Portugal is one of the world's largest markets, so forming a company in Portugal allows you to establish a presence in Europe and gain access to this market. This is a state in western Europe that is part of the EU and has only one border with Spain.
The Advantages of Starting a Business in Portugal
The primary advantages of establishing a business in Portugal are as follows:
- The political and economic environment is stable. The annual growth rate is about 0.8 percent.
- Membership in the EU entails a common currency and free trade with other member countries. In terms of commercial matters, business in the country is governed by the requirements and laws of the EU.
- Portugal is one of the countries with few barriers to foreign direct investment. The country also has a free zone.
- You will be able to hire qualified personnel because the country provides a high level of education.
- Some tax breaks are subject to certain conditions.
- The Golden Visa program is available for persons carrying out investment activities in Portugal; this is a scheme for obtaining a residence permit for citizens of states that are not members of the European Union; the program lasts 5 years. You must invest in real estate or funds and hold them for at least 5 years to accomplish this. The minimum investment amount is €250 000.
Procedure for Starting a Business
When registering a company in Portugal, a business owner must comply with the following legal requirements:
- create the Charter and related documents;
- register a business in the state;
- select an accountant;
- establish a bank account in Portugal;
- pay the necessary fees.
The formation of a company in Portugal: OPF
Overseas investors can choose from three main business structures. Each of which has unique characteristics and capital requirements.
For business registration, the following forms are available:
- Formation of a partnership.
- Establishment of a branch/representative office.
Formation of an LLC
In Portugal, there are two types of LLCs: closed (LDA) and open (SA).
The registration of LDAs is popular among small and medium-sized businesses. Setting up this type of business requires a minimum of two participants and a minimum capital of 5,000 EUR. Contributors are held accountable for their contributions. The company's capital is formed by the "quotas" owned by the participants. The company's Articles of Association contain information on quotas.
A registered Portuguese LDA that meets at least two of the following conditions is exempt from annual audit for two years:
- The assets total up to 1.5 million EUR.
- Earn up to 3 million EUR.
- The company employs up to 50 people.
- a public corporation (SA).
SA registration is appropriate for medium and large businesses with significant investment capital. This form has a more intricate structure. The country's legislation allows SA to implement the listing of shares on the stock exchange. To establish a corporation, two conditions must be met: the presence of five participants and a capitalization of 50,000 EUR. Shareholders are held accountable for their contributions.
Creating a collaboration
The process by which two people agree to form a business organization is known as the formation of a partnership. To legitimize these relationships, an act must be prepared, signed by the parties, and certified by a notary.
The contract must state:
- the amount of each party's contribution;
- the method of profit distribution;
- the details of the process of admitting new members.
There are several ways to register a partnership:
- Limited Partnership (SC)
In Portugal, a limited partnership must be formed with at least two collaborators, one of whom is the sole proprietor and is fully liable for the assets. The remaining members bear only a portion of the blame.
- General Partnership (SNC)
The agreement should be drafted by at least two collaborators, and they must both bear full responsibility. They share decision-making and management responsibilities. SNC does not have an approved carrying value 's expenses.
- Share Capital Limited Partnership
Aside from the fact that limited partners' capital is divided into shares, all other conditions are the same as in a limited partnership.
Make a branch
International firms are welcome to define a subsidiary or representative office in Portugal. The branch registration procedure has the advantage of becoming quick and possessing no approved conditions for the lowest authorized capital. Because branches are not independent legal entities, but rather an outgrowth of a foreign entity, debts are borne by the mother company.
The procedure for establishing a branch is the same as for registering a company: the company's name is entered in the RNPC, and the company must be registered in the commercial register.
You will need the following documents to open a branch:
- The parent company's statutory documents.
- Documents proving the establishment of a branch in Portugal.
- Power of attorney.
- Certificates that are relevant.
- Board of Directors and Supervisory Board
All papers should be authored in Portuguese.
The Portuguese branch will base its work on the laws pertaining to local companies.
The primary steps in the incorporation procedure
To register a company, you must first complete the following steps:
- The name has been reserved in the Commercial Register.
- A local registered agent is appointed.
- The Charter is being prepared.
- Opening an account for business operations.
- Applying for licenses and permits that are appropriate for the company's activity.
- Авторизация для выплаты налогов и социальных отчислений.
Checking your chosen company name in the National Register of Collective Enterprises is critical, especially for those who decide to register a company remotely. Subject to commission payment, a free title can be reserved for 48 hours.
The charter must include the following information:
- name of the company;
- planned enterprise activities;
- directors' duties and rights;
- the possibility of transferring a share and assigning shareholder rights;
- The liquidation procedure.
Opening a corporate account with a Portuguese bank
Many of the country's major banks provide corporate services. Some financial institutions provide startup and small business accounts. The same documents are required to open a corporate account as they are to open a personal account. Additional documents may be required depending on the company's status and the specific bank.
The tax rate will be determined by the location of the enterprise: the country's mainland, autonomous regions, or free zones. Tax breaks are available to those who:
- registered a company with the Madeira IBC;
- founded a company in the Azores' FEZ Santa Maria;
- incorporated a business in the ZFI Free Industrial Zone.
The country imposes the following taxes:
- Corporate tax - a rate of 21%; Madeira's tax rate is 14.7%; a reduced rate of 5% applies in the Madeira SEZ (until 2027). The rate in the Azores is 16.8 percent.
- There are three different VAT rates:
The European Union's Customs Code governs customs fees. This means that the regulations for import and export of goods are comparable to those in Eu countries. There is also no currency control.
Logistics, information technology, agricultural business, finance, and tourism are all promising areas to start a business. Those looking to do business in the EU may find that purchasing a ready-made company or establishing a business in Portugal is an excellent option. Specialists of YB Case can provide you with detailed information on registration issues and advise on the settlement of activities in the Republic of Portugal.
You will be required to provide:
- Company name;
- shareholder and director information;
- description of activity;
- duties and rights of directors managing the company;
- confirmation of legal address;
- certificate of opening an account and depositing the share capital in Portugal.