Portugal Company Registry: Your Guide to Opening a Business

Navigating the Portugal company registry process can be complex for entrepreneurs and businesses looking to expand their operations. The Portuguese market offers attractive growth opportunities, but understanding the intricacies of company formation is crucial for success. This guide aims to shed light on the essential steps and requirements for those who wish to open a company in Portugal or establish a subsidiary company in this vibrant European nation.

From legal prerequisites to financial obligations, this comprehensive overview covers the key aspects of company registration in Portugal, which is done through the Portuguese company registry. Readers will gain insights into the step-by-step process of setting up a business, learn about the necessary documentation, and understand the financial and tax responsibilities of operating in the Portuguese market. By the end of this guide, individuals and organizations will be better equipped to make informed decisions about their business ventures in Portugal.

Legal Requirements for Starting a Business in Portugal

Residency and Tax Considerations

Entrepreneurs must fulfil several legal requirements to start a business in Portugal. The process is relatively straightforward for EU, EEA, and Swiss citizens. They must obtain a Registration Certificate from their local city hall within 30 days after their first three months in the country. Non-EU citizens, however, face additional steps.

All entrepreneurs, regardless of nationality, must secure the following:

1. A Portuguese residency card
2. A tax identification number (NIF) from the Portuguese tax office
3. A social security number

These documents are essential for legally operating a business in Portugal. It’s important to note that opening a company alone does not automatically grant a residence permit to non-EU citizens ¹.

Visa Options for Non-EU Entrepreneurs

Non-EU/EFTA nationals have several visa options to consider when planning to start a business in Portugal:

1. D2 Visa (Immigrant Entrepreneur Visa): This visa is designed for entrepreneurs who want to invest or make an investment operation in Portugal. Applicants must demonstrate:
   • A declaration of investment intention
   • Proof of company setup or financial resources to do so
   • A structured business plan
   • Financial capacity to sustain the company and themselves

   The minimum financial requirement for the D2 Visa is €9,870 for the main applicant, with additional amounts for dependents.

2. Startup Visa: This option is tailored for entrepreneurs launching innovative projects in collaboration with Portuguese business incubators. Key requirements include:
   • A minimum of €9,840 for a year of residence
   • Focus on innovation and technology
   • Potential to reach €325,000+ in annual turnover or asset value after five years
3. Golden Visa: This program requires a minimum investment of €500,000 and offers a path to residency.

Choosing a Business Structure

Portugal offers various legal structures for businesses regulated by the Portuguese Companies Code. Entrepreneurs must select the structure that best suits their company’s needs. Some common options include:

1. Private Limited Company (Sociedade por Quotas – Lda.)
2. Public Limited Company (Sociedade Anónima – S.A.)
3. Partnership (Sociedade em Nome Colectivo)
4. Limited Liability Partnership (Sociedade em Comandita)
5. Single-Member Limited Company (Sociedade Unipessoal por Quotas)
6. Sole Trader (Empresário em Nome Individual)
7. Freelancer (Trabalhador Independente)

When choosing a structure, consider factors such as whether you plan to operate alone or in partnership, as well as the financial requirements involved. Starting as an individual entrepreneur may be easier due to fewer financial obligations.

Step-by-Step Company Registration Process

Selecting and Registering a Company Name

Registering a company in Portugal begins with choosing an appropriate business name. This step is crucial as it sets the foundation for the company’s identity. Entrepreneurs should select a name that accurately represents their business and complies with the legal requirements set by the Commercial Registry Office.

To ensure the uniqueness of the chosen name, companies must register it with the National Registry of Collective Entities (RNPC). This process involves:

1. Applying to block the company name with RNPC
2. Paying the required fees to reserve the name for 48 hours if it’s available
3. Alternatively, selecting from a list of pre-approved names maintained by RNPC

Once the name has been properly processed, RNPC issues a name approval certificate to the company. It’s advisable to verify the availability of the chosen name with the Portuguese Commercial Registry (Registo Comercial) to avoid conflicts with existing businesses and ensure compliance with local regulations.

Preparing Required Documents

After securing a company name, the next crucial step is to prepare the necessary documentation for registration. This includes:

1. Articles of Association: These documents outline the operational structure and rules governing the company’s activities.
2. Portuguese Tax Identification Number (NIF): This number is essential for conducting business activities in Portugal and is required for tax purposes.
3. Company’s Social Security Number: This is crucial for online registry certificates and issuing an electronic company card.
4. Updated copy of the registration in the Commercial Registry.
5. Records of the initial meeting of incorporation.

It’s important to ensure that all information in these documents is accurate and up-to-date. Seeking guidance from professionals who are well-versed in Portuguese business regulations can be beneficial in navigating this process.

Registering with Commercial Registry

The final step in the company registration process involves submitting the prepared documents to the Portuguese Commercial Registry. This step formalizes the company’s legal existence in Portugal. The process includes:

1. Submitting all necessary documentation to the Commercial Registry Office.
2. Paying the required registration fees.
3. Obtaining a registration certificate serves as proof of the company’s legal existence.

Throughout this process, entrepreneurs must make critical decisions regarding the company’s legal structure, whether opting for a private limited company (LDA) or a public limited company (SA). Each structure has distinct implications for share capital and operational frameworks.

Additionally, establishing a registered office address within Portugal is a symbolic and practical step, aligning with official communication requirements and substantiating the company’s physical presence in the jurisdiction.

