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Portugal’s hidden gem: the Azores

The Azores is a volcanic archipelago located in the middle of the Atlantic ocean, part of Portugal and the EU. Thanks to the NHR program, a number of tax benefits available to Azores residents and an outstanding quality of life, it is one of the best places in Europe in which to establish a home base. In this article, I cover the aforementioned tax benefits, some of the other benefits and share my experience on the ground.

Some background

No one knows for sure when the Azores were first settled. Pre-historic structures and cave paintings have been found but have yet to be dated and their origins are still subject to much debate. What is certain is that the Europeans discovered the islands during the first half of the 15th century, that the Portuguese settled them only a few years later and that they have held them ever since.

Fast-forward to the twenty-first century and the Azores are experiencing somewhat of a revival, led in large part by a booming tourism industry. Hotels, restaurants and other attractions are opening left and right and the infrastructure is receiving a much-needed upgrade. Covid has had an impact on this development but hopefully only a temporary one.

There is also an entrepreneurial boom going on which has resulted in the creation of a number of coworking spaces, such as Novovento and unOffice, and work-compatible cafes. Not to mention the growing number of long-term rentals and AirBNBs which have recently come to market.

The Azores as a home base

Thanks to freedom of movement, it is incredibly easy for EU citizens to relocate to the Azores. As easy as getting there, renting a home and registering as a resident. For non-EU citizens, however, things can be a bit more complicated. Depending on your circumstances, especially your business activities, you will want to look at either the Self-Employment visa or the Golden Visa.

Portugal offers a number of tax advantages, especially to those who qualify as non-habitual residents.

That is further compounded by a number of tax benefits granted to Azores residents and companies, such as lower VAT rates and a 17.5% corporate tax rate. Furthermore, only 50% of the total value of dividends received from local companies is subject to taxation.

It is important to understand that despite being fairly tax-friendly in the European context, Portugal is no tax haven. As a location independent entrepreneur running an active business from the Azores, you will likely pay around 20-30% in taxes (corporate + personal). That is assuming you know what you are doing and are taking advantage of every deduction and exemption available. Even if you qualify as an NHR resident, you will likely pay some tax.

Taxation is not the only factor to consider when researching options for a home base, with other factors such as cuisine, climate, lifestyle, language and the cost of living being equally if not more important. That is where the Azores really shines.

The food is absolutely delicious, with most of it organic and locally grown. There are numerous restaurants and cafes, catering to all tastes, especially in Ponta Delgada. Be sure to try the regional breakfast plate at Cafe Central and the sandwiches at Sabores. The Azores also grow some of the best pineapples I have eaten anywhere in the world.

The climate, in my opinion, is ideal. The archipelago’s location in the middle of the Atlantic ocean means that the temperature never fluctuates much, even during winter, usually ranging within a comfortable 15-25C. It does rain often but rarely all day.

Lifestyle is highly subjective but those who enjoy a slower pace of life, being close to nature and focusing mostly on outdoors activities will definitely like it in the Azores. I do recommend staying on Sao Miguel, however, as the other islands lack several of the services and facilities I consider important.

Cost-wise, the Azores is cheap. Very cheap, in fact, especially compared to most other remote islands I have visited. A nicely located one bedroom in Ponta Delgada can easily be found for under 500 EUR per month with the rest of Sao Miguel and the other islands being even cheaper. A decent restaurant meal costs between 5-15 EUR per person on average. Local groceries are very reasonably priced while imported items are similar to mainland Portugal. Traveling to the main sights by public transportation costs only a few EUR each way. Depending on your plans, however, you may be better off renting a car as buses are very infrequent, to say the least.

My experience in the Azores

I spent two weeks in the Azores, as part of my “remote islands” trip. I knew very little about the place before visiting and to be honest, had fairly low expectations. To say those were blown away would be quite an understatement, the Azores has literally become one of my favorite places in the world. I have since gone back a number of times.

I spent most of my time there hiking. I visited the well-known places such as Sete Cidades but also lesser known ones such as Ribeira Cha. The trails themselves were great but what I enjoyed most were the sea views. Because Sao Miguel is small, you can always see the ocean and it is absolutely stunning. The flora also added to the experience, with a great variety of flowers and incredibly lush forests.

When I was not on the trails I was in Ponta Delgada, the archipelago’s largest city. Despite its relatively small size, it has plenty of restaurants and cafes, a modern mall, some nightlife and a number of supermarkets. It also has sea pools, need I say more?

I had no problems finding places to work from and the internet speeds were surprisingly good. In fact, they were as good as on the European mainland.

I definitely recommend that you also add it to your list of must-visit destinations.


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