is appealing because it's low cost, 1st world country which is very safe, has great health care and has amazing geography - mountains, beaches etc. and has a great central location to many other places for travel. I can definitely see the appeal.
Firemenot
Posts: 1497
Joined: Wed Apr 01, 2020 8:48 pm

Re: People are FOMO flocking to Portugal

Post by Firemenot »

stocknoob4111 wrote: Sun Jun 12, 2022 4:33 pm
adamthesmythe wrote: Sun Jun 12, 2022 4:25 pm If you can't move there now you can't move there now. Deal with it and settle on a place to retire when you can retire. Things will change.
Yes, that is the common sense thing to do, however, I have seen opportunities go away. When I moved to California in the late 90s most middle class people could easily buy homes - teachers etc. Now, only the rich and famous can buy even an entry level place.

if one is still renting in the US, I think housing inflation is extremely alarming and returns in the stock market are hugely trailing appreciation in rents and real estate.

I think the FOMO is that one will be permanently priced out of any good options. Portugal is appealing because it's low cost, 1st world country which is very safe, has great health care and has amazing geography - mountains, beaches etc. and has a great central location to many other places for travel. I can definitely see the appeal.
I live on the northern Central Coast. Two hours from Bay Area. My neighborhood close to beach sells for $1,300 a square foot. Has almost doubled during Covid. Insane basically. I’d totally consider moving to Portugal if I didn’t have kids to think about.
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: People are FOMO flocking to Portugal

Post by JoeRetire »

stocknoob4111 wrote: Sun Jun 12, 2022 4:04 pmI am wondering if some of these destinations will no longer be affordable or viable (the current generous visa policies rescinded) etc.
Obviously the market will dictate. Long term, there's no way to know which locales will be "affordable" and which will not.

Either be prepared to continue to move to ever-cheaper locales, or save enough that it won't matter. We've chosen the latter.
This isn't just my wallet. It's an organizer, a memory and an old friend.
koryg75
Posts: 121
Joined: Sun Feb 01, 2015 7:48 am

Re: People are FOMO flocking to Portugal

Post by koryg75 »

As someone living in an area that I 100% don’t want to retire in, I can empathize. But I’m at least 7-8 years away, so I’ve settled on the mindset that a lot can change in that timeframe. These areas in Portugal could become insanely crowded and less appealing, or not. That goes for many “hot” areas right now. Not much we can do about it. I suppose you could start making a list of areas similar to the hot markets in Portugal. The one thing I for sure wouldn't do is buy something just because of FOMO.
SteadyOne
Posts: 688
Joined: Fri Mar 22, 2019 5:26 pm

Re: People are FOMO flocking to Portugal

Post by SteadyOne »

Not sure the numbers of US migrants are really that high. How many people will REALLY move overseas for good and stay? One need to have assets, go through visa issues and leave family behind. For Brits or Germans is not that hard, cause they are close but for Americans not that sure. I checked the numbers: in 2021 7,000 Americans living in Portugal and 102 Americans received Golden Visas in 2021. How many of those are from CA? Even less. So it is an equivalent of 7,000 people moving into Michigan.

The population on Portugal is 10 million.

So numbers do not support the newspaper story, unless someone can show different numbers.
Last edited by SteadyOne on Sun Jun 12, 2022 7:17 pm, edited 1 time in total.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
nigel_ht
Posts: 4742
Joined: Tue Jan 01, 2019 9:14 am

Re: People are FOMO flocking to Portugal

Post by nigel_ht »

koryg75 wrote: Sun Jun 12, 2022 6:57 pm As someone living in an area that I 100% don’t want to retire in, I can empathize. But I’m at least 7-8 years away, so I’ve settled on the mindset that a lot can change in that timeframe. These areas in Portugal could become insanely crowded and less appealing, or not. That goes for many “hot” areas right now. Not much we can do about it. I suppose you could start making a list of areas similar to the hot markets in Portugal. The one thing I for sure wouldn't do is buy something just because of FOMO.
I dunno…I was looking at Bozeman a decade ago and I think I’ve missed the window. I should have bought a cheap lot or something back then.

