October 31, 2025
For U.S. citizens eyeing the other side of the Atlantic for retirement, two countries consistently top the list: France and Portugal.
Both offer respite from a noisy U.S., excellent healthcare, and an overall slower pace of life. But when it comes to financial planning, taxation, and long-term residency, the differences are significant – and rarely are they captured accurately in quickie “best places” listicles.
Below, we seek to present thoughtful counterweights to the spontaneous sense of adventure that listicles can evoke. The goal isn’t to damper the excitement, but to emphasize the importance of planning ahead. This is especially important when you’re considering whether to retire in France or Portugal, two countries that, as you’ll see, offer very different opportunities for American retirees.
Why France and Portugal Are Top Picks
Even though the Non-Habitual Residence (NHR) regime officially ended earlier this year, Portugal continues to dominate global rankings for retirement and move-abroad destinations thanks to its affordability, safety, and established expat communities for everyone from single parents to members of the LGBTQ community. (All reasons given in reference to the U.S.)
Yet, a growing number of Americans currently resident in Portugal have decided to uproot and reset in France, citing the country’s healthcare access, stronger tax treaty protections, and better geographic location for traveling. Moreover, Facebook groups supporting this migration trend are gaining traction (1), reflecting a shift in sentiment among long-term expats.
Immigration Pathways for Retirees
Portugal’s D7 Visa is ideal for retirees with passive income
Qualifying passive incomes include pensions, investments, and rental income.
The D7 offers a clear path to residency and eventual citizenship. However, recent political shifts have made immigration policy less welcoming, e.g., immigrants seeking to obtain Portuguese citizenship will have to reside in Portugal for 10 years instead of five, and the Non-Habitual Residence Scheme, which offered an excellent tax break to qualifying foreigners, is over.
Related reading: Americans in Portugal Face a Financial Puzzle
France’s Long-Stay Visitor Visa is a great option for Americans who intend to fully retire
The main callout about this option is that recent gray areas around working (which were technically prohibited but facilitated by remote work environments) have been clarified: working remotely in France on the long-stay visitor visa is not advised.
This relatively recent change underscores the importance of working with an experienced immigration attorney if you intend to move to France and only semi-retire, i.e., continue working.
Additionally, the French government has recently moved to reject applications for naturalization if all income has been sourced from outside of France. This to say, if your goal is to retire in Europe and naturalize, France may not be the best option.
Taxation and Double Tax Treaties
Understanding how your financial plan looks when you retire abroad requires having an extremely open mind, particularly if Portugal is your target destination.
With a less-favorable tax treaty than the U.S.-French one, U.S. retirees who don’t plan ahead leave themselves extremely vulnerable to Portuguese taxes, which sting particularly badly in comparison to U.S. rates.
Portugal
Social Security: Taxed in Portugal if you become a Portuguese tax resident.
Retirement Accounts: Roth IRAs may be treated like taxable brokerage accounts.
Capital Gains: Taxed at a flat 28%.
Inheritance: No inheritance tax between immediate relatives, but strict heirship laws apply.
Wealth tax: No.
Tax Treaty: Exists with the U.S., but offers fewer protections than France’s.
France
Social Security: Taxed only in the U.S. under the U.S.-France tax treaty, but it is reported as income on your French tax return and used to calculate your tax rate.
Retirement Accounts: Taxed at U.S. rates; Roth withdrawals remain tax-free.
Capital Gains: May be taxable only in the U.S. if structured properly.
Inheritance: Taxed per beneficiary; forced heirship rules apply.
Wealth tax: Yes, applies to real estate. “Impôt sur la Fortune Immobilière” or “IFI” is an annual tax payable by individuals whose real estate assets exceed a net value of €1,300,000
Tax Treaty: Highly advantageous for U.S. retirees.
Winner for Tax Efficiency: France, due to its stronger tax treaty and favorable treatment of U.S. retirement accounts. However, if the wealth tax applies, it can be a challenging psychological burden to overcome. That said, many strategies exist to mitigate it.
