There are several ways one can open a company in Portugal, as the Portuguese Government aims at reducing bureaucracy for investors and as such it has implemented some quicker ways for investors to open a company.
In this blog post we will discussing the “traditional” procedure of opening a company in Portugal, a procedure that is followed by most investors who at the time of incorporation cannot be present in country to perform all the required diligences or who prefer to have assurance of a legal team in dealing with the Portuguese bureaucracy.
Opening a Company in Portugal? What you need to Know
Opening a company in Portugal (or Madeira) starts with the filing for the name approval certificate. The filing shall be done by one of the future company’s shareholders or by its legal representative and must clearly identify the company’s denomination, detailed corporate object (i.e. economic activities to be carried out by the company), and Portuguese address of the company’s registered office.
Application for the name approval certificate is usually completed online with the Institute of Registries and Notaries and once issued it is valid for a 3-month period as from its issuance date or renewal date.
For the name approval procedure, we recommend the shareholders suggest at least 6 different company names, in case the initial 3 are refused by the National Register of Legal Entities. A formal requirement, in case of name refusal, can be filed for with the Institute of Registries and Notaries, however, such procedure is time consuming and may include providing duly certified and translated documentation proving that shareholders have a solid claim for the name they have applied for.
Once obtained the company’s name approval certificate, shareholders wishing to open a company within the Madeira International Business Centre (MIBC) must submit a formal application (in Portuguese language) to Sociedade de Desenvolvimento da Madeira, the official concessionaire of the MIBC, in two copies, addressed to the member of the Regional Government of Madeira responsible for the MIBC in the name of an existing company, in Portugal or abroad, or of a company to be incorporated. All relevant information concerning the activity to be performed by the company must be included in the licence application, namely: company name and address; activity to be undertaken and corresponding NACE codes (European nomenclature of the economic activity); total value of the investment; foreseen number of full-time tax resident job posts to be created.
Once the document(s) mentioned above are produced, the opening of the company is formalized by means of the execution of the incorporation private act which will contain detailed information on the share capital, its shareholders, its directors, the binding rules, and the articles of association of the company. The grantors’ signatures (shareholder(s) or legal representative(s)) must be legally recognized, in the presence of a notary or a lawyer with express declaration of intent to open the company.
All shareholders and members of the corporate bodies must hold a Portuguese Taxpayer Identification Number (known as NIF) and those who are not EU-Residents must also appoint a tax representative in Portugal.
The opening of a company (and the appointment of the members of the corporate bodies) will then be subject to public accessible registration. Once opening of the company is concluded, an access code to the on-line commercial registry certificate of the company is generated by the Commercial Registry Office.
The opening of the company then becomes effective for operational activity and tax purposes (including VAT) by registering the company with the Portuguese Tax and Customs Authority (AT), done by filling specific forms with the Portuguese Tax and Customs Authority which must be signed by Certified Accountant (which all companies are obliged to have under bookkeeping rules and regulations) together with the company’s legal representatives. The deadline for such procedure is 15 days after registration with the Commercial Registry Office.
Registration of the company with the Portuguese Social Security must take place within 10 business days after filing the registration with the AT and by providing the following documents: commercial registry certificate; evidence of the commencement of activity for tax purposes; document appointing corporate bodies (incorporation document or relevant minutes of the competent corporate body’s resolution); and taxpayer number of members of corporate bodies.
Directors may be exempt from social security contributions in Portugal provided they present proof of social security contributions made in country of residence with which Portugal has entered a Social Security cooperation agreement.