Private Limited Company (Lda.)
Single Partner Limited Company (Unipessoal Lda.)
Private Limited Company (S.A.)
Holding Company (SGPS)
Limited Partnership Company
General Partnership Company
Incorporating a Company in Portugal & Madeira Island
Corporate Taxation in Portugal
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 Portuguese territory with the highest tax efficiency for companies and investors.
INCORPORATING IN PORTUGAL
Madeira International Business Centre (MIBC)*
Autonomous Region of Madeira
General Corporate Tax Rate
General Corporate Tax Rate of the first
EUR 25 000 of profit (Small-Medium Enterprises)
Withholding Tax on Dividends
0%3 or 28%
0%3 or 28%
Full-time local employees required4
Investment in Fixed Tangible or Intangible Assets5
YES – Min. EUR 75 000
* – European Union State Aid Regime
1 – applicable only to profit derived from clients that do not qualify as residents, for tax purposes, in Portuguese territory.
2 – provided shareholders do not qualify as residents for tax purposes in blacklisted jurisdictions.
3 – Participation exemption as foreseen in the Council Directive 2011/96/EU of 30 November 2011 (latest legal version as transposed into Portuguese tax law). Generally speaking, the parent company must hold more than 10% of the subsidiary company’s shares for more than one year. Shareholder companies must not qualify as residents for tax purposes in blacklisted jurisdictions.
4 – The entire economic activity of the MIBC licensed company must be carried out solely by employees who qualify as residents of the Autonomous Region from an immigration and taxation standpoint. The number of employees required varies in proportionately with the taxable profit.
5 – Investment shall be realised in assets located or received within the scope of the MIBC, used within said MIBC and necessary to carry out the business activities conducted within the scope of the MIBC. Furthermore, the assets acquired must remain within the MIBC during the entire period it enjoys this status or during its useful lifetime, whichever period may be shorter, without being transferred. Nor may such assets be leased or ceded to third parties for their use unless the corporate purpose or business activity of the MIBC is such lease or cession, and always provided that there is no direct or indirect link with the lessee or transferee of the said property. It shall be understood that this requirement is not infringed when the goods are transferred and the sum of money realised is reinvested in new fixed assets under the same conditions within the space of one year. In the case of used assets, these may not have been previously applied for a MIBC investment of another company.
|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.
Documents Needed for Incorporation
The primary documents needed for anyone to incorporate a company in Portugal are:
- Shareholders and directors’ certified copies of their passports.
- Shareholders and directors’ certified copy of their utility bill to prove address – no older than three months old.
- Shareholders and directors’ certified copy of a document proving their taxpayer identification number abroad.
Further to the above, before the incorporation itself, investors need to consider the following:
- A suggestion of three legal names for the company
- List of the economic activities that the 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 managers, the participation of each one in the share capital, and legally binding the company.
- Indication 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).