Portugal, in addition to its rich history, wonderful climate and high quality of life is ready to offer non-residents one of the most promising economies in Europe, an attractive tax policy and a stable political and business environment. The government of this country has always treated foreign qualified specialists and investors well, so it is relatively easy to get a residence permit here. These and other reasons are increasingly pushing natives of the post-Soviet space to start developing business here, and such a decision, in most cases, turns out to be correct.

 

But how to open a company in Portugal legally, and to be able to succeed in your business? We note at once that without the right approach and the ability to adapt to new conditions, it will be difficult to achieve significant success. Therefore, further we will tell you about the most important moments related to opening a business in Portugal, including organizational processes, collection of documents, etc. Regardless of the sphere of activity of the future company, you will have to overcome the same stages, and if the presented material will be at least a little useful to you, for example, will help you to pass the registration process comfortably, it means that our efforts in preparing this article were not in vain.

 

The main advantages of Portugal for business

This jurisdiction offers a wide range of opportunities for entrepreneurs. Being part of the EU, Portugal is able to provide any business with access to a large market with hundreds of millions of potential customers. In the European Union’s Innovation Development Index a few years ago, the country ranked 11th, and in the Forbes list of the quality of business environment – an honorable 25th, which is strong evidence of its prestige. In addition, the government pays close attention to the development of small and medium-sized businesses regardless of the residency of its owner. An excellent addition to the local market is the possibility of exporting not only to other European countries, but also to North America.

 

Before understanding how to register a company in Portugal, it is worth familiarizing yourself with the main advantages of this jurisdiction:

 

  • Favorable location – this small country occupying the western coast of the Iberian Peninsula has a strategically important geographical position. It plays the role of a link between the EU, the countries of the African continent and North and Latin America. In other words, opening a business here automatically opens access to various markets.
  • Steadily growing economic indicators are the result of government reforms, including the improvement of the investment environment, the development of innovative tools and a regularly replenished base of technical specialists. At the same time, the unemployment rate here has been falling steadily since 2015 (6.7%), which is much lower compared to other EU countries.
  • A wide range of preferential regimes for entrepreneurs – tax benefits, investment incentives and all kinds of startup support programs together with a relatively simple registration procedure are an important condition for the comfortable development of business of any scale.
  • The possibility of obtaining an entrepreneurial residence permit in a short period of time. Compared to visas in other countries, the Portuguese residence permit is more attractive due to the absence of minimum investments and restrictions on the type of business.

 

It is also worth noting that Portugal creates excellent conditions for the development of various sectors of the economy, but the greatest interest among investors are manufacturing, agricultural trade, IT-sector and tourism. This jurisdiction also has one of the highest percentages of English-speaking citizens in the world (among non-English-speaking countries), which makes doing business much easier.

 

Types of companies in Portugal

Before you register a business in Portugal, you need to decide on its optimal structure. The choice can be made on:

 

  • Individual entrepreneurship – it can be a company with a single founder or a sole proprietor with unlimited liability.
  • Limited Liability Company (LDA) – a popular option among investors wishing to open a small business in Portugal. Participants of this organizational-legal form are limited to liability for debt obligations in the amount of contribution to the share capital. To register an LLC you will need to make a share capital of at least 5000 euros (cash or in-kind), appoint a director (this position can be taken even by the founder himself).
  • Joint Stock Company (AO or SA) – an option for large enterprises with a high level of investment capital and a complex administrative and supervisory structure. AOs are also chosen by those who plan to work with the Portuguese Stock Exchange in the future. Joint-stock companies must have at least 5 founders, and the minimum authorized capital is 50,000 euros. Depending on the size of the contribution, the degree of responsibility of each partner is formed
  • Partnership (LP) – it can be established by 2 or more partners with unlimited personal liability. For this reason, there is no minimum initial capital requirement. When choosing a name, the name of at least one partner should be used. Depending on the sphere of activity, LPs can receive a specific form (affects the system of the applied taxation system). For example, for a company with one general partner and two or more silent partners, the limited partner’s share of profits is treated as a dividend.
  • Holding company (LTD) – the SGPS abbreviation should be used in the corporate name. The holding company owns and manages the capital of other companies (at least 10% of corporate rights). It is mandatory to appoint an independent auditing firm or a chartered accountant to prepare the financial statements.
  • Joint venture – it can be a consortium with limited liability or a group of economic interests with unlimited liability.
  • Cooperative – formalized in the form of an independent legal entity, whose liability is limited, such a legal form, first of all, must meet the economic, social and cultural needs of its members. That is, it is a non-commercial form.

