Moving to Portugal for business? Portugal has emerged as an appealing destination for entrepreneurs like us who want to expand their business in Europe. The country’s startup ecosystem ranks 26th globally, and several key sectors show remarkable growth. Tourism, real estate, renewable energy, and technology lead the way in business opportunities.
The country’s strategic location makes perfect sense for businesses that need easy access to European and international markets. The workforce stands out with its multilingual skills, and the government welcomes breakthroughs and entrepreneurship actively. Portuguese business environment offers competitive living costs and tax incentives that help companies optimize their resources and maximize profits effectively.
This piece explores five most important benefits that make Portugal a perfect choice for entrepreneurs who want to expand or launch new ventures. We’ll walk you through everything you need to know about this business decision – from Portugal’s position as a gateway to multiple markets to its tax-friendly environment. The country’s talented workforce, supportive business ecosystem, and exceptional quality of life complete the picture of opportunities that await.
Moving to Portugal for business: Strategic Location and Market Access
Portugal sits at Europe’s western edge, giving business owners a huge advantage when they want to expand internationally. The country’s unique spot on the map makes it perfect for companies that want to reach multiple markets. Let me show you why Portugal’s location matters so much to entrepreneurs.
Gateway to European and global markets
Portugal gives businesses direct access to the EU’s single market of over 447 million consumers. Companies can sell their products and services across 26 other EU member states without tariffs or customs barriers. The regulatory process stays simple and straightforward.
The country stands at mainland Europe’s westernmost point, creating a natural gateway for international trade. Portuguese people have been explorers and traders for centuries, building commercial connections that still help businesses today. Companies based in Portugal find it easier to build trade relationships with European partners and global markets.
Portuguese businesses benefit from using the euro. This eliminates exchange rate risks when trading with other Eurozone nations. Financial planning becomes more predictable and transaction costs stay lower.
Portugal has strong diplomatic and economic ties worldwide, especially with countries that share its history. These relationships often lead to better trade agreements for companies operating from Portuguese soil. The network opens up more chances for business growth than other European locations might offer.
Proximity to Africa and the Americas
Portugal bridges three continents exceptionally well. The country connects Europe, Africa, and the Americas, making it an excellent base for companies targeting these diverse markets.
Being close to Africa creates real value. Portugal’s southern coast lies just 15 kilometers from Morocco. This closeness has built strong economic ties with North African nations. Companies in Portugal can help European firms enter growing African markets easily.
Portugal’s western location makes it Europe’s closest point to the Americas. Ships move faster and air connections work better from here. Brazilian market entry becomes easier thanks to shared language and cultural ties. Speaking the same language removes communication barriers and helps build business relationships across the Atlantic.
The Azores islands in the mid-Atlantic add to this strategic position. These Portuguese islands help ships and planes cross the Atlantic, giving businesses extra support when working across continents.
Madeira’s International Business Center (MIBC) offers special benefits. This Free Trade Zone gives tax incentives and a strategic Atlantic location that attracts international trade and service companies.
Favorable Tax Environment and Incentives
Portugal’s strategic location and business-friendly tax environment help boost business profitability. The country gives tax incentives that attract foreign investment and support business growth. Let’s look at Portugal’s tax landscape features that make it a great destination for business owners.
Corporate tax rates and exemptions
Portuguese corporate tax structure benefits businesses that move to the country. Mainland Portugal has a standard corporate income tax rate of 21%. Small and medium-sized enterprises (SMEs) and small-medium capitalization companies pay a lower rate of 16% on their first €50,000 of taxable income. This system works well for growing businesses in their early stages.
The Autonomous Regions of Madeira and Azores offer even better rates. These regions have reduced the standard corporate tax rate to 14.7%. This creates extra incentives for businesses that want to set up there.
The country does add surtaxes on corporate profits. A state surcharge applies in tiers: 3% on profits over €1.5 million up to €7.5 million, 5% on profits between €7.5 million and €35 million, and 9% on profits above €35 million. Some municipalities charge a local surtax up to 1.5% of taxable income.
Portuguese tax credits and incentives help stimulate investment and breakthroughs. To cite an instance, businesses doing research and development get a tax credit of 32.5% on qualifying R&D expenses. They can carry this forward for eight years. This makes Portugal attractive for innovative businesses and startups.
