Published on and written by Cyril Jarnias
Portugal has established itself in recent years as a top destination for entrepreneurs looking to establish their company in Europe. With its favorable tax framework, simplified procedures, and business-friendly environment, the Lusitanian country offers numerous advantages for business development. Discover in this comprehensive article all the aspects you need to know to successfully create your business in Portugal.
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Portugal, Land of Opportunities for Entrepreneurs
Portugal offers numerous advantages that make it a preferred destination for company formation:
A dynamic economic environment: After overcoming the financial crisis, Portugal has experienced sustained economic growth for several years. The country is attracting more and more foreign investors drawn by its potential.
Attractive taxation: Portugal offers one of the most competitive tax regimes in Europe, featuring a corporate tax rate of 21% and numerous tax benefits for innovative companies.
Simplified procedures: The Portuguese government has implemented streamlined administrative processes to facilitate business creation. It’s possible to establish your company in just a few days.
Qualified workforce: Portugal has a young and qualified workforce, particularly in technological sectors. Wages remain competitive compared to other European countries.
Appreciated quality of life: With its pleasant climate, moderate cost of living, and safety, Portugal offers an attractive living environment for entrepreneurs and their families.
Strategic position: Located at the edge of Europe, Portugal serves as an ideal gateway to European, African, and South American markets.
Good to know:
Portugal offers a special visa for entrepreneurs, the “Startup Visa,” which facilitates the settlement of innovative project holders in the country.
Main Legal Structures for Business in Portugal
Portugal offers different legal forms for company creation. Here are the main structures to know:
Sociedade por Quotas (Lda): Equivalent to the French SARL, this is the most common form for small and medium-sized enterprises. It requires a minimum share capital of €1 and at least two partners.
Sociedade Anónima (SA): Comparable to the French SA, this structure suits large companies. It requires a minimum share capital of €50,000 and at least five shareholders.
Empresário em Nome Individual: Sole proprietorship status, suitable for small activities. The entrepreneur’s liability is unlimited.
Sociedade Unipessoal por Quotas: Single-member LLC, allowing company creation with one partner. The minimum share capital is €1.
Sucursal: Branch of a foreign company, without separate legal personality.
The choice of structure will depend on your activity, objectives, and situation. It’s recommended to consult with an expert to determine the most suitable legal form.
Good to know:
The Sociedade por Quotas (Lda) is generally the most advantageous structure for foreign entrepreneurs looking to establish themselves in Portugal.
Advantageous Taxation for Companies
Portugal offers attractive taxation for companies, with numerous benefits:
Corporate tax: The standard rate is 21%. There’s a reduced rate of 17% for SMEs on the first €25,000 of profits.
Madeira Free Zone tax regime: Companies established in this zone benefit from a reduced corporate tax rate of 5% until 2027.
R&D tax credit: R&D expenses are deductible at 32.5% and can benefit from a tax credit of up to 82.5%.
Capital gains exemption: Capital gains from share transfers are exempt under certain conditions.
Participation exemption regime: Exemption of dividends received from foreign subsidiaries under conditions.
No withholding tax: On dividends, interest, and royalties paid to EU companies.
Advantageous tax treaty with France: Allowing avoidance of double taxation.
Portugal also offers tax incentives for establishment in certain regions and for innovative companies.
Good to know:
Portugal offers a special tax regime for “Non-Habitual Residents” allowing foreign entrepreneurs to benefit from advantageous taxation for 10 years.
Creating Your Company in Portugal: Key Steps
Company formation in Portugal follows a simplified process. Here are the main steps to follow:
1. Choose a name for your company: Check its availability with the Registo Nacional de Pessoas Coletivas.
2. Draft the articles of association: Define the corporate purpose, capital, share distribution, etc.
3. Open a bank account: To deposit the share capital.
4. Obtain a tax number: From the Portuguese tax services.
5. Register the company: With the “Empresa na Hora” one-stop shop or online via the “Empresa Online” portal.
6. Publish the articles of association: In the Portuguese official gazette.
7. Register with social security: For the company and employees.
8. Obtain necessary licenses: According to your activity.
The process can be completed in just a few days. It’s recommended to be assisted by a local lawyer or accountant to ensure compliance with procedures.
Good to know:
Portugal offers an “Empresa na Hora” service allowing company creation in just a few hours at a one-stop shop.
Portugal vs. Other Offshore Jurisdictions: A Strategic Choice
Compared to other popular offshore jurisdictions, Portugal offers several advantages:
Strong reputation: Unlike some tax havens, Portugal is an EU country complying with international transparency standards.