 

Documents for company registration in Portugal

The very first step to be taken before registering a company in Portugal is to obtain a taxpayer identification number. Later, if the company will conduct its business without a permanent establishment, it will be necessary to hire a tax representative (resident). Provision of a taxpayer identification number becomes possible when establishing a legal entity. This number plays the role of corporate tax identification number, VAT number and company registration number.

 

Also, before registering a company in Portugal, it is necessary to obtain Articles of Association – a document containing information about:

 

  • The name of the company (to be specified in Portuguese).
  • Founders (in addition to their names, you should specify their nationality and country of residence).
  • Scope of business.
  • Rights, duties of the directors.
  • How the shares will be transferred, as well as other nuances of working with them.
  • Voting procedure in the company, etc.

 

In addition, to start a business, legal entities will need the owner’s passport, including the preparation of its certified copy. You must also prove your residential address to the Regulator – this usually requires utility bills. Other documents required when registering a firm:

 

  • Minutes of the general council meetings, which will document the authorization of the legal representatives to establish the company.
  • Certificate of ownership, founding document.

 

For individuals, when registering a company, you must provide identification (passport, citizenship card or residence permit) and an identification number. So, there is one simple answer to the question “How do I set up a company in Portugal as a non-resident?”: exactly the same as if you were a resident, except for the need to appoint a local registered agent.

 

Costs of incorporating a company in Portugal

The registration process, depending on the chosen legal form, may involve the following costs:

 

  • Government fee – 360 euros.
  • Payment of the tax number – 150 euros per taxpayer.
  • Payment for the name that you choose from the already existing variants of the register – 3200 euros, if you choose your own name the cost of the government fee is 4400 euros.
  • Opening a bank account (500 euros).
  • Registration of the trademark.
  • Drawing up and submitting an application to start the business, which is certified by a licensed accountant.
  • Registration with the tax authorities, as well as social insurance.
  • Obtaining a physical card with general information about the company.
  • Obtaining an electronic card to access the Permanent Certificate of Commercial Activity.
  • Payment for a legal address for 3 months.
  • Ordering a tax representation for 3 months (from 600 euros).
  • Payment for accounting services for 3 months (900 euros), etc.

 

We recommend using the help of the Lawrange attorney’s association, because to formalize a business in Portugal independently without the necessary knowledge and experience will not be possible for everyone. The cost of our services is also determined by the type of the chosen legal form. For example, in the case of registration of LDA or SA we estimate the work of lawyers and consultants within 900 euros. In the case of registration of a company with a license IBCM (autonomous region of Madeira, where there is a tax rate of 14.7% or 5% when obtaining a license here) the cost of services with mandatory payments is 4900 euros.

 

Important! Registration of a company in IBCM with a corporate income tax rate of 5% also provides for the costs of its maintenance, which include the hiring of at least one local employee with a minimum salary of 665 euros, as well as the annual payment of the IBCM fee of 1800 euros, etc.

 

Procedure of company registration in Portugal

Registration of a business takes place in several stages:

 

  • Checking the name of the legal entity and reserving it in the Registry.
  • Appointment of a tax representative.
  • Formation of Articles of Association.
  • Opening an account in a local bank.
  • Obtaining a taxpayer number.
  • Payment of all fees and charges.
  • Renting a physical office in Portugal.
  • Filing documents for company registration.
  • Registration with the tax office.

 

Company registration in Portugal lasts about 7 working days (from the moment of filing the application to the Regulator until the decision is made). After passing the registration procedure, the stipulated minimum authorized capital is deposited in a bank account. In case of registration of a public legal entity, 30% of the required amount of the authorized capital is deposited. The remaining amount can be paid within 5 years.

