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
The corporate tax rate applicable to companies in Portugal may vary, depending on which part of the Portuguese territory said companies are incorporated and domiciled. From the get go, the Autonomous Region of Madeira is the part of the Portuguese territory with the highest tax efficiency for companies and investors.
|Type of entity incorporated||MIBC*||Autonomous Region of Madeira||Portuguese mainland|
|Resident entities and permanent establishments of non-resident entities||5%||14,7%||21%|
|Resident entities characterized as a small or medium enterprises, on the first € 25 000 of taxable profit||11.9%||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).