Company Formation in Portugal: Costs, Requirements & Taxes Explained

How to do Company Formation in Portugal: Step-by-Step Guide.

1. Choose a Legal Structure

The first decision in any company formation Portugal process is selecting a legal structure. The most common options are:

• A Private Limited Company (Lda.), ideal for SMEs, which can be incorporated with a minimum share capital of just €1 per shareholder.
• A Public Limited Company (SA), suited for larger enterprises, which requires a minimum share capital of €50,000 and at least five shareholders.
• A Holding Company (SGPS), used for asset management and corporate structuring.

2. Define Share Capital and Ownership

Private limited companies may be formed with symbolic capital. However, shareholders in single-member Lda. structures must not already own another single-member company. Ownership can be individual or corporate, and foreign nationals are eligible.

3. Obtain a Name Certificate

Before incorporation, a name approval certificate (Certificado de Admissibilidade) must be requested from the National Registry of Legal Entities. Applicants must submit three potential names, specify the company’s business activity, and identify the location of the registered office. Foreign shareholders must first obtain a Portuguese tax number (NIF).

4. Draft and Sign Incorporation Documents

After securing the name certificate, shareholders must prepare the Incorporation Act, which includes the Articles of Association and identification of the appointed directors. This document must be notarised and may be executed via power of attorney for foreign investors.

5. Register with the Commercial Registry

The next step in the company formation Portugal process is registration with the Conservatória do Registo Comercial. This requires the name certificate, Articles of Association, declarations of acceptance by directors, beneficial ownership information, and tax numbers of all stakeholders. Upon registration, the company receives a Portuguese corporate tax number (NIPC).

6. Declare the Start of Business Activity

Within 15 days of registration, companies must declare the start of operations to the Portuguese Tax Authority. This includes selecting a VAT regime (if applicable), confirming the activity code (CAE), and providing an estimate of annual turnover and staffing.

7. Register the Director with Social Security

All company directors must be registered with the Portuguese Social Security system, even if unpaid. If covered under another EU-recognised system, exemption can be requested with appropriate documentation.

8. Open a Corporate Bank Account

Companies must open a business bank account in Portugal or another EU jurisdiction. Banks typically request company registration documents, proof of the company’s address, and identification of directors and shareholders.

Company Formation Portugal: Costs in 2025

The average cost of company formation in Portugal varies from service provider to service provide, depending on the client’s exact needs, the provider’s experience and reputation. Usually incorporation fees, government license fees, required deposits, notary and registration disbursements, accounting setup, legal compliance, social security registration, and optional services such as providing a registered address or appointing a local manager. Accounting services are usually provided on a yearly basis and cover standard reporting obligations under Portuguese law.

Taxation for Companies in Portugal

Corporate tax in Portugal is generally 20% (while in Madeira, the corporate standard tax rate is 14%), but companies established within the Madeira International Business Centre (MIBC) benefit from a highly attractive regime. Subject to fulfilling certain conditions, companies licensed in the MIBC can benefit from a reduced corporate income tax rate of 5% until the end of 2028.To qualify, the company must create at least one job in the first six months of operation and invest €75,000 in the first two years. If the company creates six or more jobs, the investment requirement is waived.

Additional tax benefits include:

• Exemption from withholding tax on dividends, interest, royalties, and service fees under certain conditions.
• 80% exemption from stamp duty, municipal property tax, property transfer tax, and local surcharges.
• Access to Portugal’s network of double tax treaties. These tax benefits are subject to certain limits based on gross value added, labour costs, or annual turnover.

Why Work with a Professional for Company Formation in Portugal?

The process of company formation in Portugal involves navigating multiple administrative, tax, and legal procedures. Non-resident entrepreneurs benefit significantly from working with a professional partner who understands the Portuguese legal system and can coordinate each step efficiently.

At Madeira Corporate Services (MCS), we offer end-to-end assistance, from name registration to corporate tax setup. Our team ensures full compliance and helps tailor the best legal and fiscal structure for your needs, including the use of Madeira’s advantageous tax regime.

Final Thoughts: Company Formation in Portugal in 2025

Portugal offers a highly attractive environment for business incorporation. Whether you’re launching a startup, opening a branch, or restructuring international operations, company formation in Portugal provides flexibility, tax efficiency, and access to the EU market. However, success depends on accurate execution and professional guidance. With expert support, including from firms like MCS, entrepreneurs can ensure their business is fully compliant from day one.

MCS

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