 

Important! During registration, the new company automatically receives a domain name, which specifies its name followed by the extension .pt. The cost of the domain for the first 12 months of operation of the legal entity is included in the state fee, which you pay at one of the registration stages.

 

What are the requirements to register a company in Portugal?

The requirements may differ slightly depending on the chosen form of incorporation. For example, in case of LDA registration (one of the most common forms of doing business in Portugal) it is necessary that:

 

  • There was at least 1 founder of any nationality and residency, it can also be a natural or legal person.
  • There was paid the minimum amount of the authorized capital of the company – proportionate to the value of the issued shares at the time of registration this amount is 1 euro.
  • The general meeting of shareholders has appointed a director.
  • The legal entity has proved that it is ready for bookkeeping.
  • The shareholders have made contributions to the business, thus the extent of their liability will be determined.

 

For a large business with a large start-up capital, SA (analog of the domestic open, closed joint-stock company) is often chosen. In such a case, the following requirements are made:

 

  • Payment of a start-up capital of 5000 euros.
  • The presence of at least 5 founders.
  • Organization of company management by means of a board of directors.
  • The mandatory presence of an auditor.

 

The registered company must start doing business within the first 15 days from the date of approval of the application. During this period it is necessary to have time to register the legal entity in the tax services, as well as the director – in the social security system.

 

Peculiarities of opening a branch in Portugal

A branch (or otherwise a representative office) can be opened by any foreign corporation that intends to operate in the local market. Opening a branch in this jurisdiction is somewhat easier than registering a company from scratch due to the fact that the parent company makes all the necessary initial contributions. Representative offices are not included in the category of independent legal entities, as they are controlled by other business units of the parent company. It is responsible for the debts of the branch.

 

The name of the representative office is registered in the national register of the RNPC, the business in the commercial register. For this purpose it is necessary to prepare:

 

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  • Constituent documents of the parent company.
  • Decision of the main board of directors that it is planned to establish a representative office in Portugal.
  • Certificate of incorporation.
  • List of representatives of the management board and supervisory board.

 

Important! All documents to be submitted to the Regulatory Authorities for registration must be translated into Portuguese and notarized.

 

Possibilities of opening an offshore company

Portugal includes two territories with special status (International Business Center, abbreviated as IBC) – Azores and Madeira. It is the latter option that is most popular among foreign investors, because here you can do business in a special preferential tax regime. In addition, there is much less bureaucracy in Madeira, and doing business is accompanied by low operating costs. IBC Madeira is not an offshore in the classical sense, as it implies stricter regulation of business details than in most offshore jurisdictions.  However, due to the fact that this zone of Portugal is part of the EU and fully integrated into the Portuguese legal system, it offers great prospects for business entry into the European and even global market.

 

Advantages and limitations of offshore in Portugal

Madeira attracts investors with a minimum EU corporate tax rate of 5%. It is applied only to income earned in cooperation with foreigners or with other firms in this IBC.

 

Other benefits:

 

  • No levy on shareholder distributions from capital gains, or on royalties, services, etc.
  • Exemption from stamp duty by 80% provided that the other members of the company are not resident in Portugal.
  • Reduction of local taxes by 80%.

 

In addition, companies registered in Madeira have at their disposal the advantages of the private transaction registration department – full exemption from fees and notarial costs.

 

As this jurisdiction is not a classic offshore jurisdiction, there are some restrictions on legal entities founded by non-residents:

 

  • By type of activity – prohibition to provide public services and to participate in the defense sector of the Portuguese economy. Without a license it is impossible to engage in financial services, insurance, establishment of funds, real estate operations.
  • On names – when choosing a name for your company, you should take into account a number of nuances. Firstly, such a name should not be in the Register, secondly, it should contain a reference to the type of activity, thirdly, at the end of the name should indicate the legal form.
  • Foreign exchange banking – it is mandatory to have at least one valid account in Madeira. All transactions over 5000 euros are cause for notification to the National Bank.

