Registration of a company in Portugal
Global deoffshorization has radically changed the rating of jurisdictions popular for company registration. Moreover, this rating has not remained stable. Tax breaks now often have time limits. At the same time, the general trend of international business today is the registration of an enterprise and the opening of a bank account in one country. Lawrange Law Firm specializes in registration of offshore and onshore companies, opening corporate accounts in foreign banks and payment systems. By tracking the trends in this area, we offer our clients the most profitable options. These now include Portugal, and specifically the Madeira free economic zone with a special tax regime.
General information on setting up a company in Portugal
The state policy of Portugal is aimed at attracting foreign investment in various ways. At the legislative level, one of the most profitable programs for obtaining citizenship through investment in the economy is enshrined in Europe. At the same time, the country includes the Autonomous Region of Madeira, which is fully integrated into the economic and political system of Portugal, but has its own tax and corporate legislation. The official name of the territory with special status is International Business Center of Madeira (IBCM). Important! Tax regime and benefits in Madeira:
- Corporate income tax for companies domiciled in Madeira is 14.7% .
- If you have an IBCM license, which is issued by SDM (Sociedade de Desenvolvimento da Madeira, SA), and a number of conditions are met, you can take advantage of a tax incentive – pay 5% income tax .
- The current tax regime allows new legal entities to be registered with the Madeira IBC until the end of 2021 , with the ability to use the specified corporate tax rates until the end of 2027 .
For your information! The Madeira Free Zone was established in the 1980s. With the aim of attracting foreign investment to this region 1000 kilometers off the coast of the Portuguese mainland, a set of tax incentives was introduced. These incentives worked. Now this jurisdiction is very popular among entrepreneurs from around the world, especially among IT and e-commerce representatives.
Advantages of jurisdiction:
- Madeira is a member of the EU, therefore, the companies are provided with a European image;
- by registering a company here, you can open an account in a Portuguese bank, that is, the company and the account will be in the same country;
- requirements and restrictions on citizenship, residency of the director, founder, beneficiary are not set;
- there are preferential tax conditions, which are difficult to find analogues in the modern conditions of deoffshorization.
Lawrange packages of services for starting a company in Madeira:
- “Classic” Portuguese company in the legal form of LDA or SA + bank account in Portugal – corporate income tax 14.7%.
- LDA or SA + bank account + IBCM license – corporate income tax 5% and 0% on dividends.
*** Note: Portuguese legal entities are required to pay tax on all their profits, including those earned outside the country. Is it possible to register a business in Portugal remotely? Yes. How long does it take to register a company in Portugal? 1-2 days. How long does it take to obtain an IBCM license? 15 business days.
Choosing a business form in Portugal
Depending on the specifics of your business, you can register:
- LDA (Sociedad por Quotas) – the equivalent of LLC;
- SA (Sociedare Anonima) – closed JSC;
- SA (Sociedare Aberta) – open joint-stock company
- the most popular form of companies in the country for residents and non-residents;
- one founder of any nationality and residence is omitted;
- the minimum share capital is only € 1;
- capital is due in full by the end of the 1st financial year;
- it is allowed to issue only registered shares;
- participants are liable for financial obligations in proportion to quotas (shares);
- management can be carried out by one director.
- the best choice for large enterprises;
- the minimum number of participants is 5;
- the minimum amount of the authorized capital is € 50,000;
- 30% of the capital is paid immediately after registration, the remaining 70% can be postponed for 5 years;
- such business entities are allowed to issue registered and bearer shares, ordinary and preferred shares;
- in the first years it is necessary to form a reserve fund – 20% of the authorized capital;
- the business is managed by the board of directors.
Registration of an LDA or SA with a corporate income tax of 14.7%
The cost of registering a “classic” Portuguese company in the legal form of LDA or SA is 4950 EUR and includes the following items of expenses:
- company registration, payment of state fees;
- NIF (Número de Identificação Fiscal – Taxpayer Identification Number) of the beneficiary;
- office and postal service (substance);
- notary fees and translations of documents into Portuguese;
- opening an account in a Portuguese bank.
*** Note: VAT-number (Value Added Tax) is included in the price. List of documents for registration of LDA or SA:
- power of attorney for registration of the company in the form of the registrar (we will send), notarized with an apostille;
- beneficiary’s passport, notarized with apostille;
- Utiliti (utility bills as proof of place of residence) not older than 3 months.
For your information! A power of attorney is not required to open a bank account. Registration of a company takes 1-2 business days, opening a bank account – 7 business days or more. When registering a company in Portugal, certain legal requirements must be met:
- draw up a charter;
- confirm the presence of a registered office in the country;
- register an accountant;
- open a bank account;
- pay state. duties.
