Business in Portugal: Why You Should Start a Company in the

Portugal is a Western European country with a nice climate, which already makes it worth considering for relocation. The views are breathtaking no matter if you are on the ocean coast or high up in the mountains. Besides, the cost of living in Portugal is a bit lower or considerably lower than it is in other Western European countries.

Recently, Portugal has been seeing an increasing number of foreigners buying real property there. Some use it for recreational purposes while others choose to live in Portugal permanently. Many foreign nationals also register business companies in the country and engage in active business operations there. What are the main benefits of starting a company in Portugal? What should you be aware of if you would like to start a company in the country? We answer these questions below.

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Reasons why you should consider registering a company in Portugal

Portugal is probably one of the most attractive countries in Western Europe for a creative entrepreneur. It offers beneficial conditions to business owners and the process of registering a company in Portugal is simple compared to many other countries in the region. Please see the details of registering a company in Portugal by following the link.

Why have the Portuguese authorities created such a comfortable business climate? Why do they offer serious benefits to the owners of local business companies? The matter is that Portugal suffered greatly from the global financial crisis of 2008. It was affected by the crises to a greater degree than most other Western European states (probably with the exception of Greece). This is why the country’s authorities had to take some urgent measures to help the economy recover from the blow. They lowered the taxes for business owners in an attempt to attract private capital including foreign capital. If a foreign national registers a company in Portugal and does business there, he or she can qualify for a legal residence permit.

Doing business in Portugal can be highly profitable. What business areas could you consider if you are thinking of starting a company in Portugal? First of all, the tourist sector generates around 10% of the national GDP. Twenty million tourists visit Portugal every year. Thus, you could make a good profit if you offer services to tourists. Other attractive business areas include the following ones:

Furniture manufacturing;
Seaport logistics;
Fishing and fish processing;
Grape cultivation and processing;
Growing citrus and olive trees;
Corkwood production;
Meat production;
Manufacturing tile and ceramic products.

What regions of Portugal should you choose to open a company there?

Portugal is divided into 7 regions or provinces. Two of them – Madeira and the Azores – are Free Economic Zones. These Zones are optimal from the viewpoint of taxation, bonuses, special export and import conditions, duty-free trade, unrestricted capital transfer, and so on.

Besides, the hotel business is potentially profitable because both island groups are popular sea resorts. If you are interested in this business area, you can also consider Algarve and Lisbon Riviera for building or buying a hotel there. You are going to have little trouble finding tenants in these areas because they are also highly popular with tourists.

Speaking about Lisbon, it’s the capital of the country and many foreign entrepreneurs choose the city for establishing companies there because all business infrastructure is readily available there. Besides, a large foreign investor can obtain a license for mining precious metals. In addition, investments into seaport complexes are badly needed in Portugal so this can be one more option to consider.

Stages of company formation in Portugal

The process of registering a company in Portugal will take only 2 or 3 days. Let us divide it into two stages.

Stage one

You can use a one-stop service center to register a company in Portugal.

As far as the company name is concerned, you have to have it approved prior to contacting the service center. You can skip this stage if you are going to use your personal name as the company name: the company name will be approved at the moment when it is registered.

After that, you will obtain a set of corporate documents that will depend on the type of company that you are registering. There is no need to have the documents notarized. You will also obtain company By-laws and trade registration.

If you are registering the company in the name of a natural person, you have to supply your taxpayer number and an ID. If you are registering the company in the name of another company, you have to bring an extract from the commercial registry.

When the company registration process is complete, you will obtain the following items:

A company registration certificate confirming the establishment of a legal entity;
A corporate ID card;
A social security number.

Please note that a one-stop service center charges fees for its services.

Stage two

The next thing to do is register your company with the regional social security agency. You will also have to get insurance against work-related accidents.

Available forms of corporate structure

Limited Partnership (Sociedade em Comandita). At least one Partner has to have unlimited liability while liabilities of all other partners can be limited by their contributions to the Partnership charter capital.
Public company with limited liability (Sociedade Anónima, S.A.). Not fewer than 5 shareholders are required. These can be people or companies. The registered capital shall exceed 50,000 euros. Of this sum, 30% is deposited at the moment of registering the company. A company with this form of ownership has to have an office. Bearer shares and registered shares can be issued.
Private company (Sociedade por Quotas, Lda.). This is the most popular form of company ownership in Portugal. Shareholders’ liabilities are limited by their contributions. The lowest amount of registered capital is 1 euro. Only registered shares can be issued. The number of company founders has to be at least two, one of them being the company director. An office in Portugal is required.
Company with a single shareholder (Estabelecimento Individual de Responsabilidade Limitada, EIRL). The company owner can be a private person or a legal entity. The nationality of the company owner does not matter. A director can be hired to manage the company. Registered capital – from 2,000 euros and it has to be deposited in full at the moment or registering the company.
Cooperative (Cooperativa). Normally, cooperatives are established by farmers and other people working in agriculture. The liability of each member is limited by his/ her contribution. The minimum required number of cooperative members is two.

You are free to choose any of these forms of company ownership when registering a company in Portugal.