Companies that create new jobs get tax benefits. SMEs in inland territories receive an extra tax deduction of 20% on expenses related to net job creation. They also get a 50% deduction for certain salary increases. These measures create good conditions for growing companies.
The Non-Habitual Resident (NHR 2.0) regime
Portugal’s most attractive tax incentive for entrepreneurs is the Non-Habitual Resident (NHR) regime. The original scheme ended for new applicants in 2023. A new version (NHR 2.0 or IFICI) started in 2024 and still offers great benefits.
The new Tax Incentive for Scientific Research and Innovation (IFICI) gives qualified professionals a flat 20% tax rate for 10 years on employment and self-employment income. Qualifying individuals must:
- Not have paid taxes in Portugal in the previous 5 years
- Become a Portuguese tax resident from 2024 onward
- Apply by January 15 of the year after residency
- Work in qualifying high-value jobs or for companies in strategic sectors
The regime targets professionals in scientific, artistic, or technical fields. This includes executives, managers, IT specialists, professors, researchers, and other high-value roles. Business owners with specialized expertise find this especially valuable.
People who started moving to Portugal before the change might still get the previous NHR benefits. This applies if they registered as tax residents by December 31, 2023, or met other conditions.
The new regime still exempts foreign-sourced income from Portuguese taxation. All worldwide income needs reporting. Business owners with international income streams can optimize their taxes this way.
Madeira International Business Center (MIBC)
The Madeira International Business Center (MIBC), also called the Madeira Free Trade Zone, offers compelling tax incentives for international businesses. Companies can join MIBC until December 31, 2026, and get benefits until December 31, 2028.
MIBC’s best feature is its low 5% corporate tax rate on taxable income. This rate ranks among Europe’s lowest. International service companies pay this reduced rate on profits from dealing with non-resident entities or other MIBC companies.
MIBC companies get extra benefits:
- No withholding tax on dividends to non-resident shareholders (except those in blacklisted jurisdictions)
- No tax on capital gains payments to non-resident shareholders
- Zero withholding tax on worldwide payments of interest, royalties, and services
- 80% off stamp duty, municipal property tax, property transfer tax, and local taxes
Companies must meet certain requirements. They need to create jobs and sometimes make minimum investments. Companies with 1-5 jobs must invest €75,000 in fixed assets within two years. Those creating six or more jobs don’t need minimum investment.
Tax benefit limits depend on job creation. The ceiling ranges from €2,730,000 for 1-2 jobs to €205,500,000 for over 100 jobs. More jobs mean higher income limits for the reduced tax rate.
Tax system advantages
Portugal’s tax approach benefits companies with international operations.
The country has many double taxation treaties that prevent multiple taxation of income. These treaties help businesses operating across borders optimize their taxes. Companies with permanent establishments abroad can choose an exemption method in certain cases.
The participation exemption regime covers dividends and capital gains. EU entities or those in countries with double taxation treaties might not pay withholding tax on dividends from Portuguese companies. Shareholders usually need 10% ownership for 12 months straight to qualify.
Qualifying non-residents don’t pay corporate income tax on interest income and capital gains from Portuguese securities. This helps create efficient cross-border financing structures.
Portuguese tax group rules let companies optimize across multiple entities. A holding company owning at least 75% of subsidiaries’ share capital (over 50% of voting rights) can form a tax group. Companies from other EU or EEA countries can lead Portuguese tax groups under certain conditions.
Portugal combines competitive corporate tax rates, special non-habitual resident benefits, unique MIBC advantages, and a territorial tax system. This creates an excellent environment for entrepreneurs who want to optimize taxes while expanding into European and global markets.
Skilled Workforce and Talent Availability
Portugal’s workforce is a major draw for entrepreneurs who want to expand internationally. Looking at the job market shows that access to skilled talent gives businesses a big edge when they set up operations in the country.
Multilingual and educated labor pool
Portugal has built a highly skilled workforce that keeps attracting international businesses. The numbers tell an impressive story – employment reached 72.4% in 2023, which is 2 percentage points higher than the EU27 average. This strong job market creates a deep pool of talent for businesses.
