Thinking of starting a business in Portugal? We cover everything from legal structures and taxes to registration fees and business culture.
It’s quite easy to set up a business in Portugal. If you are an EU citizen, you only have to sign up for taxes and acquire a registration certificate. Residents from outside the EU, however, will need to apply for a visa before starting a business here or even finding a job. Furthermore, if you’re not familiar with the Portuguese language yet, it may be worth reaching out to an accountant to deal with the legal requirements.
To help you find your feet, read on to learn everything you need to know about starting a business in Portugal, including:
- Portuguese business culture
- Who can start a business in Portugal?
- Legal structures for businesses in Portugal
- How to start a business in Portugal as an expat
- Starting up an online business in Portugal
- Foreign companies opening up a Portuguese branch or subsidiary
- Starting up a non-profit company in Portugal
- Administrating your business in Portugal
- Support and advice when starting up a business in Portugal
- Portuguese corporate social responsibility
- Useful resources
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Portuguese business culture
Building relationships is a fundamental part of Portuguese business culture. Because of that, it can often take a few meetings to make decisions. Additionally, people tend to have a relaxed approach when it comes to punctuality and deadlines.
It’s common to use formal titles in written communication and face-to-face meetings. Indeed, the Portuguese prefer to discuss business in person rather than over the phone or email. English is widely spoken in most cities. However, if you’re dealing with local suppliers, it helps to learn Portuguese.
According to the latest census, more than one million companies have their base in Portugal. The most common sectors for these companies to belong to are wholesale and retail. Agriculture also takes up a big chunk of the market, followed by hospitality. In 2020, there were 9,101 foreign branches in Portugal. Meanwhile, there were 704,200 self-employed workers in 2021.
If you’re planning to set up a business in Portugal, you should do your market research first. Of course, finding your niche is essential if you want your company to succeed here. Some of the top industries in the country include food and agriculture, construction, textiles, and tourism.
Who can start a business in Portugal?
Overall, opening a company in Portugal is quite a simple process. If you’re an EU citizen, you must provide a NIF, social security number, and a registration certificate. People from outside these areas, however, will need to apply for a Portuguese visa before setting up a business. If you need help getting a NIF, there are plenty of online services that can help you – Bordr, for example, helps internationals to streamline the process.
You can register your company online through the government website. It’s also possible to open a company in person at the Empresa na Hora stands in under an hour. Note that the mandatory initial capital depends on the company’s legal structure.
Legal structures for businesses in Portugal
Portugal offers a variety of legal structures (forma legal) for companies. The first thing you should consider when choosing a legal form is if you want to run your business alone or as a partnership. It’s often easier to start as an individual, as there are fewer financial requirements. Below is a brief explanation of each legal form.
Individual Entrepreneur (Empresário em Nome Individual)
Unlike freelancers, an individual entrepreneur can sell both services and products. You can start working straight away with no minimum capital. In this case, there is no separation between personal and business assets. As such, you have to assume unlimited liability. However, there are some advantages, too, such as a tax exemption from social security fees for the first year.
Individual Limited Liability Establishment (Estabelecimento Individual de Responsabilidade Limitada)
For this category, you must have a share capital of at least €5,000. Additionally, there is a separation between personal and business assets. With this in mind, only the assets associated with your economic activity will be liable for any debts.
Sole Proprietorship by Shares (Sociedade Unipessoal por Quotas)
A single shareholder owns the entire capital. You can define your initial capital, but the minimum investment is €1, or €2 if there are two partners. You will also need to create a separate bank account for your company and hire an accountant.
General Partnership (Sociedade em Nome Coletivo)
In a general partnership, there is no minimum amount for share capital. Basically, each partner is unlimitedly liable for the company’s social obligations.
Private Limited Company (Sociedade por Quotas)
To establish this type of company, you will need a minimum of two partners who will share quotes. The minimum investment is €5,000. In this case, the liability of each partner is limited to the shared capital. Therefore, only your company’s assets can be liable to creditors in case of debt.
