Starting a Business in Portugal as a Foreigner: A Guide for 2024

There are many business opportunities in Portugal because of the nation’s stable and thriving economy. In recent years, many entrepreneurs have come to the country to tap into the flourishing tech scene, real estate market, and tourism industry. Are you among those who are considering starting a business in Portugal? If you are looking for a complete guide to answer your pressing questions, you’ve come to the right place.

Starting a company abroad can be quite daunting, but the process in Portugal is actually relatively simple. This article will outline the processes involved and provide you with essential information on the following topics:

• Why foreign entrepreneurs choose Portugal for business
• How to open a company in Portugal
• Business types
• Freelancers in Portugal
• Foreign companies registered in Portugal
• What is the Portuguese Trade Register?
• How can a company register with the Portuguese Trade Register?
• Required documents for company formation
• Hiring employees in Portugal
• Social security responsibilities
• Paying taxes and accounting
• Company lawyers for startups
• Government agencies and company support
• How to open a company with e-residence
• FAQs

Why choose Portugal for business?

You may already have your heart set on Portugal to set up your business or still be researching whether it is the right country for you.

First and foremost, if you are starting a business in Portugal, you won’t face any major challenges in trying to figure out how the Portuguese tax system works. Particularly if you work with an experienced accountant, you should find the process, for the most part, pretty straightforward and favorable to entrepreneurs.

Secondly, Portugal has an excellent education system, meaning that you should be able to build an excellent team around your business.

And thirdly, Portugal has become a thriving tech hub in recent years. Take Web Summit, for example, one of the largest tech festivals in the world, relocating to Lisbon in 2016.

Additionally, Portugal is a member of the European Union, which is another advantage. As a European Union member, Portugal provides business access to the European single market, which means that businesses can benefit from the free movement of goods, services, and capital across EU countries and throughout the Schengen Area.

With a wide selection of startups and tech companies now established in Portugal – plus the Portuguese government introducing some entrepreneurship-friendly policies – you’ll find that starting a business in Portugal could be an excellent idea. Particularly in Lisbon, Porto, and Braga, you’ll find many expats and international companies that are making the most of what Portugal has to offer entrepreneurs.

And finally, most Portuguese speak very good English, the climate is second to none in Europe, and you’ll be able to soak up living in an incredible Mediterranean country. The quality of life in the country is amongst the best in the world.

How to Open a Company in Portugal

Opening a company anywhere in the world can be challenging. To make the process of starting a business in Portugal as simple as possible, we’ve provided you with a step-by-step guide below. We recommend seeking the assistance of a lawyer who will be able to help guide you through the process.

First of all, you’ll want to make sure that you are legally allowed to open a company in Portugal. You’ll need to have a NIF number (Portuguese tax identification number), a Portuguese residency card, and a Social Security number (NISS) from the Portuguese tax authorities. You’ll also need to ensure you can legally reside in Portugal and should open a Portuguese bank account – you will need a NIF number to do so.

Secondly, ensure you’ve done your market research and that you have a strong business plan. This goes without saying, but make sure you analyze the Portuguese market and competitors. Alongside this, you will want to be aware of what legal structure your company will be characterized by. You should also ensure that you have your new company’s name and address ready, as you will need them for the official company registration.

When choosing the company name, you can choose from a list pre-approved by the Portuguese government or you can choose a different name and request a Denomination Approval Certificate.

There are three options when it comes to setting up a company.

• Empresa Online: Everything is done online, the procedure takes a few days.
• Empresa na Hora: You will complete everything on the spot. You will be required to have all the documents ready.
• The traditional method of obtaining a Certificate of Admissibility, applying for a company card, etc.

How much does opening a company in Portugal cost?

Opening a company in Portugal costs €220 if you incorporate a company with a pre-approved memorandum and articles of association. It costs €360 if you incorporate a company with a memorandum and articles of association drawn up by your company.

If the company has a trademark associated with one class of goods or services, it costs an extra €100. Each additional class after that costs €44.

What are the memorandum and articles of association requirements to start a business in Portugal?

In Portugal, a memorandum of association outlines some of the basic elements of your company, including:

Company name: The intended name for your business
Founders’ names: The names of the individuals starting the company
Company objectives: A broad overview of the company’s intended purpose and goals. This could be a general statement about the industry you’ll operate in or the products/services you plan to offer.

