Learn more about the Lisbon startup scene along with how to become one of the many startups in Portugal with this guide to starting a business of your own in Portugal.
If you’re thinking of starting a business in Portugal or becoming self-employed as a foreign resident, you’ll need to understand the business climate for startups in Portugal, what types of registered company you can set up and what the process is for becoming self-employed.
The level of entrepreneurship in Portugal is still relatively low, but most businesses are small and self-employed. This means that you might not make as much money as you hoped and you will have to enter into things with a robust business plan.
This guide explains the process of starting up a business in Portugal, including:
- How to start a business
- Business types
- Offshore companies
- Freelancers in Portugal
- Foreign companies registered in Portugal
- Business visas and immigration requirements
- Taxes and accounting for starting a business in Portugal
- Employing foreign staff in Portugal
- Company lawyers for startups
- Government agencies and company support
If you are a foreign resident wanting to start a business in Portugal, you’ll need to go through the following steps:
Check that you can legally set up a business in Portugal
The first step is to ensure that you meet the legal requirements to trade as self-employed in Portugal. You will need:
- Portuguese residency card. See below section on Business visas and immigration requirements for more details.
- A Tax Number from the Portuguese Tax Office
- A Social Security Number from the Portuguese Social Security
Make sure you have a viable business idea
If you are an entrepreneur in Portugal with a business idea, you will need to do your market research and also develop a strong business plan. You can download business plan templates and look at sample business plans from various different industries from a website such as this one.
Decide on the business legal structure
See the below section on Portuguese business types for details of the different types of set up you can choose from.
Choose a business name and address
You may already have these but if not, now is the time to get it finalised as you will need to register them as part of your set-up process.
Choose set-up method
There are three methods of setting up a company in Portugal. Two simplified ways (online and on-the-spot) and the traditional method.
- Setting up online (Empresa Online) – this allows certain types of Portuguese businesses to be set up and registered over the internet with 1-2 days for a cost of EUR360. An electronic certificate is required. The Portal de Empresa website for doing this can be found here.
- Setting up on-the-spot (Empresa de Hora) – sole traders and limited companies can be created in an hour for EUR360 via this government scheme. All partners should be present along with all necessary documentation and any legal representatives. Details of how to set up using Empresa de Hora can be found here.
If you are unable or unwilling to start up your Portuguese business using Empresa Online or Empresa de Hora, you can set up using the traditional method (Criacao da Empresa) by following the steps below:
- Obtain a Certificate of Admissibility to formally identify your Portuguese company name. This can be done through the Institute of Registries and Notaries (IRN)
- Apply for a Company Card and a Collective Card (the main business ID) from the IRN
- Open a business bank account and deposit the initial capital
- Declare commencement of activity at the local Tax Office
- Register your Portuguese business at a Commercial Registry Office
- Register as an employer at the local Social Security office
Once you have completed these steps, which should take no more than around 15 days, you can start running your business in Portugal. First check if your area of business activity has any additional requirements, such as a license or certain qualifications. For some businesses it is illegal to start activity before being granted an official status in Portugal.
There are a number of different legal structures for businesses in Portugal, ranging from individual sole traders to large incorporated companies with many employees. The Portuguese Companies Code regulates businesses in Portugal and defines the different legal forms. Here’s a brief overview:
Businesses owned by one individual
- Sole Trader – see section below on freelancers and self-employed for details
- Single-Member Limited Company – see below section for details
- Individual Limited Liability Establishment – see below section for details
Businesses owned by more than one person
- Private Limited Company (Sociedade por Quotas)
Portuguese company with a minimum of two partners and minimum capital investment of EUR5000. Shareholders pay a minimum of EUR100 per share and are jointly responsible for everything agreed in the Articles of Association. Shareholders are liable for debts up to the amounts covered by business assets.
Public Limited Company (Sociedade Anomina)
- Portuguese company that requires at least 5 shareholders and a minimum capital investment of EUR50,000. Liability of debts is limited to business assets and shareholders are liable for amounts up to their share value.
Partnership (Sociedade em Nome Colectivo)
- Portuguese company with a minimum of two partners whose liability extends to personal assets that can be used to cover debts.
Limited Liability partnership (Sociedade em Comandita)
- Portuguese company with a minimum of two partners who are a mix of general partners who run the business and have unlimited liability (including personal assets) and sleeping partners who provide capital and whose liability is limited to the amount invested.