Public Limited Company (Sociedade Anónima)
A public limited company is one of the most complex options since it includes more regulations and legal requirements. There must be at least five partners, and each will own company stock. To apply for this option, you will need a minimum capital of €50,000.
Limited partnership (Sociedade em Comandita)
This type of company also requires a minimum investment of €50,000. It includes two types of partners: the ones who manage the company and have unlimited liability and the others who have limited liability.
How to start a business in Portugal as an expat
Starting a business in Portugal is pretty simple, even for expats. However, there can be different requirements depending on where you come from and the type of business. Here are a few things you should consider before you register your company.
How to obtain a Portuguese business visa
To open a company in Portugal, you must have a residence permit or visa. EU, EEA, and Swiss citizens should request a Registration Certificate from their nearest city hall (câmara municipal). You can do this within 30 days after your first three months in the country.
Meanwhile, non-EU citizens planning to live in Portugal must apply for a visa. The most common option for entrepreneurs is the D2 visa. Of course, opening a company doesn’t automatically give you a residence permit. You also have to show the following:
- A solid business plan
- Proof that your idea is economically viable and relevant to the country
- Evidence of experience in the area
Alternatively, you can apply for a StartUP Visa. With this visa, you will be a part of a start-up incubator. It’s ideal for someone who is just taking their first steps as an entrepreneur and needs time to adapt to the local market. Finally, there is also the Golden Visa, but for this, you will need a minimum investment of €250,000.
Registering your business in Portugal
Sole proprietorships by shares, quotas, and public limited companies should apply through the Empresa Online service. To do this, you need a citizen card. It’s also possible to ask a lawyer or solicitor to help with the process using a digital certificate (certificado digital). Alternatively, you can apply in person through Empresa na Hora. This service is available across the country in Espaços Empresa, and you can book an appointment in advance.
Steps to registering your company
If you’re opening a company in Portugal, the first thing you should do is apply for a NIF. Once that’s sorted, you must choose a legal form for your business and name the company. You can pick from a list of pre-approved names. However, if you prefer something different, you need to request a Denomination Approval Certificate.
You can then proceed to the following steps:
- Open a bank account and deposit the initial capital
- Draft the Articles of Association
- Acquire the Commercial Registration
- Declare the start of activity with the tax authorities
- Register for social security
You should also present an identification card, passport, or residence permit. The whole process costs around €360. However, if your business also includes a property, this value can increase.
After establishing your company, you will need to find a certified accountant. Additionally, you should register the beneficial owner at the Registo Central de Beneficário Efetivo within 30 days.
Licenses and permits
To run your business in Portugal, you must deliver an application to the Directorate-General for Economic Activities (DGAE). You can submit this to the Balcão do Empreendedor (BDE). Each economic sector has different requirements, so make sure to check the list of licenses beforehand.
Starting up an online business in Portugal
If you’re opening an online business in Portugal, you should follow the regular registration process. That said, there are a few additional requirements specific to online businesses. Firstly, you should ensure the company complies with Portuguese laws. These include the Price Law, the Consumer Law, the Data Protection Law, the Copyright Law, and the Publicity Law. In addition, if you have an online shop, you should also be familiar with the E-commerce Law.
Foreign companies opening up a Portuguese branch or subsidiary
A foreign company looking to enter the Portuguese market can do so in two ways: a branch office (sucursal) or a subsidiary (filial). Each has a different set of rules and business models, so you should check which one is the right fit for you.
A branch office, or sucursal in Portuguese, is essentially an extension of a company abroad. It has no legal personality and carries out the same activity as the parent company. The easiest way to register a branch in Portugal is to head to a local registry office with a Balcão Sucursal. All future partners should be present at the meeting. If someone can’t attend, they should assign a legal representative to be there on their behalf. The registration process costs €200, and you will need to bring the following documents:
- An identification card, passport, or residence permit
- Updated documentation from the Commercial Registry about the incorporation of the company in its origin country
- The Minutes of the General Meeting granting powers for company incorporation
- Identification of the person who has been granted the power to sign the incorporation of the new company
- The Memorandum and Articles of Association in its origin country
Note that all foreign documents must be translated into Portuguese. Once you register the branch office, you should declare it at the Registo Central do Beneficiário Efetivo (RCBE) in 30 days.
