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To start with Portugese residents are not permitted to drive vehicles in Portugal which are registered abroad - some exception apply.   Your insurance will obviously need to include your new residency and cover you for the EU.  V5 registration document will need new address in PT which the DVLA won't allow so possibly need to class it as "Permanent Export". An non-EU vehicle is only permitted to be in the EU for 6 months.   There's more.  If you are importing vehicle as part of your new status then you can go down that route and should be able to end up with the vehicle legally in Portugal.

I am totally confused.  It was  my understanding that I could drive my car in Portugal using my UK licence so long as i had the correct insurance.  From what you have written this is not the case. please clarify for me. i won't be staying here more than 6 months at a time 

Just search on here or online (Portugal News for example) and you will find references as per

a common question among those who plan to take a car with foreign registration to Portugal is the legality of this practice. According to Portuguese legislation, it is permitted to drive a vehicle with foreign registration within national territory, if certain conditions are respected.

These conditions include:

    Not residing in Portugal: The first condition requires that the conductor of the vehicle is not a resident of Portugal.

Welcome to Portugal, by the way!    Hm, I wonder if you're really a resident of Portugal, for GNR's purposes, before your título de residência has actually been issued? 

That might leave a window during which one could legally drive in, and back out, in that foreign register car.  Might need an immigration lawyer to answer that one.  I'm just guessing they don't mean fiscal resident.

Knowing people that drive foreign licensed cars for many years in Portugal, I really wouldn't worry too much. Many things that are not strictly legal will never come to light. It will always be your personal decision whether you want to risk it or not.

I wouldn't choose the path of illegality, but that's up to each one to decide. Don't complain afterwards...