There is no way to “save enough” if billionaires start buying stuff.
koryg75
Posts: 121
Joined: Sun Feb 01, 2015 7:48 am

Re: People are FOMO flocking to Portugal

Post by koryg75 »

nigel_ht wrote: Sun Jun 12, 2022 7:11 pm
koryg75 wrote: Sun Jun 12, 2022 6:57 pm As someone living in an area that I 100% don’t want to retire in, I can empathize. But I’m at least 7-8 years away, so I’ve settled on the mindset that a lot can change in that timeframe. These areas in Portugal could become insanely crowded and less appealing, or not. That goes for many “hot” areas right now. Not much we can do about it. I suppose you could start making a list of areas similar to the hot markets in Portugal. The one thing I for sure wouldn't do is buy something just because of FOMO.
I dunno…I was looking at Bozeman a decade ago and I think I’ve missed the window. I should have bought a cheap lot or something back then.

There is no way to “save enough” if billionaires start buying stuff.
Bozeman is beautiful. But when billionaires start buying and the entire culture changes, I no longer want to live there. It’s a visit only place now for me.
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: People are FOMO flocking to Portugal

Post by JoeRetire »

SteadyOne wrote: Sun Jun 12, 2022 7:09 pmI checked the numbers: in 2021 7,000 Americans living in Portugal and 102 Americans received Golden Visas in 2021.
Not much of a flock.
Perhaps not so much FOMO.
This isn't just my wallet. It's an organizer, a memory and an old friend.
koryg75
Posts: 121
Joined: Sun Feb 01, 2015 7:48 am

Re: People are FOMO flocking to Portugal

Post by koryg75 »

Wait- you’ve never been but are thinking of relocating there? You need to at least visit several times in several different seasons first. And BTW- Portuguese and Spanish aren’t very similar. You’d have a far easier time with French and Italian.
sailaway
Posts: 8215
Joined: Fri May 12, 2017 1:11 pm

Re: People are FOMO flocking to Portugal

Post by sailaway »

Before Portugal, there were other places to flock to. I have little doubt that in ten years there will be a new trendy destination.
Topic Author
stocknoob4111
Posts: 3509
Joined: Sun Jan 07, 2018 11:52 am

Re: People are FOMO flocking to Portugal

Post by stocknoob4111 »

koryg75 wrote: Sun Jun 12, 2022 8:37 pm Bozeman is beautiful. But when billionaires start buying and the entire culture changes, I no longer want to live there. It’s a visit only place now for me.
funny, I was just watching this clip about people moving to Bozeman, never really knew it was such a hot destination

https://www.youtube.com/watch?v=bISrIBXm6H4
heyyou
Posts: 4461
Joined: Tue Feb 20, 2007 3:58 pm

Re: People are FOMO flocking to Portugal

Post by heyyou »

Take a careful look at western Panama, far from the tropical capital named Panama City. Be aware there are beach condos at a place with rip tides (one or less drownings per year, not just one drowning with the story being repeatedly told), and another where the condo developer has not ever paved the road for more than a decade, but the sales office continuously says "it will be paved soon."

Puerto Armuelles is a poor town with too much crime, but the ocean water temperature is 84.7 degrees F. there, not the cold California ocean temperatures where the surfers wear wet-suits all year. There are websites similar to those for weather info, where you can see daily ocean temperatures.

