Incorporating in Portugal
So, you have decided to invest in Portugal, then the obvious next step that needs to be taken is incorporating a company (also known as company formation).
In accordance with the Portuguese law, from one of the following types of company can be incorporated:
- Private Limited Company (Lda.);
- Single Partner Limited Company (Unipessoal Lda.);
- Private Limited Company (S.A.);
- Holding Company (SGPS);
- Limited Partnership Company;
- General Partnership Company.
It must be said that the most common types of companies incorporated in Portugal are either a (Single Partner) Private Limited Company or a Private Limited Company. This is because no minimum share capital is required for these types of companies.
Corporate Tax Rate
|Type of entity incorporated||MIBC*||Autonomous Region of Madeira||Portuguese Mainland|
|Resident entities and permanent establishments of non-resident entities||5%||20%||21%|
|Resident entities characterized as a small or medium enterprises, on the first € 25 000 of taxable profit||13%||17%|
* Incorporation of entities within the MIBC – Madeira International Business Center allows for a 5% tax rate is only applicable on taxable profit deriving from non-resident entities (otherwise the normal rates apply) along with additional tax benefits for shareholders. For more detailed information, please click here.
|Type of rates||Autonomous Region of Madeira||Portuguese Mainland|
|Normal rate (most goods and services)||22%||23%|
|Intermediate Rate (F&B services)||12%||13%|
|Reduced Rate (food and essential goods)||5%||6%|
|Other tax rates||MIBC*||Portuguese Mainland and Autonomous Region of Madeira|
|Interests, Royalties and Services||0%||25%|
|Stamp duty, Municipal Real Estate Tax, Municipal Real Estate Transfer Tax, other local taxes.||80% reduction applicable to the normal rates||Normal Rates|
*For more detailed information, please click here.
Although a “quick” incorporation method is available to investors it is recommended that before choosing this option you talk to a corporate lawyer. Specialized advice regarding incorporation in Portugal is advisable, especially if one wants tailor made company by-laws or if aims to benefit from specific tax benefits available to international investors.
Having that said, the main documents need for anyone to incorporate a company in Portugal are:
- Shareholders and directors’ certified copy of their passports.
- Shareholders and directors’ certified copy of their utility bill to prove address – no older than 3 months old.
- Shareholders and directors’ certified copy of a document proving their taxpayer identification number abroad.
Further to the above, prior to the incorporation itself investors need to consider the following:
- Suggestion of three legal names for the company
- List of the economic activities that company will pursue (as detailed as possible).
- Confirmation of how the shareholders intend to structure the company, that is, who will be the partners and / or managers, the participation of each one in the share capital and the way of legally binding the company.
- Indication of the amount of the desired share capital (minimum legal amount is 1 euro per shareholder, although we always suggest a minimum value of 1.000,00 euros).