To create a company in Portugal, especially on Madeira Island, comes with a range of advantages that one must consider when setting up a business in Portuguese territory. Madeira’s strategic location, business-friendly tax environment, and strong government support have been entrepreneurs’ hotspots since the 1980s. In this article, our team will walk you through the key legal requirements and steps to starting a business in Portugal, highlighting how you can make the most of the benefits offered by the Madeira International Business Centre (MIBC).
Choosing the Right Business Structure
Selecting an appropriate legal structure is crucial for compliance and operational efficiency. Familiar business entities in Portugal include:
- Sociedade por Quotas (Lda.): A limited liability company suitable for small to medium-sized businesses, whereby the shareholders’ liability is limited to their capital contributions; the company may have one or more shareholders.
- Sociedade Anónima (S.A.): A public limited company ideal for larger enterprises, allowing public share offerings.
- Empresário em Nome Individual: A sole proprietorship where the owner has unlimited liability.
Legal Requirements for Company Formation
To establish a company in Portugal, the following legal prerequisites must be met:
- Company Name Approval: Obtain a Certificate of Admissibility to ensure the chosen company name is unique and complies with legal standards.
- Articles of Association: Draft and legalise the company’s Articles of Association, detailing the business purpose, capital distribution, and governance structure.
- Tax Identification Number (NIF): Secure a Portuguese Tax Identification Number for all shareholders and directors.
- Social Security Registration: Register the company’s employees with the Portuguese social security system.
- Commercial Registration: Register the company with the Commercial Registry Office (Conservatória do Registo Comercial) to obtain legal recognition.
Main Steps needed to create a company in Portugal.
- Open a Bank Account: Deposit the initial share capital into a Portuguese bank account. The company’s legal representatives must open that.
- Submit Incorporation Documents: File the Articles of Association and other required documents with the Commercial Registry, and once you are done, register the company with the Portuguese Tax and Customs Authority and Portuguese Social Security.
- Obtain Licenses and Permits: Acquire any sector-specific licenses necessary for legal operation.
Leveraging the Madeira International Business Centre (MIBC)
The MIBC provides a competitive tax regime and other incentives to attract international businesses. Benefits include:
- Reduced Corporate Tax Rate: A 5% corporate income tax rate on qualifying income until December 31, 2028.
- Exemption from Withholding Taxes: No withholding taxes on dividend remittances to non-resident shareholders, provided they are not in blacklisted jurisdictions.
- Substance Requirements: Companies must create at least one to two jobs and invest a minimum of €75,000 in tangible or intangible assets (if they employ less than six workers) within the first two years to qualify for tax benefits.
Conclusion
To create a company in Portugal, especially within the MIBC framework on Madeira Island, presents significant advantages, especially for businesses involved in international services that wish to expand operations on a broader scale. Understanding and fulfilling the legal requirements is crucial for entrepreneurs to establish a company that leverages Portugal’s favourable economic environment.
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
