If we bought a car in Portugal, can we drive it on a UK driving licence?

I think you can drive it for one year with a UK driving licence, then retake your test.

I am by no means an expert on this. I lived in Madeira from 1999 until 2003 and owned my own car which I bought on the island. Many times I was required to show my driving licence which is one of the photocard ones. I never encountered any problems at all. I checked with the British Consulate on arrival when sorting out my residencia etc they advised me my driving licence was fine.

You can continue to drive in Portugal on your UK licence until you have the misfortune to collect a fine when you will have to apply for a Portugese licence. This is an automatic swop if you are resident. If you are non resident you retain your UK licence. Hope this helps, we are all EEC now s legislation and licensing is interchangeable. You can however apply for and be issued with a Portugese licence if you become permenant resident without taking a further test.

You do need to have an eye test though!

If you are a visitor you can obviously drive a Portuguese registered car with a UK driving licence. The position seems to be open to doubt if you are a permanent resident and AFPOP give definite advice that if you have a residencia you must have a Portuguese licence.

I know of a German resident who was told by the Police that she would be prosecuted because she produced a German licence with her residencia. In the event the case did not go to court.

The simple way to avoid hassle is to produce your British passport alongside your UK driving licence rather than your residencia.