Registering a company in Portugal is a highly attractive option to consider if you would like to start business operations in Europe. The country’s economy is advanced and the infrastructure is superb. The national market has 10 million potential customers but you can trade with the entire European Union if your company is based in Portugal. Every year, a growing number of business people from outside the EU register companies in Portugal.
The national regulatory system is in compliance with the rules and directives of the EU authorities. Foreign companies can invest in almost all sectors of economy even though opportunities are limited in certain strategic sectors important for national security. In any case, you can certainly find where to invest in Portugal because the local economy is rapidly growing.
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Why should you choose Portugal to start a business company?
Portugal is a member of the European Union and the euro is the national currency. These facts mean that goods, capital, and personnel can freely travel across Europe. Portugal is one of the most open economies in Western Europe. The local Government offers various incentives to foreign investors registering companies in the country. Tax deductions, business loans, and informational support are readily available to newcomers in Portugal. This should not be surprising because the Portuguese authorities are doing their best to attract foreign direct investments to the country and to create more jobs. There is a reason for that: Portugal suffered greatly from the global financial crisis of 2008 and it needs additional resources for revival.
Opening a company in Portugal does not take too much time because the Government has been working hard on simplifying the business registration procedures. At the same time, opening a company in a foreign country is not like opening one at home. You simply don’t know the local ways. For this reason, you should seek professional advice if you would like to start doing business in Portugal. International Wealth is a good website where you can learn more about business opportunities in Portugal and ask for assistance in setting up a company and/ or a bank account in Portugal.
Registering a company in Portugal can make you qualified for legal residence in the country. You can apply for a residence permit even if you register a sole proprietorship let alone a full-fledged corporate entity. Unfortunately, the opportunity to acquire legal residence in Portugal by purchasing real property in the country is not available anymore. However, the ‘golden visa’ program is not totally extinct: you can qualify for residence by creating jobs and carrying out business operations in Portugal.
Portugal is a technically advanced country and it offers a wonderful infrastructure that will allow growing your business fast. The pharmaceutical industry and renewable energy are probably the most promising sectors of the Portuguese economy. Other areas where you could invest are R&D, tourism, manufacture, and infrastructural objects. The local Government especially welcomes foreign investors establishing IT or Fintech companies in Portugal.
Investments into technological business areas are also supported in the Portuguese free trade zones. These zones are even more attractive for foreign investors than mainland Portugal is because they offer huge tax cuts and they also exempt resident companies from customs duties. As far as repatriation of capital from a free trade zone is concerned, no restrictions apply.
Business in Portugal: forms of company ownership
If you have a business project that you would like to carry out in Portugal, the first thing you should do is choose the form of ownership for your prospective company. What types of companies can be registered in Portugal? What type of company will suit your business objectives best? How many company founders should there be? How much should you deposit as the charter capital? The answers to these questions will largely determine the type of company that you should start in Portugal.
The two most popular types of companies that foreign nationals register in Portugal are Limited Liability Companies (Sociedade por Quotas) and Public Limited Companies (Sociedade Anónima). The companies are regulated by the Commercial Companies Code (Código das Sociedades Comerciais) in Portugal. The Code also allows foreigners to establish General Partnerships and Limited Partnerships in the country.
Limited Liability Companies in Portugal
A SPQ (that is, and LLC) will suit most small- and medium-size businesses. The charter capital has to be 5,000 euros and it can be contributed in the form of money or assets. The liability of the company founders is limited by the charter capital. In Portugal, a SPQ has to have at least two founders. The corporate structure is rather simple: there is only one more requirement to meet. Namely, the company has to have a Director or Directors who will manage it and act on behalf of the company.
A Supervisory Board can be created if the company By-laws provide such an opportunity. However, a Supervisory Board becomes mandatory if two of the following three characteristics apply:
- The total value of the company assets exceeds 1.5 million euros.
- The total turnover for the last three years exceeds 3 million euros.
- The company has 50 employees per year on average.
The company name has to end in the word Limitada or acronym Lda.
Public Limited Companies in Portugal
If you would like to register a PLC in Portugal, its charter capital has to be at least 50,000 euros (money or assets). The shareholders’ liabilities are limited by the value of shares that they hold. The minimum number of shareholders is five. There is an exception, however. A PLC can have a single shareholder if the shareholder is a legal entity. Unlike an LLC, a PLC has to have a Supervisory Board in any case. Besides, it has to have a Board of Directors and hold regular General Meetings. A PLC in Portugal can have a single director if its registered capital does not exceed 200,000 euros.
The following forms of company ownership are also available in Portugal:
- Empresário em Nome Individual/ Sole Proprietor (liability unlimited).
- Estabelecimento Individual de Responsabilidade Limitada / A Private Limited Liability Company (liability limited by the contributed capital).
- Sociedade Unipessoal por Quotas / A single-owner LLC.
Partnerships in Portugal
A General Partnership acts as a legal entity in Portugal: actions can be carried out by the Partners on behalf of the Partnership. The minimum number of Partners is two. They are liable for the company debts by their personal assets. Contributions to the Partnership can be made in the form of money or assets when it is created. The name of the partnership has to contain the personal name of one, several, or all Partners.
A Limited Partnership in Portugal is a legal entity where at least one Partner has unlimited liability while liabilities of all other partners are limited by their respective contributions. The General Partner is called sócio comanditado in Portuguese and Limited Partners are called sócios comanditários. The General Partner is naturally the company boss. There are no requirements to charter capital. The name of a Limited Partnership has to contain the name of at least one General Partner plus the phrase em Comandita or & Comandita (and partners).
Foreign company branches in Portugal
You can also find a large number of foreign company branches in the country. Even though a company branch has to be registered with the Business Register in Portugal, it does not act as an independent legal entity. The parent company bears full responsibility for any debts that its branch in Portugal might make. If you already have a business company in your home country, you can consider opening a branch in Portugal instead of creating a new corporate entity in the country because the process is somewhat simpler.
At the same time, whichever form of company ownership you choose, some paperwork is going to be involved in registering the company anyway. Because Portugal is a foreign country for you, you will certainly need professional assistance in incorporating a company there.
