Tag Archives: company formation

Economic Substance

Opening a Company in Portugal

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 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 (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 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.

Our multidisciplinary team of lawyers, economists and accountants has more than 20 years of experience and is able to provide you an integrated approach to your investment and relocation to Madeira Island by operating as one-stop-shop.

The founding of Madeira Corporate Services (MCS) dates back to 1995. MCS started as a private and corporate service provider in the Madeira International Business Center and rapidly became one of the leading management firms. As a result of its position in the market, the quality of the services it has been providing for over a decade and full compliance with business ethics, MCS was awarded the Merit Certificate by SDM – Sociedade de Desenvolvimento da Madeira.

auctor Lília Caldeira & Miguel Pinto-Correia

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Company formation in Portugal

Not many investors think of company formation in Portugal, and those who consider Portugal might to know why Madeira is the place to be.

“Portugal’s history is made of discoveries, entrepreneurship, creativity and permanent innovation. Portugal is a modern, sophisticated, and future-oriented country. Capable of combining tradition and innovation in what we do in a surprising way. A welcoming country, filled with sunshine, breathtaking landscapes, and a unique gastronomy. Open and multicultural, the country can gather the best of its experience and knowledge to originate solutions that push forward global businesses. Portugal, a country that will surprise you.”

One thing that surprises all investors in Portugal is its corporate tax system, more specifically the one available under the Madeira International Business Centre (MIBC).

A favourable tax landscape

Developed in the 1980s, the MIBC was conceived by the Portuguese Government to attract international investment, namely international services providers in the areas of international trading, e-business and telecommunications, management services, consulting services, as well as the ownership of intellectual property, the development of real estate investments or the holding of participations.

 Type of entity incorporated


Autonomous Region of Madeira

Portuguese Mainland

Resident entities and permanent establishments of non-resident entities




Resident entities characterized as a small or medium enterprises, on the first € 25 000 of taxable profit



Add the competitive corporate taxation regime to the tax benefits available to expats and former Portuguese emigrants wishing to relocate to Portugal, the Non-Habitual Resident (NHR) tax regime. And one will find a comprehensive and desirable tax regime to expand one’s international business to Portugal. In fact, under the NHR tax regime those qualifying can benefit from a unique personal income tax treatment over a 10-year period, which included the possibility of enjoying a 10-year tax exemption on almost all foreign source income.

Company formation / incorporation

Generally speaking, in order for one to incorporate a company in Portugal, the following steps need to be followed:

  1. Verify the business name and make a reservation with the Portuguese Commercial Register.
  2. Appoint a legal representative for the company in Portugal.
  3. Draft the Articles of Association with information about the owners, business activities, etc.
  4. Open a bank account for depositing the share capital.
  5. Apply for licenses and permits in accordance with the company’s activities.
  6. Register for tax purposes and social contributions in Portugal.

Those looking into incorporating a company within the MIBC need to apply for a MIBC license. The license’s application (to be submitted in Portuguese language) must be filed to Sociedade de Desenvolvimento da Madeira, the official concessionaire of the MIBC, in two copies, addressed to the Cabinet of the Vice-President of the Regional Government of Madeira in the name of an existing company, in Portugal or abroad, or of a company to be incorporated. Branches of existing companies may also be licensed.

All relevant information concerning the activity to be performed by the company must be included in the license application, namely:

  1. Company name and address.
  2. Activity to be undertaken and respective NACE code (European nomenclature of the Economic Activity).
  3. Total value of the investment.
  4. Indication of the number of jobs to be created.

In the case of a successful application, the license is deemed to be granted in favour of the company once the applicant furnishes proof of the formation and registration of such company. All documents in support of the license application must be duly translated into Portuguese and legalized.

Types of companies

Most investors opt for a private limited company (sociedade por quotas – LDA) where liability is limited by the contribution to the capital. LDA type of companies must established by at least two founders with a minimum share capital of EUR 2, although it is recommended that it should be at least of EUR 1000. All the shareholders must bring a contribution to the capital and their liability is limited to that contribution. Management of the company is assured by a director appointed by the general meeting of the shareholders.

Sole investors, lacking a business partner, can opt to incorporate a sole shareholder company (sociedade unipessoal por quoatas – Uni. LDA). Under this type of company, the minimum share capital is EUR 1, although it is recommended that it should be at least of EUR 1000. Uni. LDA’s liability is limited by the contribution to the capital.

On the other hand, if investors opt to incorporate a public company (sociedade anónima – SA) which requires a minimum share capital of EUR 50 000. SA companies and at least 5 shareholders. Like LDAs their liability is limited to their contribution to the capital. The management of this type of companies is assured by a board of directors which is monitored by a supervisory board, both appointed by the general meeting of the shareholders. In addition, SA companies are required, by law, to appoint a certified public accountant.

Other types of companies can be incorporated under the Portuguese Commercial Code, such as limited partnerships and general partnerships, nevertheless these are seldomly chosen by investors and their partners.

auctor Miguel Pinto-Correia

MCS and its team has more than 20 years of experience in assisting corporate and private clients wishing to invest in Portugal or within the Madeira International Business Center. For more information on our services please do no not hesitate to contact us.

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