Panama's tall, extinct volcano (Volcan Baru) has scattered towns at various altitudes/temperatures on its gradual slopes. Each town has a steady year-round temperature range due to equatorial proximity, but with wet and dry seasons. A Panama relocation tour operator from Texas, now lives where she does not use heating nor cooling at her home, above the town of Boquete, according to her.
Normchad
Posts: 5648
Joined: Thu Mar 03, 2011 6:20 am

Re: People are FOMO flocking to Portugal

Post by Normchad »

For a lot of people, they like the Portugal golden visa because Portugal is awesome. But it also presents a relatively easy path to EU citizenship.
nigel_ht
Posts: 4742
Joined: Tue Jan 01, 2019 9:14 am

Re: People are FOMO flocking to Portugal

Post by nigel_ht »

stocknoob4111 wrote: Sun Jun 12, 2022 9:07 pm
koryg75 wrote: Sun Jun 12, 2022 8:37 pm Bozeman is beautiful. But when billionaires start buying and the entire culture changes, I no longer want to live there. It’s a visit only place now for me.
funny, I was just watching this clip about people moving to Bozeman, never really knew it was such a hot destination

https://www.youtube.com/watch?v=bISrIBXm6H4
The Yellowstone club has been a thing for a while but now folks are buying up ranches…I always figured I could afford a little place at Big Sky while the billionaires had their places in the Yellowstone club.
EverydayWallSt
Posts: 54
Joined: Thu Jun 18, 2020 2:29 pm

Re: People are FOMO flocking to Portugal

Post by EverydayWallSt »

I moved to Portugal right before the pandemic. Anecdotally, the number of Americans moving here is still small but growing and accelerating, and the vast majority of expats are from other countries (Brazil plus Europe (UK, Germany, France, etc.). People are starting to feel the pricing impact of American expats however, specifically in certain areas in Lisbon/Porto/Algarve. There’s a new large condo development nearby with several hundred units and the sales staff is supposedly only targeting marketing to Americans, for example. Maybe the developers just read too many of these articles and set some silly expectations.

In real numbers, 11% of the population in Portugal is comprised of expats. There are a lot of cultures represented. We are friends with one American couple, lots of locals, a Brazilian family, and lots of EU expats. We make friends with neighbors, sports, language lessons, and through our kids’ school system, so that’s how it’s organically worked out so far. That said, my in-laws decided to join us and move here from CA recently as well. They’ve joined several expat meetups and social groups. They already have dozens of American friends (and from elsewhere of course). The view toward number of Americans depends on your lens, I suppose.

If you’re interested, check out the Facebook group called Americans in Portugal. It’s about 17k members and a mix of people who are here and those who are thinking of / in the midst of moving. Lots of questions and help with visa processes, finding areas to live, etc. and lots of events once you’re here.

Edited to add: we have Portuguese friends who have lamented to us that they feel that all new construction is at a price point that is unaffordable to locals, and only serves expats. But they also say that they recognize the economic contributions of immigration, and love seeing the city we live in grow, new schools built, and services added etc. As with anything, there are pros and cons.

Boa sorte e até breve.
Valuethinker
Posts: 49027
Joined: Fri May 11, 2007 11:07 am

Re: People are FOMO flocking to Portugal

Post by Valuethinker »

stocknoob4111 wrote: Sun Jun 12, 2022 4:21 pm thanks, I am a former Californian :) currently in Texas, like it here for the COL but hate the topography and weather. Never been to Portugal but it does seem like a place similar to CA and all the pics I have seen are gorgeous. I've been to Spain and I love it so the proximity to España would also be a positive, plus I am fluent in Spanish and could learn Portuguese I think.

I've been to Chile (northern part - from San Pedro de Atacama down to Valparaiso and Santiago), I went in the winter (June) so most of southern Chile was too cold to visit for any activities. From what I recall Chile was very expensive and this was in 2011.
Portugal is booming in part because they have a designated investor program for passports-- invest a certain amount of money for a certain number of years, and get a passport. A lot of Brits trying to get their EU citizenship back, etc.

The parts people like could become very expensive.

It's a big country, so the north (wetter, colder) might stay more affordable.

Spain is also a viable choice, if you can get residency. Fluency in Spanish would certainly help - that's a major reason Brits, post Brexit, are getting tossed out (some). They haven't learned the language and so cannot pass the citizenship test. Hilariously, some of them voted for Brexit-- thinking it would never affect them (not many, perhaps, but some).

