I remember that when I first came to Portugal I was loath to confront Portuguese bureaucracy, so I drove with my South African licence for as long as I could.
The process is quite simple, as long as you have all the right documents and follow the correct steps.
Many foreign and all EU(1) driver’s licences are valid in Portugal, as long as they have not expired and have not been endorsed, revoked, disqualified or suspended in their country of issue.
There are some differences in the requirements for exchanging EU driver’s licences and those from non-EU recognized countries. You may drive in Portugal on a valid Australian, Canadian, South African and US driver’s licence for up to three months of settling in Portugal.
Licences that are about to expire (EU and others) have to be exchanged for new ones in the country where you reside i.e. Portugal, if that is where you live permanently.
Bear in mind, that if you exchange a non-EU driver’s licence for a Portuguese one and you move to another EU country, your exchanged Portuguese licence may not be recognised if that other EU country does not accept the original non-EU licence. The Portuguese licence reflects the number of your original non-EU licence and its country of issue on the reverse of it. You will then have to apply again for a new licence and probably redo a driving test.
The exchange process used to be quite simple. I took all my stuff to the privately run agency at the Cascais railway station and they did the whole thing for me, albeit at a fee.
Nowadays the process has to be done in person and you need to go to an Instituto da Mobilidade e dos Transportes (IMT) office (there is one in Lisbon). Apparently the Loja do Cidadão in Cascais has an IMT section, but I cannot confirm this.
The new Portuguese driver’s licence will be sent to you by registered mail.
When you hand in all the documentation, you will be issued with a “guia” (a simple piece of paper) authorising you to drive in Portugal. “Guias” are not valid for driving outside of Portugal. While you are waiting for your Portuguese licence to arrive by post, you may extend the validity of the “guia” at any Loja do Cidadão.
I have been told that issuing time of new driver’s licence has been shortened tremendously, but don’t bank on it. It took me 11 months to get mine!
(1) EU members and European Economic Area countries such as Iceland, Lichtenstein and Norway
Countries with which Portugal has a bilateral agreement or keeps a reciprocity regime (Brazil, Switzerland, Morocco, Andorra, Mozambique, São Tomé e Príncipe, United Arab Emirates and Angola);
Any country that has signed the International transit convention and Macau