Key Financial and Tax Obligations

Corporate Income Tax

Businesses operating in Portugal are subject to corporate income tax on their taxable profits. The standard corporate tax rate in Portugal is 21%. However, small and medium-sized enterprises can benefit from a reduced rate of 17% on the first €50,000 of taxable profit. In inland regions, this reduced rate is even lower at 12.5%. Companies incorporated in the Autonomous Region of Madeira benefit from a lower corporate tax.

A new corporate tax regime introduced in January 2024 offers qualifying start-ups an attractive rate of 12% on the first €50,000 of profit. This initiative aims to foster entrepreneurship and innovation in the Portuguese business landscape.

Small businesses and sole traders with an annual turnover below €200,000 can pay taxes through a simplified regime. Tax is calculated based on turnover rather than profit.

The Portuguese tax year aligns with the calendar year, from January 1 to December 31. Companies must submit their corporate tax returns by the end of May of the following year. Tax payments are made in three instalments throughout the year – in July, September, and December – based on the previous year’s tax assessment.

VAT Registration and Compliance

Value Added Tax (VAT) in Portugal, known as Imposto Sobre o Valor Agregado (IVA), applies to businesses. There are three VAT rates in Portugal:

1. General rate: 23% on most taxable goods and services
2. Intermediate rate: 13% on food and drink goods and services
3. Reduced rate: 6% on essential items such as certain foods, books, newspapers, medicines, transport, and hotel accommodation

To comply with VAT regulations, businesses must obtain a VAT number, which is called a NIF (Número de identificação fiscal) for individuals or a NIPC (Número de identificação de pessoa coletiva) for companies.

VAT registration in Portugal involves several steps:

1. Gathering required documents
2. Accessing the official portal
3. Completing the registration form
4. Submitting the application
5. Awaiting confirmation
6. Receiving the VAT number

Non-EU companies must appoint a fiscal representative as an intermediary with the Portuguese tax authorities.

VAT returns must be submitted electronically, with the filing frequency depending on the business’s turnover. Companies with an annual turnover below €650,000 file quarterly returns, while those above this threshold must file monthly.

Penalties for non-compliance can be severe. Late filing or failure to submit VAT returns can result in fines ranging from €150 to €3,750. Late payment of VAT may incur penalties of 15% to 100% of the owed amount, up to a maximum of €165,000.

Social Security Contributions

Social security contributions in Portugal are shared between employees and employers. The general rates are 11% for employees and 23.75% for employers, calculated on the employee’s gross remuneration. These contributions cover various benefits, including family support, pensions, and unemployment benefits.

For board members, the rates differ slightly:

• Standard board members: 9.3% individual contribution and 20.3% employer contribution
• Managers or administrators: 11% individual contribution and 23.75% employer contribution
• Self-employed (freelancer) individuals contribute at a rate of 21.4%. For those under the simplified tax regime, the contribution basis is 1/3 of the relevant remuneration determined in each reporting period.

Employers may be subject to additional contributions for self-employed workers who are economically dependent on them:

• 10% if 80% or more of the self-employed person’s fees come from the same company
• 7% if the economic dependence is between 50% and 80%

Social Security contributions are typically paid between the 10th and 20th of the following month. Failure to pay on time can result in penalties and potential criminal proceedings if the unpaid amount exceeds €7,500.

Conclusion about Portugal Company Registry

Establishing a company in Portugal opens doors to a vibrant European market, offering entrepreneurs a blend of opportunities and challenges. The process, while complex, becomes manageable with a clear understanding of the legal requirements, registration steps, and financial obligations. From choosing the right business structure to navigating tax responsibilities, each aspect is crucial in laying a solid foundation for business success in this dynamic country.

As entrepreneurs embark on their Portuguese business journey, they should consider the evolving nature of regulations and incentives. The recent introduction of favourable tax rates for qualifying start-ups showcases Portugal’s commitment to fostering innovation and growth. By staying informed about these developments and seeking professional guidance when needed, businesses can position themselves to thrive in Portugal’s welcoming business environment. This guide is a starting point to help navigate the intricacies of company formation in Portugal, setting the stage for exciting ventures.

FAQs

How do I register a startup in Portugal with the Portugal company registry? To register your startup in Portugal, follow these steps:

1. Open a bank account and deposit the required initial capital.
2. Draft the Articles of Association for your company.
3. Obtain Commercial Registration.
4. Declare the start of your business activities to the tax authorities.
5. Register your business with the Social Security office.

What are the requirements for incorporating with the Portugal company registry? To incorporate a company in Portugal, especially as a foreigner, you should:

1. Determine the type of business you want to establish.
2. Select a business name.
3. Obtain a Fiscal Number.
4. Open a bank account.
5. Register your business.
6. Ensure compliance with necessary licenses and permits.
7. Register for social security.
8. Complete tax registration.

What are the government fees associated with the Portugal company registry? The government fees to incorporate a company in Portugal vary:

• It costs 220 euros if you incorporate a company using a pre-approved memorandum and articles of association.
• It costs 360 euros if you incorporate a company with a memorandum and articles of association specifically drafted for your company.

Can a foreigner incorporate a company in Portugal? Yes, foreigners are allowed to establish a company in Portugal. The requirements include having a Portuguese residency card (for freelancers), obtaining a tax number (NIF) from the Portuguese tax office, and acquiring a social security number.

Remember, this article provides a general overview of the Portugal Company Registry procedures. Still, for more detailed information, we recommend seeking the expertise of our team at MCS, who are here to support you throughout your business journey.

MCS

The founding of Madeira Corporate Services dates back to 1995. MCS started as a corporate service provider in the Madeira International Business Center and rapidly became a leading management company… Read more