My friend who lives outside of Malaga mastered Spanish & is taking out citizenship. The only place she really hates in Spain is Gibraltar - for its Britishness.
User avatar
kramer
Posts: 1953
Joined: Wed Feb 21, 2007 1:28 am
Location: World Traveler

Re: People are FOMO flocking to Portugal

Post by kramer »

EverydayWallSt wrote: Mon Jun 13, 2022 3:16 am I moved to Portugal right before the pandemic. ...
Nice post. If I recall, that Portugal visa program gives you some kind of tax exemption or break for 10 years, but after that you become integrated into the Portugal tax system? Are taxes for an American retiree post-10-years as high in Portugal like they are, say, in Spain?

Another thing I noticed about Portugal is that the number of English speakers is quite high. I guess that is because the country is small and no nearby countries speak the same language.
halfnine
Posts: 2421
Joined: Tue Dec 21, 2010 12:48 pm

Re: People are FOMO flocking to Portugal

Post by halfnine »

I've mentioned it before on this forum but when I started living abroad about 20 years residency nearly all the desirable places in world were well within my grasp. Today the number of desirable countries that I'd be eligible to relocate to has been greatly reduced. And, personally, I don't see this trend reversing. The reality is, of course, there isn't much that is actionable about it other than pulling the trigger sooner which depending on one's circumstances would come with its own set of risks. However, on a more practical view the bigger risk is moving abroad and then finding out that the local inflation exceeds your ability to keep up and this happens with great frequency. So, if one does opt to relocate abroad the wisest approach is to have a large buffer or a Plan B.
nigel_ht
Posts: 4742
Joined: Tue Jan 01, 2019 9:14 am

Re: People are FOMO flocking to Portugal

Post by nigel_ht »

halfnine wrote: Mon Jun 13, 2022 6:31 am I've mentioned it before on this forum but when I started living abroad about 20 years residency nearly all the desirable places in world were well within my grasp. Today the number of desirable countries that I'd be eligible to relocate to has been greatly reduced. And, personally, I don't see this trend reversing. The reality is, of course, there isn't much that is actionable about it other than pulling the trigger sooner which depending on one's circumstances would come with its own set of risks. However, on a more practical view the bigger risk is moving abroad and then finding out that the local inflation exceeds your ability to keep up and this happens with great frequency. So, if one does opt to relocate abroad the wisest approach is to have a large buffer or a Plan B.
Post covid my desire to move abroad has greatly diminished…many countries left their retiree residents high and dry.

The MM2H program is a great example of where changing politics deliberately lock out many folks from returning home and with new requirements will kick many out. If you purchased a home there you’re pretty screwed.
User avatar
Bogle7
Posts: 1984
Joined: Fri May 11, 2018 9:33 am
Location: In the Witness Protection Program

Language

Post by Bogle7 »

Español es fácil.
Português é dificil.
Old fart who does three index stock funds, baby.
User avatar
Elsebet
Posts: 1606
Joined: Mon Feb 08, 2016 1:28 pm
Location: Erie, PA

Re: People are FOMO flocking to Portugal

Post by Elsebet »

I find cheap, great places to live similar to individual stocks. By the time you hear about it, it's too late!
"...the man who adapts himself to his slender means and makes himself wealthy on a little sum, is the truly rich man..." ~Seneca
Topic Author
stocknoob4111
Posts: 3509
Joined: Sun Jan 07, 2018 11:52 am

Re: People are FOMO flocking to Portugal

Post by stocknoob4111 »

Elsebet wrote: Mon Jun 13, 2022 1:13 pm I find cheap, great places to live similar to individual stocks. By the time you hear about it, it's too late!
then it's time to find the future best place to live before it's found out... that is the difficult part :D
elderwise
Posts: 836
Joined: Fri Jul 22, 2016 10:27 am

Re: People are FOMO flocking to Portugal

Post by elderwise »

Normchad wrote: Sun Jun 12, 2022 9:21 pm For a lot of people, they like the Portugal golden visa because Portugal is awesome. But it also presents a relatively easy path to EU citizenship.
Relatively easy it is not. I think you still will need to learn and or pass Language test for Portugese before getting the citizenship.