Establishing a company step by step: Step 1. Choosing a legal form and a unique name, resolving the issue with a legal address and office, submitting an application to the authorized body. Step 2. Opening a bank account and depositing the initial authorized capital in an amount depending on the chosen form of business. Step 3. Registration of the company in the National Register of Legal Entities (Registo Nacional de Pessoas Colectivas) and the Commercial Register (Conservatórias do Registo Comercial), registration with the tax office and insurance authorities;
Registration of a company with an IBCM license and corporate income tax of 5%
The right to claim tax benefits for companies registered in Madeira is given by obtaining a license from a specially authorized body – SDM (Sociedade de Desenvolvimento da Madeira, SA). A wide range of business areas are allowed in Madeira, among which it is quite possible to choose suitable ones. We are talking about consulting and programming services, accounting and online advertising services, trade, real estate activities, and so on. Important! Among the main advantages of IBCM:
- corporate tax rate until 2027 – 5%;
- exemption from income tax on dividends, including from dividends from subsidiaries;
- taxation of royalties – 0%.
The cost of registering a company in the organizational and legal form of LDA or SA with a preferential tax regime is 7990 EUR and includes the following items of expenses:
- obligatory payments, which include:
– payment of the registration fee and compulsory insurance premium of IBCM,
– preparation of constituent documents,
– registration and registration of the company with the tax service, with the social security body,
– requesting and obtaining an IBCM license.
- NIF (Número de Identificação Fiscal – Taxpayer Identification Number) of the beneficiary / director;
- office and postal service (substance);
- notary fees and translations of documents into Portuguese for company registration;
- opening an account in a Portuguese bank;
- notary fees and translations of documents for the bank.
*** Note 1: VAT-number (Value Added Tax) is included in the price. *** Note 2: The list of documents is similar to that indicated in the section on registration of a “classic” company. For your information! A power of attorney is not required to open a bank account. Registration of a company with obtaining an IBCM license takes 15 working days, opening a bank account – from 7 working days or more. Important! Registration of companies and opening of bank accounts in the Portuguese bank Novo Banco is carried out remotely .
In addition to the costs of registering in a low-tax jurisdiction, IBCM will have to spend certain funds to maintain the company :
- During the first six months of registration, you should start actual activities and hire at least one local employee. If you pay him the minimum allowable salary, this is € 665 (we take care of the hiring of an employee).
- During the first two years of the company’s operation, it is necessary to invest in fixed assets (with the corresponding reflection in the balance sheet) € 75,000.
- An IBCM fee of € 1,800 must be paid annually.
Opening a corporate account in a bank in Portugal
Lawrange law firm offers services for opening an account in the Portuguese bank Novo Banco, which is an institution with modern services and reasonable rates. Key information on Novo Banco:
- there are no requirements regarding the amount of the initial payment;
- there are no requirements regarding the amount of the minimum balance;
- there are no restrictions on the number of transfers per month;
- the minimum annual turnover of a corporate client is € 1,000,000;
- tariffs for outgoing transactions in SEPA through the Client-Bank system up to € 100,000 – free of charge, over € 100,000 Euro – € 20;
- incoming transactions are free;
- tariffs for outgoing transactions outside the EU (in SWIFT) through the Client-Bank system – 0.25% of the payment amount, but not more than € 110;
- the possibility of opening an account remotely is provided .
Package of documents for opening an account:
- set of constituent documents;
- personal documents for the beneficiaries;
- special bank forms;
- documents confirming the company’s fiscal address and mailing address;
- some other documentation that is requested under the KYC procedure.
Important! In addition to Novo Banco, we can offer you another bank in Portugal to open an account. AK Lawrange cooperates with such banks as Millennium, Santander and Caixa Geral de Depositos. But to open an account in these banking institutions, a personal visit is required from the client.
Features of accounting for a company in Portugal
All legal entities operating in Portugal (including IBCM) are required to maintain accounting in accordance with international standards in Portuguese. In accordance with the trends towards “transparency” of international business, nominee services are not used in companies.
- The reporting period is 1 calendar year. The company must hold an annual meeting of participants, submit reports for the past year, a report from the director.
- Reporting is submitted in electronic form monthly, quarterly, annually.
- Every month a salary report is submitted and contributions to the social insurance fund are made (if the beneficiary is also a director, the contributions will be approximately € 150 per month ).
- VAT reporting is submitted quarterly.
- Annual reports are submitted by July 15th. If reports are not submitted for two consecutive years, the company may be liquidated forcibly.
- Reports of legal entities in the organizational and legal form of Sociedare Aberta and, if the company meets certain criteria, are subject to audit.
- The tax return must be submitted by the company within five months after the end of the reporting period.
- Taxes are paid quarterly (advance payments).
The accounting costs will be as follows:
- for a “classic” company – from € 180 per month (up to 50 transactions per month);
- for a company with an IBCM license – from € 280 per month (up to 50 transactions per month).
If the following criteria are met, an audit becomes mandatory for the company (compliance with two of the three criteria is sufficient):
- the amount of profit annually (for two years after registration) – more than € 3,000,000;
- number of employees – 50 and more;
- net assets exceed € 1,500,000.
The staff of such companies must have their own auditor, who signs the documentation together with other representatives of the company. By choosing Portugal as a jurisdiction for opening an international company, and Lawrange as a partner in legal services, you provide yourself with excellent prospects for successful business development and profit.