When setting up a business in Portugal, one of the first questions is whether to buy a shelf company or incorporate a new one from scratch. While both options exist, recent developments in Portuguese corporate law make it clear that integrating a new company is almost always the better choice.
What is a Shelf Company in Portugal?
A shelf company (or “ready-made company”) is a company that has already been incorporated but has never traded. It is placed “on the shelf” until sold to a new owner. Some entrepreneurs are attracted by the fact that a shelf company:
- The tax number and registration are already in place.
- May have an older incorporation date, creating the appearance of longevity.
- It can be transferred quickly to new owners.
However, these apparent advantages are often overstated. With Portugal’s fast incorporation procedures, the time saved by buying a shelf company is negligible, while the risks are real.
Risks of Shelf Companies
While marketed as convenient, shelf companies in Portugal come with several downsides:
- Hidden liabilities: Even if a company is advertised as “clean,” you must perform detailed due diligence to ensure it has no undisclosed debts or legal issues.
- Limited flexibility: You are bound by the company’s pre-existing articles of association, which may not reflect your business needs.
- Reputational concerns: Banks, regulators, and business partners increasingly view shelf companies with suspicion.
- Unnecessary costs: Purchasing a shelf company usually involves paying a premium, even though creating a new company costs little in Portugal.
Why a New Company in Portugal is the Better Choice
Portugal has one of the most efficient incorporation systems in Europe. Through the Empresa na Hora (“Company in an Hour”) program, it is possible to create a fully functioning company in just a few hours.
Benefits of starting a new company include:
- Complete control and customisation over the name, corporate purpose, articles of association, and shareholding.
- Transparency with banks and authorities, since the company has no prior history.Minimal risk of inheriting legal or financial problems.
- Similar or lower cost compared to buying a shelf company.
- In almost every case, a new company in Portugal provides a cleaner, safer, and more flexible foundation for your business activities.
Final Considerations
When comparing a shelf company vs. new company in Portugal, the conclusion is straightforward:
- Shelf companies may seem convenient, but they carry risks, lack flexibility, and usually cost more than they are worth.
- Incorporating a new company is fast, transparent, and thoroughly tailored to your needs.
At Madeira Corporate Services (MCS), we strongly advise clients to incorporate new companies rather than purchase shelf companies. This ensures full compliance, transparency, and a structure built around your goals.
The founding of Madeira Corporate Services dates back to 1996. MCS started as a corporate service provider in the Madeira International Business Center and rapidly became a leading management company… Read more