An easier route OP should you be interested in EU citizenship (which gives full access to live study return in any EU countries) is to pursue Netherland citizenship by means of Dutch American Friendship treaty the bar is low but the only big issue would be Dutch have Wealth tax (notional gain) on your worldwide asset outside 401k and they don't recognize Roth or IRA as tax deferred.
gougou
Posts: 1317
Joined: Thu Sep 28, 2017 7:42 pm

Re: People are FOMO flocking to Portugal

Post by gougou »

How does Portugal tax your investment income? Does it have something similar to Ireland’s non-domiciled status?
The sillier the market’s behavior, the greater the opportunity for the business like investor.
FrugalFed
Posts: 281
Joined: Mon Mar 09, 2015 11:40 pm

Re: People are FOMO flocking to Portugal

Post by FrugalFed »

nigel_ht wrote: Mon Jun 13, 2022 7:46 am The MM2H program is a great example of where changing politics deliberately lock out many folks from returning home and with new requirements will kick many out. If you purchased a home there you’re pretty screwed.
The Malaysia MM2H changes are a great corollary for this. Just when you think you're settled, the rules change. The big EU states do not like the Maltas, Portugals, Cypruses, etc. making it easy to obtain EU citizenship with either $$ or very minimal days-in-country. There's a big-time risk the crackdown could come before one has met the five-year requirement to apply for EU citizenship.
Starfish
Posts: 2996
Joined: Wed Aug 15, 2018 6:33 pm

Re: People are FOMO flocking to Portugal

Post by Starfish »

What is the draw of Portugal comparing to Spain? I love Porto or Lisbon, but Barcelona is still a larger and nicer city and you can actually swim in the sea. Prices are reasonable (for my Californian gauge at least) even in the city, once you get out it gets cheaper.
Bfwolf
Posts: 2108
Joined: Thu Oct 14, 2010 11:19 am

Re: People are FOMO flocking to Portugal

Post by Bfwolf »

The big draws for Portugal are:

1) It's basically the cheapest/easiest way to get EU citizenship.

2) Good weather

3) Affordable for a first world country

4) English spoken fairly well. Certainly nothing like a Scandinavian country but far better than Spain.
Valuethinker
Posts: 49027
Joined: Fri May 11, 2007 11:07 am

Re: People are FOMO flocking to Portugal

Post by Valuethinker »

kramer wrote: Mon Jun 13, 2022 6:12 am
EverydayWallSt wrote: Mon Jun 13, 2022 3:16 am I moved to Portugal right before the pandemic. ...
Nice post. If I recall, that Portugal visa program gives you some kind of tax exemption or break for 10 years, but after that you become integrated into the Portugal tax system? Are taxes for an American retiree post-10-years as high in Portugal like they are, say, in Spain?

Another thing I noticed about Portugal is that the number of English speakers is quite high. I guess that is because the country is small and no nearby countries speak the same language.
When I was in Portugal (north) I met 60-70 somethings who had lived in America for 30+ years, retired, and come back home. A lot of expats that way to North America or France, etc. Spoke English with a broad New Jersey accent :wink:
User avatar
oldcomputerguy
Moderator
Posts: 17932
Joined: Sun Nov 22, 2015 5:50 am
Location: Tennessee

Re: People are FOMO flocking to Portugal

Post by oldcomputerguy »

A disrespectful comment was removed. As a reminder, see: General Etiquette
At all times we must conduct ourselves in a respectful manner to other posters. Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.
There is only one success - to be able to spend your life in your own way. (Christopher Morley)
afr
Posts: 684
Joined: Sun Apr 27, 2014 4:01 pm

Re: People are FOMO flocking to Portugal

Post by afr »

I’ve read that the sales tax is quite steep. Not sure if that matters much if the cost of goods and services is considerably less than here in the U.S.
Wannaretireearly
Posts: 4880
Joined: Wed Mar 31, 2010 4:39 pm

Re: People are FOMO flocking to Portugal

Post by Wannaretireearly »

Sign me up.

