After moving to Portugal, some expats prefer to find a job in their professional field, while others are looking for information on how to start a business in Portugal in the fastest and the most cost-effective manner. Besides, many expats do not plan to relocate physically to Portugal, but are looking to open and develop their businesses in the European Union without having to travel here.
They have heard of course that the registration of a sole proprietorship or a company in this country can be done within just one day. However, soon they discover that in real life this is a quite challenging task. Why? Because of the language barrier, and different ways of doing things.
Therefore, foreigners often rush to negotiate with several (randomly selected) agencies that advertise help and advice. This often leads to a waste of time, extra costs, and even critical errors and mistakes. To avoid fines and legal disputes in the future, please be sure to postpone any business activity or signing of contacts until you obtain a special permit and understand the requirements for starting a business.
Our experts have summed up for your their insights and answers to the most essential questions that are often asked by our readers such as:
- what you should pay special attention to when registering a company in Portugal,
- how you can open your business even without a residence permit,
- why the tax number is a mandatory document for all citizens and legal entities, and
- in which Portuguese or foreign bank you can open an account for personal and corporate purposes for your Portuguese company.
If you are going to start your business in Portugal under the sound guidance of reliable international professionals specialized in the intricacies of the incorporation process, you are welcome to contact the InternationalWealth experts for assistance. You are also welcome to find on our portal many attractive offers and articles on different aspects relevant to Portugal.
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Aspects to consider when planning to open a business in Portugal
If you are a non-resident just beginning to explore the business environment in Portugal with a desire to start a small or medium-sized business, we recommend considering the following two TYPES OF BUSINESS STRUCTURES that are quite easy to register in Portugal:
1). sole proprietor/sole trader/individual entrepreneur,
2). Private Limited Liability Company (Lda)
Please note that any form of business involves formal registration. This means you will need to file the required documents, including the mandatory certificate of a TAX NUMBER.
EU residents can get a Tax ID with very little formality. Residents of non-EU countries need to engage a local tax agent. In either case, it can be done in person or remotely.
Registration of a sole proprietorship in Portugal
Individual entrepreneurship or recibos verdes is the easiest way for a foreigner to start a business in Portugal. A sole proprietorship can be registered either IN-PERSON, OR ONLINE on the website of Portal das Financas https://www.portaldasfinancas.gov.pt/
DOCUMENTS to be submitted to the registrar:
- photocopy of a valid passport
- residence permit or proof of Portuguese citizenship (if any)
- personal Tax ID.
THE TIME required for opening a sole proprietorship in Portugal is from 10 minutes to 1 day, which depends only on the correctness of the data submitted.
Taxes and mandatory contributions payable by sole proprietors in Portugal in 2021
- The maximum annual turnover qualifying for income tax exemption (IRS) has increased to EUR 12,500 in 2021 ( it was EUR 11,000 in 2020 and EUR 10,000 previously). If the sole proprietor has not reached the established limit, the VAT exemption applies. If the annual turnover exceeds EUR 12,500, the entrepreneur becomes liable to collect VAT.
- The planned amount of your financial turnover needs to be mentioned in your application for opening a sole proprietorship in Portugal. In this case, we recommend that you specify the target amount under the EUR 12,500 threshold.
- Invoices are generated semi-automatically on the Portal das Financas website, where you will need to select “isenção do art. 53.º do CIVA”.
- You should also know that there are two systems of taxation for individual entrepreneurs: a simplified option and a standard options:
- The simplified regime for sole proprietors in Portugal is suitable for entrepreneurs with a turnover of up to EUR 200,000 per year. The income tax is charged on the entire amount.
- The standard system of taxation of sole proprietors in Portugal involves deducting expenses from the tax base.
- Social security contributions are a mandatory item, which is similar to the requirements for the old-age pension and insurance contributions for sole proprietors in many other countries. In Portugal, this system works according to a simple scenario:
- After the registration of the sole proprietor, the tax authority will independently notify Segurança Social (social insurance agency) about the registration of the new entrepreneur.
- Next, the sole proprietor generates a quarterly report to the social insurance agency and makes a payment according to the invoice issued from the 10th to the 20th day of the next month.
FYI: If an individual entrepreneur is dormant during a certain period, he/she is still obliged to pay a minimum fixed social security contribution
Registration of an Limited Company (LDA) in Portugal
If you are planning to open a business in Portugal with a view to expand it in the future, it is much better to start immediately with the registration of a private limited liability company. This is also the best route to choose if you are looking to enter the European Union market using Portugal as a gateway.