- Non-profit organisations run through cooperative principles and mutual assistance of members. They are freely established legal entities whose capital and composition may vary. Portuguese cooperatives are regulated by the Antonio Sergio Cooperative Sector Institute (CASES).
Setting up an offshore company
If you are considering setting up an offshore company, i.e. one that is registered, established or incorporated outside of your country of residence, there are several major pros and cons you need to bear in mind.
Offshore incorporation is a straightforward process in all of the popular offshore financial centers and tax havens around the world. They can provide a wide range of benefits to the company and company principals.
You can read more about the pros and cons of setting up an offshore company, including privacy and reduced tax liability, in our helpful guide. This also explains how to register, establish, or incorporate your business outside of your country of residence.
Individuals wanting to start up businesses in Lisbon or another of the Portuguese cities on their own can choose from the following:
Sole Trader (Empresario em Nome Individual)
- This is a basic form of self-employment in Portugal where individuals (sole traders) trade as a business, are free to do what they want with profits once taxes have been paid and have unlimited liability for business debts. There is no minimum capital requirement to start up and no requirement for any formal constitution or articles of association.
Single-Member Limited Company (Sociedade Unipessoal por Quotas)
- One person runs the Portuguese business but debt liability is limited to business assets. There must be a minimum capital investment of EUR5000.
Individual Limited Liability Establishment (Estabelecimento Individual de Responsabilidade Limitada)
- Similar to the Single-Member Limited Company but the initial capital investment of EUR5000 must consist of at least two-thirds cash. Up to a third can consist of collateral that can be used as security.
- Freelancers in Portugal can operate in exactly the same way as Sole Traders. If you’re supplying a trade rather than operating as a business from a fixed premises (e.g. journalist, hairdresser, electrician), you can work as a freelancer in Portugal as long as you have a residence permit, tax number and social security number. You will be responsible for making your own income tax payments and social security contributions.
More information on self-employment in Portugal can be found on the Portuguese Public Services website here.
Foreign companies wanting to open up a branch or subsidiary of their company in Portugal need to register the branch office name with the IRN and establish and register the branch with the Commercial Registy Office. The following documents will be needed:
- parent company’s incorporation documents
- confirmation from the board of directors of the parent company confirming the opening of the branch
- a power of attorney
Businesses within the EU who have been operating in at least 2 EU countries for at least 2 years can create a European Country which makes it easier to expand into other EU countries. More information available here.
You need to have a Portuguese residence permit (or a Certificate of Registration if an EU/EFTA citizen who has been a Portuguese resident for less than 5 years) to start a business in Portugal. See our guide to Portuguese visas and residence permits for more information.
Non-EU/EFTA nationals wanting to come to Portugal to start a business or work as a freelancer will need to obtain a Portuguese work visa and residence permit. See our guide to Portuguese work visas for more information.
Non-EU/EFTA nationals interested in investing money into Portugal might qualify for the Golden Visa programme which is designed to attract foreign investment. See our guide to the Portuguese Golden Visa for more information.
Business and self-employed income is classed as category B income under Portugal’s income tax system and can be taxed according to accounts or under a ‘simplified regime’. Portugal has a progressive rate of income tax and a VAT tax rate of 23% on goods other than food, drink and basic necessities.
The Portuguese tax year runs from 1 January to 31 December and all residents self-employed in Portugal need to submit tax returns annually. See our guides to Taxes in Portugal for more information.
If you have a business in Portugal with employees, you can employ staff who are EU/EFTA citizens or those from outside the EU/EFTA who have a valid visa allowing them to work. See our guide to Portuguese work visas for more information.
If you are starting a business in Portugal and planning to employ staff, be sure to account for the cost. Employers in Portugal have to pay 14 months of salary a year, social security contributions, 14 paid public holidays and 5 weeks paid annual leave.
Before starting a business in Portugal, it’s advisable to speak to an English-speaking lawyer knowledgeable in Portuguese business laws. Obtaining legal advice will help you identify any tax breaks available and will help you navigate your way through the process of opening your business in Portugal.
Details of English-speaking business lawyers in Portugal can be found here.
- Portuguese Ministry of the Economy
- British-Portuguese Chamber of Commerce
- Programme of Support for Local Employment Initiatives
- Portugal Ventures (offering help to start-ups and entrepreneurs)
- Portugal Global (offers support to businesses and self-employed)
- information on Portuguese Business Centres where you can go to set up your company on-the-spot and get advice on business issues