Reality is I know I’d miss NorCal quickly. Too spoiled in many ways here. Sign me up for 6 week immersion trip, then send me back.

Home is where my Toto seat is.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
BUBear29
Posts: 396
Joined: Wed Aug 19, 2015 4:20 pm
Location: DFW

Re: People are FOMO flocking to Portugal

Post by BUBear29 »

Wannaretireearly wrote: Tue Jun 14, 2022 12:21 pm Home is where my Toto seat is.
i feel that. reading this on my Toto, avoiding the heat outside in Fort Worth.
There is no dignity quite so impressive, and no one independence quite so important, as living within your means.
User avatar
Bogle7
Posts: 1984
Joined: Fri May 11, 2018 9:33 am
Location: In the Witness Protection Program

Sales tax vs VAT

Post by Bogle7 »

afr wrote: Tue Jun 14, 2022 12:09 pm I’ve read that the sales tax is quite steep. Not sure if that matters much if the cost of goods and services is considerably less than here in the U.S.
There is no sales tax in Portugal.
There is VAT.
Old fart who does three index stock funds, baby.
iamlucky13
Posts: 3527
Joined: Sat Mar 04, 2017 4:28 pm
Location: Western Washington

Re: Sales tax vs VAT

Post by iamlucky13 »

Bogle7 wrote: Tue Jun 14, 2022 10:59 pm
afr wrote: Tue Jun 14, 2022 12:09 pm I’ve read that the sales tax is quite steep. Not sure if that matters much if the cost of goods and services is considerably less than here in the U.S.
There is no sales tax in Portugal.
There is VAT.
If I remember right, it tends to confuse people used to a sales tax, because the rate is high (something like 20%?), but unlike a sales tax that applies to the full sales value, it only applies to the marginal cost of a transaction.

So if a store buys a gadget at wholesale for $10, and sells it retail for $20, the value added tax is applied to the $10 difference, and the tax is $2.

Meanwhile, a sales tax of 10% applied to the same $20 retail sale also results in a tax of $2.

I apologize if I got any of that wrong. Regardless of the mechanisms of how the taxes are calculated and at what stages of production, distribution, and sale to the end user they are applied, the real question of interest is no doubt, what is the overall tax burden (and presumable, how does that compare to my other options)?

Information like this can be helpful:

https://www.taxpolicycenter.org/briefin ... nationally

But it also isn't a complete picture because there are usually differences in the level of services those taxes pay for. There are also differences in how the tax burden is distributed with respect to income or possessions. The link above appears to indicate Portugal does have derive more of its income from goods and services taxes than the US, but less from property and income taxes.
afr
Posts: 684
Joined: Sun Apr 27, 2014 4:01 pm

Re: People are FOMO flocking to Portugal

Post by afr »

Does anyone know if the percentage of US retirees moving abroad has increased in the past few decades or is this a more recent phenomenon?
Topic Author
stocknoob4111
Posts: 3509
Joined: Sun Jan 07, 2018 11:52 am

Re: People are FOMO flocking to Portugal

Post by stocknoob4111 »

elderwise wrote: Mon Jun 13, 2022 1:23 pm An easier route OP should you be interested in EU citizenship (which gives full access to live study return in any EU countries) i
I have zero interest in relinquishing my US Citizenship, now or ever. I would prefer to retire in the US but it's getting just too expensive to live here in any remotely desirable area. And then there is healthcare which is downright scary to deal with in the US - perhaps not too bad after Medicare age but before that even with insurance it's hairy.