There are several types of companies that can be registered in Portugal:
- A private limited company or LLC is an LDA (Sociedade Limitada) in Portugal. It can be incorporated by one or more individuals and legal entities, including non-residents. The minimum amount of the authorized capital is 2 euros.
- A Public Limited Company in Portugal is a S.A. (Sociedade Anonima/Sociedade Aberta). It is suitable for larger businesses. The minimum authorized capital of such a company is EUR 50,000.
A Lda. is the most popular business structure in Portugal, particularly preferred by foreign or non-resident founders. Such Portuguese companies can be incorporated in-person or online via remote registration – including the procedure of applying via an authorized trusted person with support from InternationalWealth.
The step-by-step standard procedure of an Lda registration in Portugal
- Get a (personal) tax number by contacting a resident representative or InternationalWealth experts (by writing to the e-mail address given at the top of this page).
- Rent an office (can be virtual) and a registered legal address in the area of incorporation.
- Translate into Portuguse, legalize and notarize all documents required for your Portuguese Lda registration: the passport, the proof of address, or the corporate shareholder’s Articles of Incorporation and Memorandum of Association or equivalent documents.
- Open a corporate account with any financial institution, depending on the geography of your client and/or partner network (non-banks, payment systems, banks in Portugal, Europe, in offshore jurisdictions, etc.).
- Register your company name or choose from a suggested/free list by visiting the National Registry in person or online.
- Submit an application for registration of your LDA in the Register, attach all the necessary documents.
- It is mandatory to deposit the amount of the authorized capital on the bank account according to the number of members (1 euro per 1 member/quota).
- Use the services of an experienced accountant because all entrepreneurs in Portugal are subject to the mandatory requirements.
- Declare yourself as a legal entity to the tax and social insurance authorities.
- As for your tax planning, please note that it is possible to prove your tax residency status in another country and thus be eligible to pay taxes in only one jurisdiction.
Please note: Income taxes in Portugal are payable by local and foreign companies alike. Allowances can only apply to certain industries and offshore zones (Madeira, Azores).
Reasons to open a business in Portugal
- First, by starting a business in Portugal you will take a serious first step towards developing it across the entire European Union.
- Secondly, there are several financial support programs for those who want to start their own business in Portugal, which can be found on the official government portal (https://www.portugalglobal.pt/EN/InvestInPortugal/Pages/index.aspx) and the website of the Employment Service.
- Next, Portugal ranks third in the world in terms of the number of inbound expats in 2021, which proves the country’s economic and liferstyle appeal for individuals and start-ups. You can obtain a Portuguese residence permit in exchange for investment, as well as for the registration of a company and bank deposits. And this is a great benefit, as Portugal is an EU member state, so your residence permit will be your visa-free pass across the Schengen zone, so your freedom of travel across borders will drive your integration into the European lifestyle/mentality and society.
For more information about Portugal for business and life, please visit the menu of countries on our website, lookup for products, special offers, and other relevant articles in the Portugal section, or request answers by writing directly to the online consultant on the website.
Let us sum up the tips on how to open a business in Portugal today!
To meet all the established corporate standards, it is better to start your business in Portugal by discussing nuances with an experienced expert. This will allow you to avoid mistakes and choose the right bank when opening a bank account for your Portuguese company, choosing the niche and legal form of business. You will need to discuss the type of your prospective business entity, the more and the timelines of registration, the application documents, the tax number and taxation, the legal address, the bank account, etc.
The InternationalWealth experts offer you comprehensive solutions to all essential issues including the following arrangements:
- Residence permits in Portugal for start-ups – based on the Golden Visa, residence-by-investment in the economy, business incorporation.
- Turnkey registration of your company in any business form, a bank account set up in a European country, offshore zone, or with a payment system.
- Services of an accountant and tax expert.
- Rental of an office and legal address for an entrepreneur or company in Portugal.
- Redomicile of the business to another country or Portugal.
You should contact us today to be more confident in the future. Please send your questions and requests for services to the contact numbers or email address given at the top of this page.
Can I open a startup in Portugal if I am not a citizen or resident of the European Union?
Yes, you can. You can remain a tax resident of your country or choose to obtain a Startup Visa.
Is it possible to change the legal type of a company registered in Portugal?
Yes, it is possible. Please apply to the commercial registry at the place of incorporation and the registrar of companies, stating your desire to change the legal form of the business entity.
What value of the investment in Portugal is sufficient for obtaining a residence permit?
Depending on the type of investment, the amount will vary: if you purchase a real estate with the purpose of its refurbishment, the golden visa starts from EUR 350,000; for other purposes and property type – from EUR 500,000.
Residence permit for the purchase of shares of Portuguese companies-from EUR 1,000,000.
Investment in art and scientific research-from EUR 350,000.