Subsidiaries have a separate legal personality, making them distinct from the parent companies. Opening a subsidiary is the same as starting a regular company in Portugal. It is subject to corporate income tax and other taxes that Portuguese companies need to cover.
Starting up a non-profit company in Portugal
In Portugal, there are two legal forms for non-profits: association and cooperative. An association (associação) is tied to a social activity, while a cooperative (cooperativa) can have a commercial purpose. You can register for either at a local notary office.
Administrating your business in Portugal
After you set up your company, you should keep track of your tax obligations. In Portugal, companies are subject to corporate income tax (Imposto Sobre o Rendimento das Pessoas Coletivas or IRC), VAT (Imposto sobre Valor Acrescentado or IVA), and customs duties, among others.
To keep a clear record, you should open a separate bank account for your business. Usually, you need to consider the following fees:
- VAT – varies between 6%, 13%, and 23% depending on the service, paid monthly or quarterly
- IRC – 21% tax paid annually
- Derrama municipal – a tax on profits, set by the council where the company is established, a maximum of 1.5% paid annually
You must also sign up for social security and register the people you hire. Employers should pay social contributions for the company and the employees in their service. As such, it is up to the employer to deduct the value of these contributions from the employees’ salaries. These must be paid between the first and 15th day of the following month.
Companies also have to submit a monthly renumeration statement (declaração mensal de renumerações). Public inspection measures vary for each business. You can find the specifics for your sector on this list of public inspection templates issued by the Portuguese government.
Employing staff when starting a business in Portugal
When hiring staff, you can opt for a recruitment company or reach out to the Instituto do Emprego e Formação Profissional (Employment and Vocational Training Institute). They offer free recruitment and selection services as well as incentives for hiring. You should also be aware of Portuguese labor law.
Portuguese business insurance
As a business owner, you will also need to consider insurance. While there are several options available, there is one insurance that all companies must have: workplace accident insurance (seguro de acidentes de trabalho). Credit insurance is optional.
Support and advice when starting up a business in Portugal
The Portuguese government has released a series of public incentives to assist new businesses. Essentially, there are three entities responsible for managing these financial support programs:
- IAPMEI (Agency for Competitiveness and Innovation) – offers incentive schemes for corporate and entrepreneurial innovation, SME qualification, internationalization, research, and technological development.
- Turismo de Portugal – Portugal’s tourism board promotes projects in the tourism industry through venture capital, real estate investment, and mutual guarantee companies.
- AICEP (Portuguese Agency for Investment and Foreign Trade) – agency dealing with foreign investment projects. They select projects that contribute to the local economy, aiming to increase Gross Value Added, reduce the trade deficit, and create jobs.
Young entrepreneurs between 18 and 30 can apply for the Investe Jovem. The program is regulated by the Institute for Employment and Vocational Training (IEFP) and includes financial support and technical advice.
If you’re setting up a business in Lisbon, you can reach out to Startup Lisboa. This private incubator offers many services to aspiring entrepreneurs, including mentoring, networking activities, investment, and office space.
Portuguese corporate social responsibility
Social responsibility and ethical business practices have been a growing concern for Portuguese companies. According to the Cambridge Sustainable Development Report 2022, Portugal ranks 20th in the world for sustainable development goals. The RSO is a nationwide network promoting corporate social responsibility. Meanwhile, the Portuguese Association for Business Ethics (APEE) has an annual initiative that distinguishes companies actively contributing to sustainable development.
- ePortugal – a practical guide for entrepreneurs, including information on how to start a company and manage your business
- Compete2020 (in Portuguese) – guidelines for corporate social responsibility
- Remote Portugal – list of coworking spaces in Portugal
- Justica.gov (in Portuguese) – official government website with information about opening a company, including costs and documentation
- Justica.gov (in Portuguese) – Information on how to register a brand
- Portal do Licenciamento (in Portuguese) – Information about licenses in Portugal
- Ministério dos Negócios Estrangeiros – Ministry of Foreign Affairs website with information about Portuguese visas