Stable legal framework: Portugal offers significant legal security, with a reliable judicial system.
Competitive costs: Company formation and management fees are generally lower than in Malta or Cyprus.
Attractive but not aggressive taxation: Portugal offers tax benefits while remaining within an acceptable framework for international authorities.
Access to European market: Unlike jurisdictions like Dubai or Hong Kong, a Portuguese company benefits from the European single market.
Superior quality of life: Portugal offers a more pleasant living environment than many offshore jurisdictions.
Portugal thus positions itself as a credible and advantageous alternative to traditional offshore jurisdictions, combining tax attractiveness and respect for international standards.
Good to know:
Portugal regularly ranks among the top countries for expatriation and company formation in Europe.
Social Obligations for Companies in Portugal
Portuguese companies must comply with certain social obligations:
Social security contributions: The employer must pay 23.75% of gross salary to social security. The employee portion is 11%.
Minimum wage: Set at €760 per month in 2023 (14 months per year).
Working hours: The legal duration is 40 hours per week.
Paid leave: Employees are entitled to 22 working days of paid leave per year.
Dismissal protection: Portuguese labor law offers significant protection to employees.
Staff representation: Mandatory in companies with more than 50 employees.
Professional training: Companies must ensure continuous training for their employees.
Portuguese labor law is generally favorable to employees but offers some flexibility to companies. It’s important to research these obligations thoroughly to avoid any disputes.
Good to know:
Portugal offers hiring incentives, particularly for youth and long-term unemployed individuals.
Opening a Professional Bank Account in Portugal: How-To Guide
Opening a professional bank account is an important step for your company in Portugal. Here’s the procedure to follow:
1. Choose a bank: Compare offers from major Portuguese banks (Millennium bcp, Novo Banco, Santander Totta, etc.).
2. Prepare documents: You’ll need the company’s articles of association, tax number, identification documents of directors, etc.
3. Schedule an appointment: Contact the bank to schedule a meeting with an advisor.
4. Present your project: During the appointment, explain your activity and banking needs.
5. Sign documents: After your file is validated, sign the account opening contract.
6. Make initial deposit: Transfer the share capital to the account.
7. Activate online services: To manage your account remotely.
Account opening can take from a few days to several weeks depending on the bank and complexity of your file. It’s recommended to compare offers and banking fees before choosing your institution.
Good to know:
Some banks offer specific services for foreign entrepreneurs, with English-language support.
Promising Business Sectors in Portugal
Portugal offers opportunities in numerous business sectors:
Technology and startups: The country has become a European tech hub, particularly in Lisbon and Porto.
Tourism and hospitality: Key sector of the Portuguese economy, experiencing strong growth.
Renewable energy: Portugal is a leader in this field, with numerous innovative projects.
Automotive industry: Important sector, with presence of major manufacturers.
Food industry: Strong export potential for quality Portuguese products.
Business services: Particularly in consulting and outsourcing fields.
Real estate: Dynamic sector, driven by the country’s attractiveness.
Blue economy: Development of ocean-related activities (fishing, marine biotechnologies, etc.).
Portugal also offers free zones and competitiveness clusters to promote development in certain strategic sectors.
Good to know:
Portugal has implemented specific incentive programs to attract investments in certain priority sectors.
Recruiting in Portugal: Keys to Success
To recruit effectively in Portugal, follow these tips:
Master the language: Although English is widespread, Portuguese proficiency is an advantage for recruitment.
Use the right channels: Job sites (Net-Empregos, Sapo Emprego), social networks (LinkedIn), recruitment agencies.
Enhance your employer brand: Portuguese people pay attention to company reputation and values.
Offer attractive benefits: Beyond salary, consider social benefits, training, etc.
Respect local legislation: Familiarize yourself with Portuguese labor law.
Focus on training: Portugal has reputable universities and talented young graduates.
Think international: Portugal attracts many foreign talents you can recruit.
Collaborate with universities: For internships or young graduate recruitment programs.
The Portuguese job market is dynamic, with a good qualification level. Don’t hesitate to be assisted by local experts to optimize your recruitment process.
Good to know:
Portugal offers hiring incentives for certain profiles, particularly youth and long-term unemployed individuals.
Creating a company in Portugal represents an interesting opportunity for entrepreneurs looking to develop in Europe. With its advantageous taxation, simplified procedures, and business-friendly environment, the country offers a framework conducive to your project’s success. By following the steps detailed in this article and being assisted by local experts, you’ll maximize your chances of successfully establishing yourself in Portugal.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
