Ultimately the decision of whether you move to Spain or Portugal may come down to personal preferences - the areas you like, the language you want to learn and the types of cuisine you want to enjoy, but there are several factors that can make living somewhere more difficult than others, such as taxes, visas and cost of living.
So which one of these two countries that form the Iberian Peninsula (along with tiny Andorra) offers the most to newcomers - Spain or Portugal? Here's everything you need to know.
Taxes
The tax systems in both Spain and Portugal are complicated, so it will of course depend on your individual circumstances as to where you'd pay less tax. At first glance, it seems that whether you're a low earner or a high earner, the tax brackets for 2022 are generally more favourable in Spain than in Portugal, where they are slightly higher.
In Portugal the general income tax rates for 2022 are:
28.5 percent for those earning €15,217 - €19,696
35 percent for those earning €19,676 - €25,076
37 percent for those earning €25,076 - €36,757
43.5 percent for those earning €36,758 - €48,033
While in Spain the tax rates for 2022 are:
24 percent for those earning €12,450–€20,200
30 percent for those earning €20,200–€35,200
37 percent for those earning €35,200–€60,000
45 percent for those earning €60,000–€300,000
However, if you plan on being self-employed, Spain may not be more beneficial to you. As a freelancer you will have to pay social security on top of your income tax in both Spain and Portugal.
Portuguese Social Security (Segurança Social) is generally 21.4 percent of your earnings and payments are made monthly. In Spain however, the minimum contribution is around 30.60 percent. Currently this is paid as a flat monthly fee of €294 per month, no matter what your earnings are.
READ ALSO - Self-employed in Spain: What you should know about being ‘autónomo’
There are further benefits in Portugal when you look at the country’s ‘non-habitual residents’ (NHR) scheme. This allows new residents to access special tax benefits for their first ten years in the country. It also offers a lower income tax rate of 20 percent if you’re employed in Portugal in a ‘high value’ activity and allows you to earn some foreign income tax-free.
Foreigners from any country can benefit from Portugal’s NHR scheme if they qualify as a tax resident in Portugal and have not been taxed as a Portuguese tax resident in the five previous years.
Spain doesn't offer any similar type of scheme for foreign residents.
Golden visa
If you're a non-EU citizen who wishes to move to either Spain or Portugal, one of the ways to be gain residency is through a sizeable investment.
Before 2022, you could qualify for residency in Portugal by investing €280,000 in one or more properties, one of the lowest investment thresholds in Europe. But the country's golden visa rules were toughened on January 1st and now you have to buy a property worth €500,000 or invest €350,000 in a rehabilitation project, as well as other restrictions on "qualifying" areas where you can buy.
That puts Portugal on a par with Spain, where you have to you have to invest €500,000. Both countries offer other monetary investment residency options involving shares, bonds and donations.
It's also worth noting that in Portugal you are eligible to apply for Portuguese citizenship in five years, while in Spain you also renew your residency status, but can only apply for citizenship after 10 years.
READ ALSO - Pros and cons: What foreigners should be aware of before applying for Spain’s golden visa
Digital nomad visa
While Spain only just announced it would be introducing a digital nomad visa in 2021 and has yet to finalise all the details, Portugal currently offers the D7 visa for digital nomads.
To be eligible you must prove you have an income of at least €8,424 a year, but they are more likely to grant you the visa if you earn more. You’ll also be required to have a minimum of €7,500 in a Portuguese bank account.
Spain does offer a non lucrative visa (NLV) scheme, but it is a lot costlier than Portugal's D7 visa and as the name suggests you are not allowed to work on the NLV. For 2022 you need to prove you have an income of €27,792 for the year to be eligible for this visa.
READ ALSO - Tax cuts and visas: Spain’s new law for startups, investors and digital nomads
Cost of living
The costs of living in Spain and Portugal vary considerably depending on where you choose to live in the country. Several cost of living comparison websites state that Portugal is slightly cheaper than Spain, but others state that it's virtually the same.
According to expat price comparison website Expatistan the cost of living in Madrid is seven percent higher than in Lisbon, while Barcelona is 10 percent higher than Lisbon.
Monthly rent for an 85 m2 (900 sqft) furnished flat in a standard area of Lisbon will cost an average of €970 per month, while in Barcelona a flat of the same size will cost an average of €1,040 per month.
Eating out and grocery shopping are both slightly higher in Spain than in Portugal. Up until recently, you would usually pay more for electricity, gas and petrol in Portugal than in Spain, but energy costs are sky-high in both countries currently due to record inflation.
In Spain, generally speaking the south and western parts of the country are cheaper than Madrid and northern regions, while in Portugal it's generally the central and northern regions that are cheaper. The cost of living in both countries is a lot less if you stick to smaller towns and steer clear of the likes of Barcelona, Madrid and Lisbon.
Lifestyle and culture
Both the Spanish and the Portuguese are friendly, easy-going people, and while it really depends on the area you visit and the people you meet, the Portuguese can be quieter and more reserved than the Spanish.
The Portuguese are also known to be more melancholic than the fun-loving passionate Spanish and you’ll notice this in the music and the way festivals are celebrated. While Portugal does celebrate a few events such as Easter and Carnival, as well as local festivals, nothing in Portugal can come close to Spain’s fiery Las Fallas festival, Catalonia's human towers, the crazy Canary carnival and southern Spain's Semana Santa parades.
Culturally, Spain is also a lot more diverse than Portugal. While Portugal’s regions of course do have slight differences in their culture, it’s not as obvious as the differences between Spain’s 17 different regions. In Spain, five different languages are spoken and each region has its own cuisine, festivals, dances and traditions which differ greatly from one to the other.
Spain also has 49 UNESCO World Heritage Sites, while Portugal only has 17. While of course, Portugal’s two largest cities of Lisbon and Porto have plenty going on, many museums and cultural events, in Spain than are many more cultural centres than just Madrid and Barcelona. The likes of Valencia, Seville, Bilbao, San Sebastián, Málaga and Granada are also known for their great museums and cultural offerings too.
Nature and landscapes
Both Spain and Portugal are great for nature lovers, especially those who love hiking, cycling and water sports.
Spain's landscapes are more diverse than Portugal's however. The country has a longer coastline, more mountain ranges and more national parks. Spain boasts a total of 16 National Parks, while Portugal only has one national park. Spain also offers more opportunities for winter sport lovers, with more ski resorts - there is only one place to do this in Portugal, while Spain offers many places throughout the Pyrenees and north of the country, as well as one in the Sierra Nevada.
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