How to start a business in Portugal? With its favourable business environment and strategic location, Portugal has become an attractive jurisdiction for entrepreneurs and investors. Establishing a company in Portugal can be a straightforward process if you follow the right steps. In this comprehensive guide, we will walk you through the process of setting up a business in Portugal, from choosing the right business type to registering your company and initiating your business activities.
Is Portugal a Good Place to Start a Business?
Portugal offers a favourable business environment for entrepreneurs and investors. With its strategic location in Europe, it provides access to a large consumer market and opportunities for international expansion. The country has experienced economic growth and stability in recent years, making it an attractive destination for business ventures. Additionally, Portugal offers various incentives and benefits for companies, such as tax incentives, access to EU funding programs, and a skilled and educated workforce.
One particular area of interest for starting a business in Portugal is the Madeira International Business Center. The Madeira island has established itself as a hub for international business activities, offering a range of tax advantages and incentives. Companies operating within the Madeira International Business Center can benefit from reduced corporate tax rates, exemptions on dividends, and other tax advantages. This makes Madeira a particularly attractive location for businesses looking to establish a presence in Portugal.
Tips on how to start a business in Portugal
Choosing the Right Business Type
The first step in starting a business in Portugal is to determine the type of business entity you want to establish. Portugal offers various options, including limited liability companies (sociedade por quotas), stock companies (sociedade anónima), and holding companies (SGPS). Each type of company has specific requirements that need to be met, such as the appointment of mandatory statutory bodies. Depending on your business plan and goals, you should carefully consider which type of company suits your needs best.
Define Share Capital and Shareholders
In Portugal, there is no minimum share capital required to incorporate a company. You can even establish a company with a share capital of just EUR 1. However, if you choose to set up a stock company, the minimum share capital is EUR 50,000. It’s important to determine the amount of share capital you want to invest in your company and identify the shareholders who will contribute to the capital. Portugal allows for sole shareholder companies, but keep in mind that a sole shareholder cannot be another sole shareholder company.
Applying for the Certificate of Name Approval
Before incorporating your company, you need to apply for a certificate of name approval. This can be done online through the RNPC (Registro Nacional de Pessoas Coletivas) website. The application should be submitted by one of the future shareholders or their appointed attorney. If the shareholder is an individual from a foreign country, they should have a Portuguese tax number, which can be obtained from the Portuguese tax office. In the case of a shareholder that is a corporation, a commercial certificate will also be required.
In the application for the certificate of name approval, you will need to provide the proposed name for your company, along with a detailed list of activities (social object) and the corresponding economic activity codes (CAEs). You should also indicate the municipality where your company’s registered office will be located. Once you receive the approval, the certificate will be valid for three months.
Prepare and Formalize the Incorporation Act Document
The next step is to prepare and formalize the Incorporation Act document. This document will serve as the legal basis for incorporating your company. The shareholders or their appointed attorneys should organize and formalize the private document, which will include the company’s articles of association. It should also appoint the corporate body or bodies, such as the director(s), and provide their details, including full name, marital status, Portuguese tax number, and residence.
It is advisable to specify in the incorporation act whether the director(s) will be remunerated for their role. If remuneration is expected, monthly contributions will need to be paid to the Portuguese social security system. However, if the director(s) is already enrolled in Portugal or abroad and making payments to a recognized jurisdiction, an exemption may be applied. Additionally, the incorporation act should state that the company’s share capital will be fully subscribed by a certain date.
Registering the Company
With the certificate of name approval and the properly formalized incorporation act document, you are ready to register your company. The registration process involves submitting the necessary documents to the commercial registry office. In addition to the certificate of name approval and the incorporation act, you will need to provide a declaration accepting the office of the director and confirming the absence of any circumstances that may hinder the occupation of the position.
Furthermore, you will need to submit a list indicating the ultimate beneficiary or beneficiaries of the company, as required by anti-money laundering regulations. If you are setting up a stock company, you will also need to include an acceptance declaration from the statutory auditor and substitute auditor, if applicable. Once you have submitted all the required documents, your company will be officially registered.
Initiating Business Activities
Congratulations! Your company is now incorporated, and you are ready to start your business activities in Portugal. However, keep in mind that there is a deadline of 15 days to initiate your business activities, register your company with the tax services, and enrol the director(s) with the social security system. It is important to comply with these requirements to ensure that your business operates legally and smoothly in Portugal.
Opening a Bank Account
To facilitate your business operations, it is essential to open a bank account for your company. You can choose to open an account with a Portuguese bank or with a foreign EU bank. Having a bank account will enable you to receive and make payments, manage your finances, and comply with financial reporting obligations. It is advisable to consult with a financial advisor or banking professional to determine the best banking options for your company’s needs.
Additional Services and Assistance
Starting a business in Portugal involves various legal, financial, and administrative aspects. To ensure that you navigate the process smoothly and efficiently, you may consider seeking assistance from professional service providers. Companies like MCS offer integrated corporate services, including accounting, tax, and administrative support. Their experienced team can analyze your business plan, optimize it from a corporate and tax perspective, and provide guidance throughout the incorporation process and beyond.
Our Conclusion about how to start a business in Portugal
Starting a business in Portugal can be a rewarding endeavour, thanks to the country’s favourable business environment and strategic location. By following the step-by-step guide outlined in this article, you can navigate the process of setting up a business in Portugal with confidence. Remember to choose the right business type, define your share capital and shareholders, apply for the certificate of name approval, prepare and formalize the incorporation act document, register your company, and initiate your business activities within the designated timeframe. Seeking professional assistance from reputable corporate service providers can also ensure a smooth and successful incorporation process. How to start a business in Portugal begins by contacting us!
This article provides general information and should not be construed as legal or professional advice. Consult with a qualified professional for personalized guidance tailored to your specific situation.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more
