From stunning beaches on the Atlantic coast and a mild Mediterranean climate to fabulous food and rich history and culture, Portugal is a popular destination for both tourists and expats. However, the country's growing economy and the security of being an EU member state attract lots of investment from international companies, meaning Portugal is far from being all about leisure. These and other factors make it a somewhat favorable environment for new entrepreneurs and startup founders.
Is Portugal a good place to open a business?
The success of any commercial enterprise depends on a whole range of factors, and where your business is set up is just one of the many things to take into account. However, if you do plan to start a company in Portugal, you may be happy to know that the country has a lot to offer. In fact, in the World Bank's Doing Business Report (2020), Portugal ranked 39th when it came to 鈥渢he ease of doing business鈥�.
There are several key factors that make Portugal a favorable new business environment.
First, compared to most other Western and Southern European countries, Portugal has a lower cost of living. This also means that costs associated with setting up a company will be lower, which is a very important consideration for small businesses.
Second, Portugal has an actively developing startup scene. Lisbon, in particular, is emerging as a destination for new companies in the fields of IT, tech, digital data management, and more. In fact, the current local executive had made it a priority to attract foreign investment and turn the Portuguese capital into the unofficial Silicon Valley of Europe (for example, the city plays host to the annual Web Summit). As such, Portugal is home to a number of startup incubators and听accelerators and听coworking spaces, as well as groups of angel investors looking for promising projects to invest in.
Third, the last few Portuguese governments (regardless of standing as center-left or center-right) have slowly transformed the country into a much more business-friendly destination, looking at private enterprises (big and small) as the backbone of the economy. Because of this, there are lots of state-sponsored initiatives to support new companies and promote the startup culture.
Finally, the country's location also makes it a very friendly destination for investors. A member state of the European Union, it offers financial security and stability 鈥� but as a growing economy, it also provides new opportunities not available in more established European nations. Plus, it's a meager 7-hour flight away from the US.
How to start a company in Portugal?
Setting up a business in Portugal is not particularly difficult, but you will need to follow a number of steps.
The first thing to do is get your business plan ready and make sure it's clear and economically viable.
Second, you will need to make sure that you have the right credentials and paperwork to start a business. This includes:
- Portuguese residency permit (temporary or permanent);
- Tax ID Number from the Portuguese Tax Office;
- Social Security Number issued by the Portuguese Social Security Office.
Next up, you will need to define your business structure. Are you setting up a limited company, a partnership or a cooperative?
You can then go on to select a business name and decide on the address where your business will be registered.
The next step would beto choose a setup method. There are two main ways to set up a company in Portugal.
You can set up a company online through the . This only takes a few days and costs about 鈧�360. Note that the option is only available for some types of businesses.
On the other hand, you can also set up a company in person and on the spot, registering a sole trader company or a limited company in just an hour. The same set fee of 鈧�360 applies. On the other hand, if the company's share capital includes other assets, you will pay 鈧�50.00 per real estate, 鈧�30.00 per movable property, and 鈧�20.00 per vehicle.
To set up a Portuguese company on the spot, you need to be accompanied by all the partners (if there are any) and have all the necessary documentation. To learn more about setting up a business on the spot, read the .
Types of companies you can set up in Portugal
There are different business types you can set up in Portugal. Your choice of business structure will most likely depend on the activities you plan to perform and the number of people involved in the business. Here are some of the most popular types of business arrangements in Portugal:
If you are the only one in charge of your company, you will probably be setting up a Sole Trader company, a Single Member Limited Company, or an Individual Limited Liability Establishment.
Sole Trader, Empres谩rio em Nome Individual in Portuguese, is the most basic business form and the most typical way to arrange self-employment in Portugal. Alternatively, you may simply start your activity as a freelancer through the and just issue regular invoices (Recibos Verdes) for your services. In that case, though, you will not be starting a company but rather officially letting the government know you will be doing freelance work. Be that as it may, if you set up a Sole Trader company, you will have full ownership of all company profits (after taxes). With that, you will also have unlimited liability for business debts and other expenses. To set up a Sole Trader company, there is no minimum capital requirement. You also won't need any formal constitution or articles of association.
