3 Mistakes I Made When I Moved from the U.S. to Portugal
In March 2022 (almost 3 years ago at the time of writing this) I moved from California in the United States to Portugal with my husband and two small children.
Photo description: Me and my family’s last day in California, waiting for our airport taxi to arrive. We took only what we could carry with us.
I have learned so much during this time of living in a country where I don’t speak the language, and where I have never been before.
While my husband and I still have zero regrets about moving our family abroad, we have made several mistakes along the way.
I’m sharing my top 3 mistakes with you. Hopefully, this blog post can help you avoid these pitfalls if you choose to move abroad too.
1 • I did not hire tax attorneys to educate me about my tax responsibilities to both the U.S. and Portugal.
One of the biggest mistakes I made was not educating myself about my unique tax responsibilities that I would need to comply with as a U.S. citizen living aboard in Portugal.
I was made to believe that because I run a business that is formed in the U.S., I would not have to pay tax to Portugal.
Boy, was that incorrect advice.
After two years of trial and error, I have learned from tax attorneys who specialize in expat tax law — one in the U.S. and one in Portugal — that I actually have several tax responsibilities to both the U.S. and Portugal when it comes to filing and paying taxes.
I also learned that there are several tax benefits and advantages when you’re a U.S. citizen living abroad — something that my first tax attorney at the firm, Not AVG Law, failed to tell me until after they filed my tax return for the year.
Before choosing to work with them, I informed them about my expat status and how my income was earned, and they assured me that they had the expertise to help me with my situation. But it was clear after they filed my taxes that they failed to use basic expat tax benefits on my U.S. tax return, like the Foreign Earned Income Exclusion (FEIE).
I asked them why they didn’t use the (FEIE) tax benefit on my tax return and if they should file an amended tax return, but they have not been responding to my emails with any answers to these questions. Needless to say, I do not recommend hiring them.
I also learned that there are many accountants and other tax return service providers in Portugal who will say they can help you file your taxes in Portugal, but they don’t actually know how your tax return should be filed because they are not experts in the nuances of the laws that apply to U.S. citizens who live in Portugal.
There is a whole separate set of laws that apply to those of us who are U.S. citizens living in Portugal, and there are even more nuances depending on where your income comes from, what type of worker you are classified as in the U.S., and more things that you need to be aware of in order to file your taxes correctly in Portugal.
This year, I worked with Bordr as a trial run to file my Portugal taxes, but I ended up cancelling with them (they gave me a full refund) because they gave no guidance about how I should file my taxes in order to be in compliance with Portuguese tax law. They essentially showed me a list of options of how you could categorize yourself in Portuguese tax law, and they asked me which box I wanted to choose.
Note: I do recommend Bordr if you’re looking for an inexpensive way to get your NIF number and bank account opened in Portugal. I just do not recommend them for filing your taxes.
When I asked them what my tax obligations were under the law, they said that was a separate service, which I paid $250 extra dollars for in order to speak with their on-staff Portuguese tax attorney for 30 minutes, but I was still not given the answers I needed. The “advice” I was given was about how to avoid paying tax rather than what my tax obligations are and what I should do in order to be compliant.
When I had a follow-up question outside of the 30-minute window, they wanted me to pay again for more time. I’m sure eventually after many $250 30-minute sessions of trying to figure out what I didn’t know I would have come to the answers I needed, but this was a very expensive and time-consuming way to be educated on what my tax obligations were.
Instead, I did some research and found another law firm based in Portugal that could help me file my Portuguese taxes. They are called Fresh: The Expat Firm (I am not sponsored or affiliated with them). After paying their one-time rate, I had the opportunity to have a live video call and as many email exchanges as were needed to file my Portuguese taxes. They took the time to learn about my situation, asked me questions, and then educated me on the Portuguese tax law that applied to me and what I would need to do to be in compliance with the law.
I really appreciated their professionalism, transparency, and timeliness.
Fresh: The Expat Firm, costs a lot more than most tax filing services you’ll hear about in Portugal, but they are worth every penny, and you’ll save yourself a lot of time and headache.
To file my U.S. taxes (yes, you are still required to file U.S. taxes even if you don’t live there), I hired My Expat Taxes. I found them to be affordable and knowledgeable; however, I’ll be honest that the specific accountant I was assigned made a lot of data entry mistakes that I would catch and need him to fix again and again, so just keep that in mind if you’re trying to cut costs by going with My Expat Taxes for your U.S. tax filing.
2 • I did not get my Portuguese health number ASAP.
Your health number, also called número de utente, enables you to get prescriptions and heath care in Portugal for a much lower cost than if you were paying out of pocket or with private health insurance. That being said, health care and prescriptions in Portugal are already so much cheaper than in the U.S.
I avoided getting my health number for myself and my family members for almost two years because I was told by some misinformed “experts” that I would not owe tax in Portugal. Based on this information, I decided that I did not want to use public health insurance if I would not be paying tax to the country. I have been paying for and using private health insurance since I moved here.
But, after finding actual tax attorney experts who educated me on my tax responsibilities in Portugal, I learned that I am liable to pay income tax in Portugal, in addition to the fact that I pay 23% VAT tax on everything I buy here. After I realized that this is actually the case, I decided to sign up for health numbers for myself and my family, which has since saved us a good amount of money each month on doctor’s appointments and prescription costs.
3 • I did not sign up for Portuguese language classes sooner.
I just completed my first 10-week course of in-person Portuguese language classes.
While about 90% of my interactions with people are in English, it is still very helpful to understand and speak Portuguese, especially when it comes to interacting with tax and government authorities and reading official mail and forms.
After all, Portuguese is the national language, so no one — and especially not the government — is going to translate materials into English for you.
I have a basic fluency in Spanish, and while Portuguese and Spanish have a lot of similarities, they are very different, especially when it comes to speaking and understanding the language as it is spoken.
It will be a lot easier to connect with local people if you can hold a basic conversation in Portuguese.
Does this mean you can’t get by? Of course not. Like I said, most people speak English here, especially in the Algarve region where I live.
But, if you want to integrate and connect with local people, then I recommend starting classes sooner rather than later and integrating learning new vocabulary words into your daily life for yourself and your children.
It’s also important to know that in order to apply for citizenship here after 5 years of being a temporary resident, you do need to have a basic fluency in the Portuguese language, so if you end up deciding you want to stay here, you'd be better off investing time and money into learning the language sooner rather than later.
And that’s it! I hope sharing my mistakes can help you!
Book a 1-on-1 Portugal Chat with me before January 2025!
If you’d like to ask me your questions about moving my family from the U.S. to Portugal, you can book a 1-on-1 session with me for a limited time. December 2024 is your last chance to book this time with me. After December, I will be closing this offer. Book a session here.
Want content about life in Portugal from an American expat and father?
I don’t make a lot of content about life in Portugal anymore because I’m more focused on my podcast and my work as a self-care coach at The No Longer Last Journey.™
If you’re interested in getting more up-to-date information about life in Portugal as an American, especially from the perspective of a Black American who is also a father of two young children, I recommend my friend’s YouTube channel @YahtAbroad.
More Portugal content from me.
5 Reasons Why I Moved from the U.S. to Portugal
5 Myths about Moving to Portugal from the U.S.
My Algarve Portugal Apartment Tour