Plan is to spend the next 5-10 years traveling around without commitment and then using the lessons learned to make an informed decision about where I would eventually like to settle for good. However, this whole FOMO thing is getting interesting. In the next 5 years if all the desirable places *worldwide* are gone then that would be unfortunate. It's hard to believe that something like that would happen but it has happened here in the US - as I said when I first came to Southern California in the late 90s almost anyone in the middle class could easily afford to live nicely, now forget about it, you need to be Liberace's first born to afford even a shack in a bad neighborhood.

Becoming a tax resident of anywhere in the EU is frankly a scary thought given the reputation of how most countries in the union go after individuals with even modestly high wealth. I think Spain has a wealth tax on anything over 750,000 Euros which I find frankly ridiculous.
User avatar
GeraniumLover
Posts: 560
Joined: Mon Feb 22, 2016 2:39 pm

Re: Sales tax vs VAT

Post by GeraniumLover »

iamlucky13 wrote: Tue Jun 14, 2022 11:20 pm
Bogle7 wrote: Tue Jun 14, 2022 10:59 pm
There is no sales tax in Portugal.
There is VAT.
If I remember right, it tends to confuse people used to a sales tax, because the rate is high (something like 20%?), but unlike a sales tax that applies to the full sales value, it only applies to the marginal cost of a transaction.

So if a store buys a gadget at wholesale for $10, and sells it retail for $20, the value added tax is applied to the $10 difference, and the tax is $2.
Really? So you can tell a retailer's wholesale price by how much VAT it charges? And a retailer could charge different VAT for two identically priced items?
coffeeblack
Posts: 770
Joined: Wed Jun 19, 2019 10:20 am

Re: People are FOMO flocking to Portugal

Post by coffeeblack »

So what happens after ten years are up and you have to pay the full tax rate in Portugal?
iamlucky13
Posts: 3527
Joined: Sat Mar 04, 2017 4:28 pm
Location: Western Washington

Re: Sales tax vs VAT

Post by iamlucky13 »

GeraniumLover wrote: Thu Jun 23, 2022 7:22 pm
iamlucky13 wrote: Tue Jun 14, 2022 11:20 pm
Bogle7 wrote: Tue Jun 14, 2022 10:59 pm
There is no sales tax in Portugal.
There is VAT.
If I remember right, it tends to confuse people used to a sales tax, because the rate is high (something like 20%?), but unlike a sales tax that applies to the full sales value, it only applies to the marginal cost of a transaction.

So if a store buys a gadget at wholesale for $10, and sells it retail for $20, the value added tax is applied to the $10 difference, and the tax is $2.
Really? So you can tell a retailer's wholesale price by how much VAT it charges? And a retailer could charge different VAT for two identically priced items?
In my limited experience in the UK, no. The listed price already included the tax.
Topic Author
stocknoob4111
Posts: 3509
Joined: Sun Jan 07, 2018 11:52 am

Re: People are FOMO flocking to Portugal

Post by stocknoob4111 »

coffeeblack wrote: Thu Jun 23, 2022 7:24 pm So what happens after ten years are up and you have to pay the full tax rate in Portugal?
as I understand it you are subject to normal Portuguese taxes, however for US income (like 401k withdrawals) it wouldn't matter as US taxes are owed and due to the tax treaty taxes there wouldn't apply. However I think you may owe the difference to Portugal if liability is higher. US taxes can be low (12% marginal rate for example) and non NHR rates in Portugal are 20+ % if I recall correctly!!!
gougou
Posts: 1317
Joined: Thu Sep 28, 2017 7:42 pm

Re: People are FOMO flocking to Portugal

Post by gougou »

stocknoob4111 wrote: Thu Jun 23, 2022 6:38 pm
Becoming a tax resident of anywhere in the EU is frankly a scary thought given the reputation of how most countries in the union go after individuals with even modestly high wealth. I think Spain has a wealth tax on anything over 750,000 Euros which I find frankly ridiculous.
Ireland has a non-domiciled/remittance-based taxation scheme which seems very interesting. I wonder if anyone on this board has experience with it?

