Are you a foreign entrepreneur considering launching a business in Portugal? You’ve come to the right place! Portugal is gaining traction as an appealing destination for global business owners and entrepreneurs, owing to its strategic location, hospitable business environment, and favorable tax system. In this comprehensive guide, we’ll walk you through step-by-step advice on initiating a business venture in Portugal.
Why open a company in Portugal
The Portuguese business environment is characterized by several key factors that make it an attractive destination for entrepreneurs:
Strategic Location: Situated at the crossroads of Europe, Africa, and the Americas, Portugal serves as a gateway to markets worldwide. Its strategic location offers easy access to major international markets, making it an ideal hub for trade and commerce.
Stable Economy: Portugal boasts a stable and diversified economy, with key sectors including tourism, renewable energy, agriculture, and technology. The country has experienced steady economic growth in recent years, attracting investment from both domestic and international sources.
Supportive Infrastructure: Portugal offers modern infrastructure, including well-developed transportation networks, advanced telecommunications systems, and world-class facilities. This infrastructure facilitates business operations and enhances connectivity within the country and beyond.
Skilled Workforce: Portugal is home to a highly educated and skilled workforce, with a strong emphasis on innovation and entrepreneurship. The country’s universities and research institutions produce top talent in fields such as engineering, science, and technology, providing businesses with access to a pool of qualified professionals.
Friendly Tax Regime: Portugal offers a competitive tax regime, with favorable tax rates for businesses and individuals. The country’s tax system is designed to encourage investment and innovation, making it an attractive destination for entrepreneurs seeking to optimize their tax liabilities.
Business Structures in Portugal
In Portugal, there are multiple structures available for starting your business. You just need to choose the one that is suitable for your situation.
Individual Ownership
Sole Trader: Referred to as Empresario em Nome Individual, this form of self-employment involves one person conducting business activities. There’s no minimum capital requirement, but sole traders bear unlimited liability for business debts.
Single-Member Limited Company: Known as Sociedade Unipessoal por Quotas, this structure allows one person to operate a business with debt liability limited to business assets. It necessitates a minimum capital investment of €5,000.
Individual Limited Liability Establishment: Recognized as Estabelecimento Individual de Responsabilidade Limitada, this resembles a Single-Member Limited Company. However, the €5,000 capital investment must comprise at least two-thirds cash.
Partnership
Private Limited Company: Identified as Sociedade por Quotas, this type requires a minimum of two partners and a €5,000 capital investment. Shareholders must contribute a minimum of €100 per share and are collectively responsible for debts covered by business assets.
Partnership: Known as Sociedade em Nome Colectivo, this structure mandates a minimum of two partners, whose liability extends to personal assets for covering company debts.
Public Limited Company: Referred to as Sociedade Anomina, this entity requires at least five shareholders and a minimum capital investment of €50,000. Shareholders are liable for debts up to the value of their shares.
Starting a Business in Portugal
Once you’ve determined the appropriate business structure for your company in Portugal, the subsequent step is to register your business. Here’s a comprehensive, step-by-step guide on how to register your business in Portugal:
- Choose your company name: Select a unique and appropriate name for your business.
- Obtain a taxpayer number: Obtain a taxpayer number (Número de Identificação Fiscal or NIF) from the Portuguese Tax Authority (Autoridade Tributária e Aduaneira).
- Draft the incorporation documents and statutes: Prepare the necessary incorporation documents and statutes outlining the legal structure and operation of your business.
- Register with the Portuguese Commercial Registry: Register your company with the Portuguese Commercial Registry (Registo Comercial) to establish its legal existence.
- Submit the Ultimate Beneficial Owners: Provide information about the Ultimate Beneficial Owners (UBOs) of your company as required by Portuguese law.
- Register for social security: Register your business and any employees with the Portuguese social security system (Segurança Social).
- Deposit share capital: Deposit the required share capital into a Portuguese bank account in the name of your company.