The Portuguese workforce’s education level sets it apart. Eurostat data shows 35% of young people have university degrees, higher than the EU average. Portugal also shines in STEM education with 31% of graduates in these fields. This puts it just behind Germany at 36% and well above the EU’s 26% average.
Portuguese workers show remarkable language abilities, which makes them valuable to international companies. Beyond their native Portuguese, many professionals are strong in:
- English (Portugal ranks 7th among non-native English-speaking countries with “very high” proficiency)
- Spanish (close proximity to Spain helps language learning)
- French and German (taught widely in schools and universities)
This language advantage helps Portuguese businesses talk effectively with clients and partners worldwide. “Portugal’s labor market is brimming with individuals who possess not just language skills, but also a nuanced understanding of different cultures”. This cultural awareness helps companies targeting the EMEA (Europe, Middle East, and Africa) region.
Access to tech and innovation hubs
A thriving tech ecosystem has grown across Portugal with innovation hubs that support entrepreneurial growth. The ICT sector employs about 220,000 people – 4.5% of total jobs. This number is higher than other major nearshoring spots like Poland and Romania.
The education system, including that found in the Autonomous Region of Madeira, creates tech professionals with wide-ranging skills from software development to data analytics. The government shows steadfast dedication to growing technical talent through its National Strategy for Digital Transition, putting €3 billion toward digital skills and STEM education.
Beyond Lisbon, other areas have their own specialized talent pools. For example the Autonomous Region of Madeira combines traditional industries with modern sectors like IT, biotechnology, and healthcare. The archipelago has a university universities and research centers with business incubators.
Government support for training and hiring
Portuguese authorities have created programs that make finding and developing talent easier for businesses. The Tech Visa program stands out by making it simpler to bring in international tech talent without the usual red tape. This helps companies that need specific skills not found locally.
Companies investing in employee growth can get substantial financial help. The Portugal 2020 agreement with the European Commission offers support for building up human resources, focusing on innovation and going international. This program aims to reach 150,000 participants by 2023 across regions, including 33,500 in the North and 40,000 in the Center.
Portuguese companies updating their technology or automating processes can also get help through ‘Qualifica On’. This program covers training costs and wages during production stops, helping employees learn new tech skills.
The basic support rate starts at 50% but can go up to 70% for:
- Medium-sized companies (50-250 employees) get 10% extra
- Small and micro companies (up to 50 employees) get 20% extra
This support extends to the Madeira International Business Center (MIBC), where companies can get tax benefits and training help. Setting up in this special economic zone gives access to Portugal’s skilled workers plus unique business perks.
Portugal’s focus on workforce development makes it perfect for entrepreneurs who need both immediate talent and long-term growth. Whether you choose mainland Portugal or the Madeira Free Trade Zone, you’ll find support for building skilled teams ready for global competition.
Access to funding and venture capital
Portugal’s sophisticated funding landscape makes capital more available to entrepreneurs. The Capitalization and Resilience Fund (FdCR) has allocated 400 million euros to venture capital firms that invest in startups, especially pre-seed, seed, and early-stage ventures.
Portugal Ventures, one of the country’s leading investors, manages 44 million euros in their portfolio. They have invested in 38 new startups since 2012, with investments totaling 33.6 million euros. The development bank (Banco Português de Fomento) allows capital increases for VC firms meeting target deadlines.
Entrepreneurs moving to Portugal can access funding through several programs:
- Startup Voucher: Supports 18-35 year old entrepreneurs’ projects with technical and financial tools
- Incubation Valley: Helps first-year businesses by contracting incubation services
- Capital + acceleration: Creates funding lines that accelerate startup growth through new capital subscriptions
Venture capital continues to mature rapidly. Firms like Indico Capital and Oxy Capital received increased funding from 35 million to 50 million euros and 30 million to 50 million euros respectively after meeting targets. Portuguese startup funding saw a remarkable 196.86% increase from 2023 to 2024.
Networking and mentorship opportunities
Strong networks drive business success in Portugal. APMENTOR (Portuguese Mentoring Association) stands out by promoting mentoring activities nationally and internationally. Members receive certification, tools, and direct contact with business entrepreneurs.