 

Opening a corporate account in a bank in Portugal

There are over 140 banks operating in the country, so you are guaranteed to find an option that perfectly suits your business. The conditions for entrepreneurship in Portugal are especially comfortable due to the fact that in Portugal you can carry out transactions through the SEPA system. You will not need to hire a local director to open a commercial account, and it is not a fact that you will have to visit a bank, although this is considered more of an exception to the rule – the number of banks that consider applications online is not so great.

 

To open an account in Portugal, you will need to confirm:

 

  • place of residence;
  • your identity;
  • the fact of registration of a legal entity.

 

Some banks are interested in your financial condition, which may require you to provide information about payments or income. In general, each banking institution may have its own specific requirements. With the help of the Lawrange team you will be able to establish constructive relationships with many Portuguese banks, saving time and nerves.

 

Financial support for starting a company in Portugal

How to start a business in Portugal with minimal burden? Non-resident entrepreneurs can take advantage of all kinds of Portuguese business support programs – this is a significant factor in attracting foreign investors to the country. They are available in case of registration in Portugal of large firms in the field of tourism, science, as well as projects that have a charitable impact on the environment.

 

Well-known funds supporting entrepreneurship in Portugal:

 

  • Turismo de Portugal – is engaged in promoting innovation and entrepreneurship by providing venture capital, real estate investments, etc.
  • Investment Agency – the organization aims to help in the development of all foreign investment projects in the country, for which, among other things, work is carried out to select projects that increase competitiveness and sustainability of the economy.
  • Agency for Competitiveness and Innovation (IAPMEI) – provides financial incentives for business creation in the field of corporate and entrepreneurial innovation. Thus, any companies that are engaged in the production of new products and services with simultaneous improvement of current production can count on a financial incentive of 35-75%. This agency also supports small, medium-sized businesses and companies engaged in research and technological development.

 

Important! Companies whose main priority in their activities is the search for and implementation of innovations, as well as the development of relevant economic sectors can count on state financial support in Portugal.

 

Portugal Golden Visa Program

The program of citizenship through investment (ARI or Golden Visa), operating in the country since 2012, offers foreign entrepreneurs the opportunity to obtain a residence permit simultaneously with a passport of the country. It is valid for citizens of countries that are not part of the European Economic Area (EEA). The residence permit is issued for investments for 5 years. Also, participants of this program can enjoy visa-free travel in the Schengen area. After 5 years, the Golden Visa participant can apply for a residence permit with subsequent citizenship.

 

You can become a participant of the program in one of the following ways:

 

  • Invest in the country’s economy – registration of a company, implying the opening of 10 jobs or investing in the authorized capital of an already existing legal entity. This is an optimal option for entrepreneurs who are looking for comfortable conditions for the development of their business. In this case, you do not need to permanently reside in Portugal.
  • Invest in real estate – as a rule, simultaneously with the opening of the company it is decided to purchase real estate in this jurisdiction, which also allows you to get a residence permit. The size of the minimum amount for investment in this case is 280,000 euros.

 

Also in Portugal it is possible to obtain an entrepreneurial visa D2 without the established minimum threshold for investment, it is enough to have the finances for the normal conduct of business. In the case of a positive decision of the Consulate, the investor’s passport is stamped on the receipt of a visa for a period of 2 months. During this period, the entrepreneur must come to the country to apply for a residence permit for 2 years. The main difference between D2 and “golden visa” is the mandatory residence of a non-resident on the territory of Portugal for 5 years.

 

Conclusions

Portugal is one of the best jurisdictions in the world not only for living, but also for doing business (ranks 25th in the Forbes rating). This is possible due to its favorable geographical location, steadily growing economic indicators and full support of entrepreneurs by the state, and not only local, but also non-residents. Here it is relatively easy to obtain a residence permit by investing in the local economy or real estate. Therefore, it is quite logical that more entrepreneurs are wondering how to formalize a business in Portugal, and correctly and simply? The main condition is to fulfill all the necessary steps in the registration of the company, starting from the choice of the name of the legal entity ending with the opening of a bank account. At Lawrange Law Office we are ready to provide full assistance in overcoming the registration and post-registration process. Our dedicated team will help your business occupy a worthy niche in the thriving Portuguese economy.

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