Taxes for Starting a Business in Portugal
Navigating Portuguese tax laws and regulations can be intricate, and it’s crucial to grasp your tax responsibilities as a business owner in Portugal. Here are some essential points to consider:
Personal Income Tax
Individuals are subject to personal income tax (Imposto sobre o Rendimento das Pessoas Singulares, or IRS) on their worldwide income. Tax rates are progressive and range from 14.5% to 48%.
Corporate Income Tax
Businesses are liable for corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas, or IRC) on their profits. The standard corporate tax rate is 21%, with reduced rates for small and medium-sized enterprises.
Value Added Tax (VAT)
Value Added Tax (Imposto sobre o Valor Acrescentado, or IVA) is imposed on the sale of goods and services in Portugal. The standard VAT rate is 23%, with reduced rates of 13% and 6% for certain goods and services.
Social Security Contributions
Employers and employees are required to make social security contributions (Segurança Social) to fund various social benefits, including healthcare, pensions, and unemployment benefits. The Single Social Tax (TSU) amounts to 34.75% of each worker’s gross salary. Within this, companies cover 23.75%, while employees contribute 11%.
Intellectual Property in Portugal
Intellectual property (IP) rights are crucial for safeguarding innovations and creative works in Portugal. Here’s an overview of IP in Portugal:
Trademark
Trademarks distinguish the products and services of one business from those of others. Once registered in Portugal, a trademark grants exclusive usage rights, preventing unauthorized use by other entities. Trademarks are subject to renewal and expire after five successive years of non-use.
Patent
Patents in Portugal protect unique inventions with inventive steps that are applicable for industrial use. They are valid for 20 years, granting exclusive rights to the patent holder. This includes the right to prevent others from manufacturing or distributing the invention without permission.
Copyright
Governed by the Portuguese Copyright Office (IGAC), copyright safeguards intellectual creations in various fields such as literature, science, and the arts. Copyright owners hold exclusive rights and can commercially exploit their works or authorize others to do so with consent.
Register a trademark in Portugal
To register a local trademark in Portugal, you must submit an application to the INPI (Portuguese Institute of Industrial Property). The INPI is the sole authority in Portugal authorized to grant exclusive rights to trademarks at a national level. Its role is to safeguard industrial property, including patents, designs, and trademarks.
Like in many other countries, trademark registration in Portugal is obligatory to secure trademark rights. Additionally, if your trademark registration is approved by the INPI in Portugal, it automatically extends to Madeira and the Azores.
Frequently asked questions about Starting a business in Portugal: Guide for Foreigners
Can i move to Portugal and start a business?
Yes, you can move to Portugal and start a business as a foreign entrepreneur. Portugal offers various residency and visa options for individuals looking to relocate and establish a business in the country such as the D2 Visa or Digital Nomad Visa.
How can I start a business in Portugal as a foreigner?
Foreigners can start a business in Portugal by following specific steps, including choosing a business structure, registering the company, obtaining necessary permits, and complying with tax and legal requirements.
What are the most common business structures in Portugal?
Common business structures in Portugal include sole trader, limited liability company (LDA), and public limited company (SA). Each structure has its own advantages and requirements.
What are the requirements for registering a business in Portugal?
Requirements for registering a business in Portugal typically include choosing a unique company name, obtaining a taxpayer number (NIF), drafting incorporation documents, and registering with the Portuguese Commercial Registry.
Are there any incentives or support available for foreign entrepreneurs in Portugal?
Yes, Portugal offers various incentives and support programs for foreign entrepreneurs, including tax incentives, grants, and funding opportunities. These programs aim to encourage investment and stimulate economic growth.
What are the tax implications of starting a business in Portugal?
Starting a business in Portugal entails tax obligations such as corporate income tax, value-added tax (VAT), and social security contributions. It’s important for entrepreneurs to understand their tax responsibilities and seek professional advice if needed.
How long does it take to start a business in Portugal?
The time required to start a business in Portugal can vary depending on factors such as the chosen business structure, the complexity of the registration process, and the efficiency of completing required documentation. On average, it can take several weeks to several months to complete the registration process.