Lisbon’s annual Web Summit has made Portugal a hub for innovation and entrepreneurship that draws thousands of investors, startups, and industry leaders. The country hosts industry-specific conferences year-round in technology, finance, tourism and other sectors.
Professional organizations strengthen business networks significantly. The Entrepreneurs’ Organization (EO) Portugal chapter, 6 years old, has resident entrepreneurs whose businesses earn over 1 million euros. Members come from IT, wine, marketing, digital enterprise, and hospitality industries.
Programs like PWIT Women’s Mentorship provide vital support to underrepresented groups. This five-month program connects female tech students and recent graduates with tech professionals who share career advice and networking opportunities.
Startup Grind Lisbon creates regular networking opportunities by bringing together entrepreneurs, creatives, innovators, and investors. They build an inclusive ecosystem through shared experiences and mutual support. One organization describes this as “mass mutual resilience” – entrepreneurs face challenges better together.
Moving to Portugal means joining a dynamic ecosystem where support structures, funding opportunities, and networking platforms help entrepreneurial ventures thrive.
Quality of Life and Cost Efficiency
Entrepreneurs often overlook how quality of life affects business success during enterprise relocation. Portugal stands out by offering great value through its mix of affordable living and lifestyle perks.
Affordable living and business costs
Moving a business to Portugal makes financial sense. A single person’s monthly expenses, including rent, come to €1,622. This is much lower than the UK’s €2,210 or the US’s €3,700. Families also save money in Portugal, spending around €4,000 monthly compared to the UK’s €5,338.
Running a business costs less too. Portuguese companies spend just 15% of sales on fixed operating costs. Starting up requires between €360 and €1,000 for the original investment. The Madeira International Business Center adds more savings through its special economic zone benefits.
Daily life costs less here. A cappuccino costs €1.90, unlike the US’s €4.62. Restaurant meals average €10, which beats the €18 price tag elsewhere.
Work-life balance and safety
Portugal shines in creating work-life harmony. A recent government-backed 4-day workweek experiment showed amazing results. Worker anxiety dropped by 21%, fatigue decreased by 23%, and work-family conflicts fell from 46% to just 8%. The results spoke volumes – 85% of workers said they’d need 20% more pay to go back to five-day weeks.
Portuguese law caps the workweek at 40 hours. Workers get 22 days of annual holiday. These rules help entrepreneurs maintain a healthy balance.
Healthcare and education infrastructure
Portugal’s healthcare system ranks 13th best in Europe, better than the UK, Spain, and Italy. People here live to 81 years on average. Medical care stays affordable – uninsured patients pay under €60 for GP visits.
The education system impresses equally. Free education starts at age 4. Students can progress from primary through university levels, with vocational training options. International schools provide excellent multicultural education for expatriate children. These factors make Portugal an attractive destination for entrepreneurs.
Conclusion
Portugal is a great destination for entrepreneurs who want to grow their business in Europe. This piece explores five most important benefits that make this vibrant country a smart move for business owners worldwide.
The country’s strategic location gives exceptional access to European, African, and American markets. A strong infrastructure and prime location create many more chances for businesses with global ambitions.
You can’t overlook Portugal’s tax benefits. The competitive corporate tax rates and the new Non-Habitual Resident program are a great way to get financial advantages. The Madeira International Business Center stands out with its 5% corporate tax rate and tax exemptions while staying fully EU compliant.
Portuguese talent makes a compelling case for business relocation. The skilled, multilingual workforce shines in technical fields. Government training incentives help develop employee skills economically.
A thriving startup ecosystem adds to Portugal’s appeal. Entrepreneurs find support at every growth stage through incubators, accelerators, and growing venture capital opportunities. Events like Web Summit have helped revolutionize the country into an innovation hub.
The quality of life in Portugal is exceptional. Low living costs combined with great healthcare, education, and safety standards create the perfect environment where businesses and employees thrive.
Portugal deserves your attention when you think over international expansion or relocation. These five advantages create a unique business environment in Europe. Companies can cut costs while getting top talent and accessing new markets. Moving to Portugal for business presents a unique mix of opportunities, affordability, and quality of life.
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