But I guess the weather in Ireland isn’t good so not a lot of people want to retire there.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
Shallowpockets
Posts: 2533
Joined: Fri Nov 20, 2015 9:26 am

Re: People are FOMO flocking to Portugal

Post by Shallowpockets »

OP. Don’t worry about FOMO now. I am sure another article or news blurb will come out soon, and again after that, showing how people are buying in whatever is the flavor of the month.
Everyone nearing retirement thinks about moving. Usually based on the equity in their house. It all looks so exotic and an escape and a real deal, until it isn’t.
I guess it depends on where you are economically. Most BHs from California are at the top of that. They fantasize. But, unless you can simply do it, as in a second house and two continent living, you are not really going to do it.
And, if you do, what of it?
You will most likely seek out an expat place and thus be more or less in the same circumstance. Same people. Maybe a gated community, like in Panama/Costa Rica. Locals in 20k houses, and you in your 350k expat house with groomed lawns and a pool.
JackoC
Posts: 4714
Joined: Sun Aug 12, 2018 11:14 am

Re: Sales tax vs VAT

Post by JackoC »

iamlucky13 wrote: Tue Jun 14, 2022 11:20 pm
Bogle7 wrote: Tue Jun 14, 2022 10:59 pm
afr wrote: Tue Jun 14, 2022 12:09 pm I’ve read that the sales tax is quite steep. Not sure if that matters much if the cost of goods and services is considerably less than here in the U.S.
There is no sales tax in Portugal.
There is VAT.
If I remember right, it tends to confuse people used to a sales tax, because the rate is high (something like 20%?), but unlike a sales tax that applies to the full sales value, it only applies to the marginal cost of a transaction.

So if a store buys a gadget at wholesale for $10, and sells it retail for $20, the value added tax is applied to the $10 difference, and the tax is $2.

Meanwhile, a sales tax of 10% applied to the same $20 retail sale also results in a tax of $2.

I apologize if I got any of that wrong. Regardless of the mechanisms of how the taxes are calculated and at what stages of production, distribution, and sale to the end user they are applied, the real question of interest is no doubt, what is the overall tax burden (and presumable, how does that compare to my other options)?

Information like this can be helpful:

https://www.taxpolicycenter.org/briefin ... nationally

But it also isn't a complete picture because there are usually differences in the level of services those taxes pay for. There are also differences in how the tax burden is distributed with respect to income or possessions. The link above appears to indicate Portugal does have derive more of its income from goods and services taxes than the US, but less from property and income taxes.
There's nothing basically wrong there except to say that VAT comes out in the end up basically same as a sales tax for items consumed domestically. The total value added at each stage adds up to the retail price, and it generally applies to imported inputs also. So other rich countries with 20%+ VAT's basically do have that much more taxation on consumption than a typical state/local sales tax in the US (0%-around 13% are the extremes, usually fairly near the middle of that range), plus usually much higher motor fuel taxes and sometimes other special consumption taxes. Like you say tax is one thing, what it's spent on is another, but judging that is subjective and inevitably political. What you actually have to pay (plainly visible like income or sales tax or less so like VAT) is objective in a given situation.

As to income tax, the US has a now nearly unique system of charging its nationals US federal income tax no matter where they live, though generally you get credit for tax paid to the foreign country. But it means little scope to reduce income tax going from a no tax US state to a foreign country, and the possibility of paying more if the foreign country has higher income taxes. But in general other rich country tax rates aren't a lot higher than US federal. Their top rates though tend to kick in at lower incomes, a mid/upper US earner still getting a fairly lower rate in the US might be in the top bracket in some other rich countries, a high earner might be at top rate in either. And if only considering high income tax US state or foreign country then there's more scope to save on income tax in the foreign country by avoiding state tax.
User avatar
LadyGeek
Site Admin
Posts: 95686
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: People are FOMO flocking to Portugal

Post by LadyGeek »

I removed an off-topic post and reply regarding climate change. The discussion was derailed. As a reminder, see: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
  • US or world economic, political, tax, health care and climate policies
  • conspiracy theories of any type
  • discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Post Reply