Expat Math: How Portugal’s Golden Visa Can Save You Money

Golden Visas Aren’t as Expensive as They Seem
Portugal’s Golden Visa can open the door to residency—and big long-term savings.|©iStock/BrasilNut1

A big part of my role here at International Living is talking to people about their plans for a life abroad.

Too often, money appears to be an obstacle.

For example, let's say Bill and Andrea want an offshore plan B for themselves and their two kids. They want residency rights in Portugal, but they’re not ready to move right away, so neither a passive income nor a digital nomad visa will work.

I tell them they can get a golden visa that will let them live in Portugal as and when they choose, and that leads to permanent residency and citizenship… but they say it’s “too expensive.”

Let’s look at that assumption more closely.

Unless you're prepared to donate money or start a new tech business, the cheapest golden visa requires an investment of about $570,000 in a qualifying Portuguese fund.

That is a lot of money… until you start considering the offsets…

First, many Portuguese investment funds generate excellent annual returns—let’s assume—7.5 %. Even if Bill and Andrea took their annual gains as income rather than reinvesting it, they’d be looking at around $42,750 a year in investment returns. Over 10 years, that’s $427,500.

Second, let's say that Bill and Andrea’s kids transfer from private schools in the US to private schools in Portugal. Based on recent research, some immigrant families have saved up to $288,000 over a 12-year academic cycle for two children by enrolling in Portuguese English-medium international schools. If those kids end up going to university in Portugal, they’ll save nearly $200,000 in tuition compared to the United States.

Third, the US Kaiser Foundation reckons that a US family of four with private health insurance pays about $25,000 a year in premiums, deductibles, and co-pays. Comparable Portuguese medical coverage would cost about $2,000 a year. That’s $230,000 in savings over 10 years.

Putting it all together, moving to Portugal would save this family nearly $1,000,000 compared to staying in America.

But that’s before taxes. Let’s assume Bill and Andrea earn about $150,000 a year and will continue to do so for the next ten years. Based on current tax rates in the two countries, they will end up paying about $35,000 a year more in total tax if they move to Portugal than if they remained in the United States.

Over 10 years, that’s $350,000. But even if we deduct that from the $1,000,000 in savings Bill and Andrea get by living in Portugal, they’re still ahead by $650,000 over a decade.

A little arithmetic shows this works out to a 7.8% annualised return on their $570,000 investment in a Golden Visa. That’s almost as good as the long-term return on the US stock market, which is 8%.

And that’s just the financial return. It doesn’t take into account the improved quality of life, a more relaxed lifestyle, more safety, more cosmopolitan opportunities for the family in Europe, and a host of other non-financial benefits.

But what if Bill and Andrea don’t have $570,000 available to invest in a golden visa?

I explain that they can convert some of their retirement savings into a self-directed IRA, which can invest in a Portuguese fund. It’s still part of their retirement savings; it’s just invested in a foreign financial asset now instead of plain vanilla US mutual funds. And it’s going to be earning around 7.5% annual returns, which is outstanding over the long term.

My conversation with Bill and Andrea started out with them assuming that they’d be losing a lot of money if they pursued a Portuguese golden visa. By the time we were done, they were looking forward to making serious financial gains by moving out of the United States.

Who knows how much money you could make by making a similar move? Give me a call, and let’s find out together.

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