Cost of Living and Lifestyle
Main takeaway: Portugal offers a lower cost of living, but housing prices are climbing rapidly. France is more expensive overall, but may offer better healthcare and infrastructure, especially for retirees with complex medical needs.
Retirement Accounts and Investment Planning
Portugal
Portugal’s tax treatment of U.S. retirement accounts is less favorable than many Americans expect. If you’re a Portuguese tax resident, Social Security benefits and retirement account distributions are taxable in Portugal.
Additionally, banking and investment access can be complicated:
Many U.S. financial institutions restrict access for clients with foreign addresses.
Portuguese banks offer lower interest rates and fewer investment options.
Investing in local mutual funds or ETFs can trigger PFIC (Passive Foreign Investment Company) rules under U.S. tax law, leading to punitive taxation and complex reporting requirements.
Maintaining U.S.-based investments is often the most strategic move, but it requires careful planning to avoid compliance issues and ensure continued access.
France
France offers a more predictable and favorable environment for U.S. retirement accounts. Thanks to the U.S.-France tax treaty, distributions from Social Security and 401(k)s are generally taxed only in the U.S., and Roth IRAs retain their tax-free status.
This makes France particularly attractive for retirees with significant retirement savings.
Investment planning is also more straightforward:
Capital gains on U.S. investments may be taxable only in the U.S. if structured properly.
French banks and financial institutions are more accustomed to working with American clients, though PFIC rules still apply to non-U.S. funds.
Social Security benefits are taxed only in the U.S., preserving more income for retirees.
Cross-border financial planning is essential in both countries, but France’s treaty protections and treatment of U.S. retirement accounts make it a more seamless option for long-term financial stability.
Key Insight: France offers more predictability and protection for U.S. retirement assets.
Related reading: https://libertyatlantic.com/blog/managing-us-investments-when-moving-to-france
Professional Support Can Be A Lifeline
Whether you choose France or Portugal, working with cross-border experts can help you understand the best options for you so you can move abroad without fear of triggering unexpected tax tripwires or committing immigration faux pas.
Our clients typically work with:
Immigration Lawyers: To guide you through visa applications and residency requirements.
Cross-Border Tax Advisors: To ensure compliance with both U.S. and local tax laws – reach out to Rook CPAs to request a joint U.S.-France tax planning session.
Cross-Border Financial Planners (that's us!): To evaluate your current financial plan and create a new one that accounts for your new cross-border context, restructuring your portfolio and retirement accounts for optimal tax efficiency.
Estate Planning Attorneys: To navigate inheritance laws and trust structures.
Related reading: How to Move Abroad: Building Your Team
Final Thoughts on Retiring in France or Portugal
On paper, France may seem to be the “obvious” choice, especially when controlling for cross-border financial planning opportunities. However, integrating in France is a very different experience than doing so in Portugal, and that’s why we emphasize taking a holistic approach to retirement planning abroad: the financial aspect is just one part of that picture.
If you’ve had your heart set on Portugal for some time, that matters. Our job is to help you understand the financial aspect so that you can feel confident in your final choice. And hey, on that note, it’s not that moving to Portugal (or France) means you can never move somewhere else. One of the built-in benefits of working closely with cross-border financial planning firm is that you get ongoing U.S. account and wealth management support. If you want to change your home base, we can adjust the plan so everything stays on the rails.
At Liberty Atlantic Advisors, we specialize in supporting Americans moving abroad for retirement by creating comprehensive financial plans built for a long-term cross-border context. If you’re seeking to offload the burden of creating a cross-border financial plan and the ongoing wealth management work to a trusted partner, we’d love to have a conversation.
References
Portugal to France — Facebook group discussing this topic
Disclaimer
This material is purely intended to be general and educational in nature, and should not be construed as specifically-tailored investment, financial planning, tax, legal, or other professional advice. Information and data contained herein is as-of the date of publication, and may be subject to change in the future without notice. Any investment performance referenced is purely past performance, which is no guarantee of any future performance. Nothing contained herein should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or other financial product or investment strategy. All investment, tax, and financial planning strategies involve risk that you should be prepared to bear. You are highly encouraged to consult with professionals of your choosing before taking any action based on this material.
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