Alternatively, a Single Member Limited Company, Sociedade Unipessoal (SU) in Portuguese, is also a business that is run by one person. The main difference is that debt liability, in this case, is limited to company assets (and not personal assets of the business owner). There used to be a minimum capital requirement in the amount of 鈧�5,000, but that is no longer the case (you can start your Sociedade Unipessoal por Quotas with as little as 鈧�1,00). Compared to a Sole Trader company, registering a Single Member Limited Company requires that you hire the services of an accountant.
Lastly, an Individual Limited Liability Establishment, Estabelecimento Individual de Responsabilidade Limitada in Portuguese, is operated in much the same way as the Single Member Limited Company. There is a difference in setup requirements, though: There is a minimum capital requirement of 鈧�5,000.
Visa requirements for opening a company in Portugal
To start a business in Portugal, you must first have a valid work permit or a visa type that allows you to start a business, as well as having the minimum capital to invest in the new company. In addition to any necessary visas, you will also need a Portuguese residency card, social security number, and a tax number.
Who is eligible for the Golden Visa in Portugal?
Non-EU citizens who want to start a business in Portugal may be eligible for the Golden Visa, which is designed to encourage investment in the country. Note that this visa option is only open to third-country nationals who are able to fulfill at least one of the requirements below:
- Creating at least 10 job postings;
- Investing 鈧�500,000 in scientific research activities;
- Investing 250,000鈧� in arts or in the preservation of local heritage sites;
- Investing 鈧�500,000 in subscription units of mobile investment funds (non-related to the housing sector);
- Investing 鈧�500,000 in creating a local company or supporting an existing one, as long as the investment leads to the creation or maintenance of at least 5 job positions for a minimum of 3 years.
Note that more conditions may apply for receiving this type of visa. This is why it is recommended that you check with your local Portuguese embassy or consulate regarding the most up-to-date Golden Visa application requirements and application procedures.
Corporate taxes in Portugal
Companies in Portugal pay taxes (IRC) at a flat rate of 20%. Municipality payments also apply (up to 1.5%, depending on location). There is also an additional charge called Derrama Estadual if a business makes over a certain amount in taxable profits:
- Up to 鈧�1,500,000: 0%
- Between 鈧�1,500,000 and 鈧�7,500,000: 3%
- Between 鈧�7,500,000 and 鈧�35,000,000: 5%
- Over 鈧�35,000,000: 9%
As the government in Portugal offers strong support to small and mid-sized companies, they can pay a reduced tax rate (16%) on their first taxable profits of 鈧�50,000. Plus, small businesses (with an annual turnover of under 鈧�200,000) can use a simplified tax scheme and choose to pay taxes on their turnover instead of profit.
Starting a business in Portugal: governmental support initiatives
One of the benefits of starting a business in Portugal is strong government support. As we've mentioned earlier in this article, the Portuguese government has a number of initiatives to support small and medium-sized businesses. There are also a lot of programs aimed at helping startups and new companies. For instance:
- offers technical and financial tools to help young entrepreneurs (between 18 and 35) set up new innovative companies.
- allows local companies to apply for EU funds.
- is a venture capital organization where investors can help finance businesses in exchange for equity.
- provides support for early-stage businesses. This includes assistance and mentoring when it comes to management and marketing, legal services, intellectual property support, networking, training and more.
- is an IEFP program where experts help new business owners come up with a viable business plan and provide technical consulting within the first 2 years of the project.
- is an internship program that pays for the company's costs when employing a recent graduate or unemployed citizen for up to 6 months.
This is鈥攂y far鈥攏ot an exclusive list of programs and initiatives offered to businesses in Portugal. For a full list of programs, make sure to check .
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
