Ten in the morning on a Tuesday in February, on the Tavira seafront. It is 17 °C, the café terraces are full, and at the next table you hear French, Belgian and Swiss accents. Retiring in Portugal has been a dream for a long time, and it is not only about the sun: the cost of living, safety, the kindness of the people and a flight of two and a half hours from Paris or Brussels count just as much.
But the Portugal of 2026 is no longer the Portugal of the 2010s. The tax regime that attracted so many retirees has closed, rents have risen sharply, and healthcare takes a few steps. Here is what you need to know before you pack.
Why do so many retirees choose Portugal?
The climate first, mild on the coast, especially in the Algarve and Madeira. An overall price level lower than in the French-speaking countries of Europe: according to Eurostat, it was about 20% below that of France in 2025. A simple life, where a coffee at the counter and the dish of the day remain affordable. And a well-established French-speaking community, which makes the first months easier if you come from France, Belgium or Switzerland.
As for paperwork, a retiree from the European Union or Switzerland does not need a visa. After three months, they register with the town hall to obtain their residence certificate, a formality explained in our guide to the EU residence certificate in Portugal.
What people mention less: the administration can be slow, language remains a barrier at the doctor's or at the counter, and older homes are often cold in winter.
Where should you settle when retiring in Portugal?
There is no single right answer, but there are three broad families of choice, each with its prices. The rents below are the medians for new leases over the twelve months to June 2026, according to INE (Portugal's national statistics institute).
The Algarve, for the mild winter and the international community: Tavira around €11.5/m², Faro around €10.3/m², Lagos around €12.8/m². Plenty of services in English and Faro airport, but prices pushed up by tourism and a quieter life out of season.
The Centre and the west coast, for balance: Caldas da Rainha (about €8.4/m²), Leiria (about €8/m²) or Coimbra (about €9.4/m²), with large hospitals and Lisbon within reach by road or train.
The interior, for small budgets: Viseu (about €6.8/m²), Castelo Branco or Guarda (about €5.3/m²). Rents there are two to three times lower than in Lisbon, but a car becomes essential, summers are hotter and winters harsher.
Our advice: when retiring in Portugal, the distance to a hospital and to an airport matters as much as a sea view. To compare in detail, read our selection of places to live in Portugal without breaking the bank.
How does health cover work with the S1 form?
This is the most important step, and it is prepared before you leave. Here is how it works if your pension is paid by France.
If you receive only a French pension and move to Portugal without working there, you ask for the S1 form from your basic pension fund: the Assurance retraite (CNAV) for the general scheme, the DGFiP pensions management centre in Nantes for a civil or military State pension, the MSA for farmers. The Cleiss, the French body for international social security, recommends doing this, ideally, before you leave.
In Portugal, you present this S1 at the district centre of the Segurança Social for the area where you live. Once your entitlement is opened, the health centre in your neighbourhood assigns you an SNS utente number, the key to seeing a family doctor or being admitted to a public hospital. Our article on the utente number and the SNS explains what comes next.
Three points to know:
- Your healthcare remains paid for by France, but you are treated under Portuguese rules.
- You can still be treated in France during your stays there, whatever the reason.
- You no longer pay the CSG or CRDS (French social levies) if you are no longer a French tax resident, but a health contribution is deducted from your French pensions: 3.2% on the basic pension and 4.2% on the supplementary pension, according to the Cleiss.
Since 2022, SNS consultations are no longer charged, except in hospital emergency departments without prior referral. Many retirees add private insurance to avoid waiting times for specialists, at a price that climbs with age.
How is your pension taxed in Portugal?
Pension tax in Portugal rests on two questions: in which country are you tax resident? And what kind of pension do you receive?
Residence. You become a Portuguese tax resident if you spend more than 183 days a year in Portugal, or if you have a home there that you clearly occupy as your habitual residence. You must then declare your worldwide income in Portugal.
The kind of pension. If you are moving from France, the France-Portugal tax treaty makes the difference:
- private-sector pensions are taxable only in the country of residence, so in Portugal;
- public-sector pensions (former civil servants of the State, local authorities or public hospitals) remain taxable in France, unless you have Portuguese nationality, even if you are also French.
The French tax authority recommends asking each pension fund for the exact nature of your pension before drawing any conclusion. If you come from Belgium, Switzerland or elsewhere, the treaty between that country and Portugal, if there is one, has its own rules, especially for public pensions: check yours.
The Portuguese tax scale. A pension taxed in Portugal falls under income tax (IRS), calculated in bands. In 2026, the marginal rate ranges from 12.5% for the first band to 48% above about €86,600 of taxable income. Tax depends on each case (amount, household, other income, assets): for a decision that commits you, get help from a tax adviser who knows both countries.
Does the NHR regime still exist in 2026?
It is the big question for retirees who have read old articles. The answer is no for newcomers.
The non-habitual resident regime (NHR, residente não habitual or RNH in Portuguese), which offered very favourable tax treatment of foreign pensions, was abolished from 1 January 2024 by Portugal's 2024 budget law (Lei n.º 82/2023). A transitional regime allowed some people who were already in the process of moving at the end of 2023 to register in 2024, under strict conditions. Those already registered keep their regime, in principle, until the end of their ten years.
What replaced it is called IFICI (incentivo fiscal à investigação científica e inovação, the tax incentive for scientific research and innovation), sometimes nicknamed "NHR 2.0". The name says it all: it targets researchers, university teachers, managers and highly qualified professionals working for certain companies or institutions. It applies to earned income, not to pensions. The end of NHR status therefore means that a retiree who moves today is taxed at the normal rates.
What budget do you need for retiring in Portugal?
Rent remains the decisive item. Based on INE medians, 70 m² costs about €1,200 a month in Lisbon, €700 to €900 in Algarve towns, and €370 to €660 in medium-sized towns in the Centre and the interior. Buying avoids rent but not running costs: the annual municipal property tax, condominium charges, insulation work that is often needed.
For the rest, a few benchmarks:
- Electricity: about €37 a month for a couple without children on the 2026 regulated tariff, according to ERSE (the energy regulator), more if you heat with electricity.
- Health: the SNS free of charge thanks to the S1, plus possible private insurance and the share of medicines that is not reimbursed.
- Car: almost essential outside Lisbon, Porto and the centre of medium-sized towns.
Going out and restaurants are noticeably cheaper than in France. Groceries, on the other hand, are much less cheap than people imagine. Our article on the cost of living in Portugal breaks down every item.
What should you do before you leave?
If you are a French pensioner retiring in Portugal, you will gain from preparing your move in this order:
- Ask for the S1 from your basic pension fund, and tell all your pension funds about your change of address.
- Inform the French tax authority of your departure, and declare the year of the move taking your change of residence into account.
- Get a NIF, the Portuguese tax number, essential to rent, open a bank account or sign an electricity contract.
- Do a trial stay of a few months, ideally in winter, in the town you have in mind.
- Consult a professional if your income mixes public and private pensions, rental income or investments: that is where tax treaties hold surprises.
Portugal remains a wonderful place to spend your retirement. It simply asks for a little more preparation than in the days when people left with nothing but a dream of sunshine.