Have You Factored These Costs into Your Finances?

So, you’ve come up with what seems like a comprehensive budget for living in Portugal?

You’ve factored in housing (mortgage or rental) costs. Utilities–gas, electric, water bills. Gasoline. Groceries. Insurance: health, home and auto. Recreation and eating out. International and child-related expenses. Even taxes, travel, and contingencies.

Here are some buggers you may not have thought of that can impact your budget, no matter how grand or frugal:

Via Verde If you’re driving on Portugal’s highways, you’re responsible for all those tolls–whether you pay booth by booth or invest several shekels for that gadget affixed to your windshield that allows you to sail through now and be charged later. In either case, depending on how much (or little) you drive on toll roads, consider adding ten euros per month to your budget.

Fares You live in a metropolitan area served by a network of trains, trolleys, and buses? You may not have tolls to pay, but consider what you’ll be shelling out daily for commuting costs. Create a new budget item for fares, commuting, and transportation costs.

Bank Fees Unlike some countries which pay you interest for the privilege of holding and investing your money, Portugal (and Spain) charge you for “renting” space at their banks. Add five euros each month … just for maintaining your account. To this, your bank will also charge you transaction fees. Take transfers, for instance. Regardless of the amount or location to which you’re transferring funds, you’ll be charged a fee–plus IVA! At our bank (Montepio) we’re currently charged €1.15 per transfer + €0.05 IVA. Use this convenient service enough and you can spend another fifteen or twenty euros each month for fees on top of the amount of your transfers. Speaking of transfers, don’t forget to figure on the fees charged by (Transfer)Wise and other currency transfer companies. My Social Security payments go directly into my USA bank (credit union) account, from which I transfer almost 80% of it each month to our Portugal bank account. All things considered, the transfer fees on that amount to about 30€ per month.

Vet Visits and Pet Licenses Certainly, you take good care and responsibility for members of your furry family. Excluding pet food, which is part of your grocery budget, have you added the costs of keeping your pets in Portugal? Each must have a rabies shot and be micro-chipped. Each requires an official EU passport. Each must be registered at your local town hall. And, in addition to routine veterinarian visits and periodic inoculations, pet medications and special diets are downright expensive. They’re usually covered by insurance–public or private. We spend between €150 and €500 each year to care for our three miniature schnauzers.

Pharmacy Except for top-of-the-line health care coverage, prescription and over-the-counter drugs aren’t covered by insurance. Prices for most medicines are prescribed by the state, but can vary from pharmacy to pharmacy. Add at least €100 per year to your budget.

Pellets and Wood for Heating Whether you’ve got one or more fireplaces, a pellet or wood-burning stove (or two) to keep you warm during Portugal’s damp and cold weather, remember that your appliances must be fed. Pellets can run between €3.69 and €3.99 per bag … and you’ll go through at least three per week during the winter season. Similarly, if you don’t have the space or the inclination to deal with multi-kilo barrages of wood, you’ll pay about the same to purchase tidy packages of wood covered with plastic from your grocery, hardware, or agricultural supply store. Figure between €50 and €75 monthly.

Tax Preparation Yes, you have to report and submit income tax filings every year here in Portugal, which can be frustrating — a pain in the arse — when winding your way through Portugal’s Finanças portal. The cost for a professional (accountant) to prepare and file your taxes here is actually rather reasonable: From most accounts we’ve heard, tax preparation costs €50 per person–whether your filing as an individual, married couple filing jointly, or married couple filing separately. So, put in €50-100 per year for having your taxes done. And don’t forget to add in the preparation fees and taxes you may also owe to your country of citizenship.

IVA (Value-Added/Sales Tax) Almost everything you buy here already has IVA factored into its price and includes the 23% due to Portugal and 21% to Spain. But, sometimes it doesn’t. Look carefully to see if stores and salespeople are trying to be more competitive by showing prices exclusive of IVA along with the words “… plus IVA” in small print. Big-ticket items like vehicles, especially, can deliver a wallop when you first see the price listed as €30,000. But, turn the page, and you’ll notice an additional €6,900 for IVA, making the actual price €36,900 or more.

Property Tax In addition to what you paid in taxes when purchasing property and transferring it from the previous owner to you, in Portugal you also will have to pay annual property taxes. The property tax is fixed annually by each municipality and typically ranges from 0.3% to 0.45%. While properties in rural areas are taxed at 0.8%, properties in more urban areas are taxed within the mentioned range. If a property has been re-valued since 2004, it will fall between 0.2% and 0.5%. If a property was valued before 2004, the rate will be between 0.4% to 0.8%. In some cases, there will be exemptions from the taxes on property (IMI). For example, if you will use the property as a permanent home or if you rent it out, it will be exempt from property tax for three years. Also, the rate will depend on the patrimonial value of the property. IMI (Imposto Municipal sobre Imóveis) is paid annually, either: in a single instalment, in April, if the tax is below EUR 250; in two instalments (April and November) if the value is between EUR 250 and EUR 500; and three instalments (April, July, November) if the amount is more than EUR 500.

Road Tax If you own a vehicle registered in Portugal, you must pay the Single Circulation Tax (aka “road tax”) every year. Probably, you’ve already received an email from Finanças regarding payment of this tax. It is a mandatory tax for everyone who owns a vehicle in Portugal. The amount of tax paid is different for vehicles registered before and after July 2007. Owners of cars registered before July 2007 pay an amount of tax directly related to the age of the vehicle and its cubic capacity. The tax on vehicles registered after July 2007 also takes into account the vehicle’s CO2 emissions and its engine power. Mine is €103.12 … but most people pay more.

Subscriptions Forget (or not) about magazines, newspapers, and other periodicals to which you subscribe. I’ve not counted them in here. Instead, I’m referring to the annual fees which Internet providers and suppliers charge you each year. Netflix, HBO, the Disney Channel. Microsoft Office 365. Malwarebytes or other protection services. WordPress and other Internet-related expenses … especially if you host a blog or vlog or do business online.

Tips and Gratuities Giving or not is a matter of choice–yours. Whether at restaurants in taxis, at the beauty salon or the car wash, there’s no expected amount to give. After embarrassing quite a few services with our (American) 20% tips, we learned that some people don’t leave tips. And that’s perfectly acceptable. For us, although we still feel awkward about leaving pennies on the dollar, we’ve found that 5% is a reasonable and perfectly appropriate gratuity.

Though not really an additional expense, here’s a worthwhile reminder: It takes a while to get used to European weights and measures. For instance, fuel is sold by the liter–not gallon. When looking at price signage, if you see unleaded (95) gas listed at €1.95, it’s for a liter. There are four liters to a gallon. So, a gallon of gas would cost €7.80. At today’s very favorable exchange rate, in dollars, that gallon costs just over US $8.00.

And then there’s this: Though eating out at cafés, snack bars, and restaurants is often quite cheap, it’s the extras that add up. See that table set with a basket of bread, a bowl of olives, and a variety of spreads — butter, cheese, etc.? While often served courtesy of the house, in not too few places there’s a surcharge for these nibbles: usually between one and five euros, which will be added to your bill.

Don’t want (or need) it? They’ll be removed from your table before the first course arrives.

No charge!