Registration of individual entrepreneur in Portugal

29.12.2023

Enrolling an exclusive unincorporated business entity in Portugal is an affordable solution for alien entrepreneurs. The Republic of Portugal has become a popular business destination in recent years. It offers a number of advantages for entrepreneurs, such as affordable tax rates, developed infrastructure, high standard of living and excellent conditions for launching and developing start-ups.

Portugal is also a component of the European Union, which confers ingress to a capacious marketplace and intercontinental commercial prospects. The connotation is that being a segment of the EU signifies that entrepreneurs in Portugal can conduct commerce with all EU constituent nations without supplementary commercial hindrances.

Registering SP in Portugal is a relatively simple and relatively quick procedure. This may be attractive to those who wish to start a business with minimal bureaucratic burden. Portugal provides tax incentives for sole traders. For example, it is possible to take advantage of tax residency under the "Tax Resident Without Borders" programme and pay taxes at a special rate. In addition, registering a sole proprietorship in the Portuguese Republic can be the first step to obtaining a residence permit in this country.

What is a sole proprietorship in Portugal?

A sole proprietor in Portugal is a natural person registered as an independent business entity to carry out business activities. The registration of a sole proprietorship in Portugal provides simplicity and flexibility in doing business. This type of company is preferred for small businesses.

The requirements and obligations for a self-employed person in Portugal may vary depending on the type of activity. However, in general terms, the main requirements and obligations that are generally applicable are:

Register the business with the Registo Nacional das Pessoas Coletivas. This will require certain documents such as a copy of the founder's passport, address of residence in Portugal and others.
Tax obligations. Portugal has a taxation system for sole proprietorships which may include taxes such as VAT, personal income tax and social contributions. Regulation and tax rates may vary depending on the area of activity and the amount of income.
Accounting reporting. These are the responsibilities of keeping records of your business and reporting to national authorities and agencies. Current accounts, financial transactions, expense and income records all require accuracy and timeliness.
Insurance. Certain industries may require certain security and insurance measures.
Legal Compliance. A sole proprietor must comply with all applicable laws related to the particular industry and business.

Given the complexity of the rules and requirements for registering a sole proprietorship in Portugal, it is advisable to seek advice from a business consultant to ensure that all legal requirements relating to registration are properly complied with.

How to register as an individual entrepreneur?

To register a sole proprietorship in Portugal, the following steps will be required:

Prepare the necessary documents, including copies of the founder's passport, address of registration in Portugal, business plan and other requested documents.
Register with the Tax Office to obtain a tax number (Número de Identificação Fiscal).
Submit the documents for registration.
Open an account in a Portuguese bank to carry out the financial operations of the sole proprietorship.

Note that it is possible to open a sole proprietorship in Portugal online. But it should be remembered that registration requirements and procedures may change over time, so it is recommended to contact professionals to get up-to-date information about the process of registering a sole proprietorship in Portugal.

Advantages of registering a sole proprietorship in Portugal

Opening an exclusive proprietorship in Portugal furnishes ingress to the following benefits:

Convenient geographical location of the country. Portugal is located at the crossroads of Europe, Africa and America, which provides good opportunities for international trade and business relations.
International reputation. The Republic of Portugal has a stable economy and political system, as well as a good business reputation. Registering a sole proprietorship in Portugal can improve the business image and positively influence business relations.
Ease of doing business. The process of registering a sole proprietorship in Portugal is relatively simple and quick.
Access to the European market. Registration as a sole proprietor in Portugal gives you access to the European market without restrictions on doing business in other EU countries.
Tax benefits. Portugal has an attractive tax system for entrepreneurs, including reduced personal income tax rates. This can significantly reduce the tax burden on businesses.

Furthermore, if you wish to register a sole trader in Portugal, please note that there is no minimum share capital requirement as the sole trader is fully individually accountable for the debts of the business.

These are just some of the advantages of registering a sole proprietorship in Portugal. However, before deciding to register, you should consult a lawyer to obtain more specific information according to your individual needs and situation.

What documents are essential to amalgamate a solitary proprietorship in Portugal?

The ensuing assortment of records is necessitated to enroll a solitary ownership in Portugal:

Copy of passport or other identity document.
Document confirming the place of residence.
Tax number (NIF). To obtain it, you must contact the Portuguese tax office (Autoridade Tributária e Aduaneira).
The address of the office or place of commerce pertaining to your exclusive proprietorship in Portugal.
Application for registration of the sole proprietorship.

Which account should be opened for a sole proprietorship?

Supposing thou art self-sustaining and dost aspire to inaugurate an account in Portugal, certain of the more prevalent financial institutions within the land that do provide for exclusive possessors encompass:

Banco Comercial Português (BCP).
Millennium BCP.
Caixa Geral de Depósitos (CGD).
Novo Banco

When opening a bank account for a sole proprietorship in Portugal, it is necessary to provide a registration certificate, identification documents and additional documents such as a business plan or proof of financial solvency. It is important to note that the requirements and procedures for opening a bank account for sole proprietorships may vary from bank to bank and may be subject to change. Therefore, it is recommended to obtain information directly from the selected bank at the time of account opening.

What tax incentives apply to individual entrepreneurs?

Portugal possesses sundry fiscal encouragements for the autonomous:

Non-Habitual Resident (NHR) tributary regimen. This regimen confers fiscal privileges to alien denizens who transmute into tributary inhabitants of the Commonwealth of Portugal*. Below this regimen, levies on proceeds from overseas gain immunity from taxation, and levies on earnings from Portugal incur an imposition at a percentile of 20%.
Streamlined fiscal arrangement. Portugal furnishes a streamlined fiscal arrangement for solitary proprietors with annual yield not transcending a particular sum. Through this arrangement, the solitary proprietor tenders a established proportion of duty contingent on their yield, which is customarily more straightforward and more advantageous for meager enterprises.
Assistance for nascent speculators. A few regions of the realm proffer regimens that bestow toll and fiscal incentives to nascent speculators, encompassing solitary proprietorships. These incentives might encompass reprieves from particular toll remittances and grants for vocation formation.

* A tax resident is an individual who is acknowledged as a tributary pursuant to Portuguese fiscal jurisprudence owing to particular circumstances, like the abode's location or engagement.

An individual could be deemed a fiscal denizen in Portugal in the event that they:

Dwells within this land for exceeding 183 days in a solar cycle.
Possesses a "accustomed habitation" in Lusitania.
Claims a domicile abode in the Realm of Portugal, which serves as their paramount dwelling.

In Portugal, the societal levy ratio for singular proprietors (SP) is approximately 21.4%. Freelancemen and lone possessors in Portugal are beholden to personal gain tax at an evolving ratio, unless an uncomplicated mechanism hath been favored. This levy fluctuates betwixt 14.5% to 48%, contingent upon the echelon of earnings of the taxpayer.

Conclusion

Portugal offers favourable conditions for individual entrepreneurship. It has business-friendly tax legislation, opportunities for various financial incentives and grants for start-ups. Portugal has a number of advantages such as simplified registration procedures, low tax rates and social contributions.

If you are interested in incorporating a company in Portugal, it is advisable to contact business advisors to get detailed information about the required documents and the incorporation process. They will be able to provide up-to-date information on the requirements for registering a sole proprietorship in Portugal and provide the necessary support in opening a sole proprietorship account.