The number of foreign investors in Portugal is growing day by day, attracted by the business environment, as well as the nice weather and culture. Anyone can open a business in Portugal, but there are a few specific rules and regulations, as well as steps to take. If you’re looking to start your own company, here’s a quick guide to help you succeed.
Make sure you can legally start a business
You need to have a Portuguese residency permit, with temporary or permanent status, to be able to open a business, if you’re not from a European Union country. This way you can apply for your NIF, the required tax identification number, and also the social security number. If you’re from the EU, you can skip the residency requirements and apply for the NIF. The tax identification number is needed for simple tasks like opening a bank account for the company.
There are also special visas available to facilitate the business investment process, some of which are for those who are already a few steps ahead:
- D2 visa. Foreign independent workers or entrepreneurs can apply for this visa in portuguese consulates throughout the world. It costs €90 and is valid for 4 months. After that you can ask for a residence permit.
- StartUP Visa. It’s essentially aimed at entrepreneurs from outside the EU with innovative ideas, mainly in the tech sector, giving access to residency and also to Portuguese incubators. It’s managed by IAPMEI, and you can apply through its website.
- ARI/Golden Visa. As the name suggests, ARI (residence permit for investment) is a permit given specifically when you want to invest in Portugal, for a minimum of 5 years, also giving access to the EU's Schengen Area. You need to create 10 jobs with your company; invest €500.000 and create 5 jobs; invest €500.000 in R&D; or invest €250.000 in specific activities (like Arts) or regions (inland).
Research the market well
Maybe you want to enter a proven market or service, maybe you want to bring an innovation or product that doesn’t exist in Portugal, but you have to make sure you understand the specifics of the business and the customers well. When preparing the business model or the business plan, do an extensive research on the market and the region, but also parameters like equipment, supplies, packaging or shipping. Both the INE (National Statistics Institute) website and the Eurostat have extensive information, as well as news outlets and specialized websites.
Company name? Don’t forget the rules
If you are ready to open the company, with all documentation in order - identification, residency permit, NIF and social security number - and have a name for the business already planned, remember there are a few requirements regarding it.
A company name must meet specific criteria regarding the expressions used. Not using geographic references, national symbols, insulting words or misleading information are some of the rules. To make sure your name complies, you must ask for a Certificate of Admissibility. It is valid for 3 months and costs €75, or €150 for an urgent request. If you don’t have a name in mind or want to speed up the process, you can choose a name from a pre-approved list. But remember, that name can be requested by someone else before you register the company.
Choose the business structure
There are different types of companies in Portugal, as in other countries. You can select a Private Limited Company (Sociedade por Quotas), a Public Limited Company (Sociedade Anónima) if you have partners, or a Single Member Limited Company (Sociedade Unipessoal por Quotas) if you’re the sole investor. There are also a few different structures less used, like partnerships and cooperatives. You can also be a Sole Trader (Empresário em Nome Individual). In this case the taxes are higher, if you have larger revenues, but if you are a Non-Habitual Resident, your income taxes are lower than average.
The business structure also determines the minimum share capital you have to put upfront, and the income tax application. Apart from sole traders, all other companies need to have an accountant (técnico oficial de contas) and to present their Articles of Association document. But it is also possible to choose one that is already pre-approved here when you register the company.
Time to register the company
There are three ways to open the business officially: online, in a Company on the Spot reception desk, or through a notary. All partners must be present for the in person registry, and all documents must be ready to submit.
- Online. The remote registration can be made through a portal of the portuguese public services, using an individual access called Chave Móvel Digital. It has an English version, but it may be tricky, so you can use a helpline available. The registration cost is €220 using a pre-approved memorandum and Articles of Association, or €360 if submitting your own. The procedure will take a few days to be official, and you get a Social Security Number for the company, a certificate of association, an enterprise card, an electronic access, and an access to a Permanent Certificate of Commercial Registration.
- Company on the Spot. The ‘Empresa na Hora’, as it’s known in Portuguese, lets you set up the registration in an hour, with all the formalities above being made in person, with the help of an official of the Registries and Notary Institute. You can schedule an appointment for this reception desk - available in different locations, mainly Conservatórias (conservatories and Lojas do Cidadão (citizens shop). The cost is also €360.
- Notary. A notary can also help you register a company, serving as an aid to the online registration, but using his or hers credentials and vast experience. All the documents are also attested by the notary. The cost for this is the price of the registration, plus the service fee.
What next?
You are almost set to go! There are only a few actions to complete the process. You have 5 days to deposit the social capital money of the company in a bank account, and create it if you haven’t. You also need to submit a declaration of the beginning of activities in an office of the tax authority, Finanças. You have two weeks to do so, and the document must be signed by the accountant named in the registry. Finally, in 30 days from the registry, you need to do the Official Beneficiary Registry, that identifies the people in charge of the company.
The Social Security registration is made by cross-referencing between government authorities, but you can also check with them if it’s all finished. And you have to go to one of their offices if you hire employees, to register them.
Fiscal obligations of a company
There are different types of taxes a company must pay in Portugal, that account for a large share of the revenue and should be considered from the beginning. Apart from possible licensing for specific areas, like restaurants or industries, you must count on 4 expenses:
- The IRC, the main tax on companies, 20%, is applied to the revenue after expenses and possible fiscal benefits;
- IVA (VAT), is calculated from the sum of the VAT you pay and the one you charge customers. The difference is paid to the tax authority.
- TSU, the tax for Social Security, 23,75% of each employee of the company.
- Municipal Surcharge (Derrama), up to 1,5% of the revenue, depending on the municipality, deducted from the revenue before the IRC.
Finding financial support
A company needs investment, whether it’s just the location and services, or it needs expensive machinery and other equipment. Foreign investors can also apply for financial support and different kinds of funds, Portuguese or from the European Union.
The Turismo de Portugal supports entrepreneurs in the tourism sector. The Portuguese Agency for Investment and Foreign Trade deals directly with international investors. And IAPMEI, the competitiveness and innovation agency, also gives a lot of financial support and assistance to new businesses, mainly regarding Innovation, small and medium businesses qualification, and R&D.
When it comes to investing in a foreign country, there are always lots of questions and difficulties to understand the where and the what, but Portugal is definitely a country that welcomes investors. And help can be found everywhere. Lawyers and solicitors are experienced in helping to set up a company and even to reach financial support or find tax breaks. Even the services companies you contract, like energy or telecommunications, can be real partners to your company, helping with networking, to customers and partners and leading you to the success of your business.