The articles of association are the rulebook for your company in Portugal. It’s a key document that outlines how your company will operate internally. Here’s what it typically includes, explained simply:

Basics: Your company name, registered office address, and the type of company you’re forming (e.g., LDA – Limited Liability Company)
Shareholders: Names and initial investment of each shareholder (owner) in the companyShareholder operations: How shareholders will vote on decisions, receive profits, and potentially transfer their ownership
Finances: The total amount of starting capital the company will have
Management: Who will manage the company (e.g., directors, managers) and how they’ll be appointed

Business Types in Portugal

Opening a business in Portugal, you will need to be aware of the business types and some other essentials. As we mentioned previously, a lawyer may be able to assist you with this to ensure everything is done correctly.

It is important to make the distinction of how many people own a particular firm. Are you going to be the sole owner, or are you setting up the company with another person or other people? This will determine the legal form that your company should take.

If you are the sole owner, the following types of business entity are applicable:

• A Single-Member Liability Company: This structure is suitable for sole proprietors. It offers limited liability protection, meaning your personal assets are shielded from business debts. This is a good option if you want to limit your financial risk while maintaining some control over the business.
• Sole Trader (also known as a sole proprietorship): This is the simplest structure, ideal if you’re planning on starting a small business in Portugal with low risk. However, it doesn’t provide liability protection, so your personal assets are at risk if the business incurs debts. This sole proprietorship structure is suited for businesses where the owner is comfortable with this level of financial exposure.
• Individual Limited Liability Establishment: This business structure requires share capital of at least €5,000. It guarantees a separation between personal and business assets. This means that only the assets associated with your economic activity will be liable for any debts.

If you are going to work alongside partners, you can opt for the following:

• Private or Public Limited Company: A Private Limited Company requires at least two partners and a minimum capital investment of €5,000, while a Public Limited Company requires a minimum of five shareholders and a minimum capital investment of €50,000.
• Cooperative: Capital can vary, but the organization is regarded as non-profit.
• Partnership: You will need at least two partners, and you’ll have unlimited liability, which means personal assets can be applied to cover debts as business assets.
• Limited Liability Company Partnership: You will need at least two partners, with general partners and sleeping partners outlined.

Starting a non-profit company in Portugal

In Portugal, non-profits come in two forms: association and cooperative. An association (associação) is connected to a social activity, whereas a cooperative (cooperativa) may serve a commercial purpose. Registration for either can be done at a local notary office.

Freelancers in Portugal

If you are working as a freelancer in Portugal, then you will effectively be self-employed, and you’ll act in the same way as a Sole Trader. You will need the following:

• A residence permit to stay in Portugal
• A work permit to work in Portugal
• A NIF number
• A social security number
• A Portuguese bank account

You will need to be aware of and be responsible for the payment of taxes (e.g. income tax) and your social security payments. You will need to visit the tax office (Finanças) to obtain your NIF number. There are many different ways to get a residence permit; the D2 Visa and the Digital Nomad Visa are good options for young professionals and entrepreneurs.

What is the Portuguese Trade Register?

Companies in Portugal will need to register with the Portuguese Trade Resister. You will need to have your company incorporated by a representative and a power of attorney.

It is good to have an experienced lawyer with a good knowledge of Portuguese business laws on your side to ensure you meet all the legal requirements and regulations for establishing the company.

This procedure can be done online, provided you have all the required documents.

How can a company register with the Portuguese Trade Register?

There are two ways to register a company with the Portuguese Trade Registry, either in person or online. To apply in person, you must have verified your company’s name in the National Register of Companies database and received a validation certificate. This can be done by a shareholder of the company or by a legal representative who has been granted power of attorney.

To register your company online, you will need to have all the documents ready and then make the application on Empresa Online. This may take a few days to ensure everything was completed correctly.

For both options, we recommend working with a legal expert.

What are the necessary documents for company formation in Portugal?

You will need the following documents to form a company in Portugal, and the registration needs to be submitted to the Commercial Register. We recommend working with an experienced lawyer who will be able to help you. They will work as company formation agents to ensure that everything is in order.

• Articles of incorporation (also known as articles of association)
• Certificate of association
• Enterprise card
• Electronic access code
• Access code for a permanent certificate of commercial registration
• Social enterprise security number

Foreign Companies Registered in Portugal

If you are opening a branch of your business in Portugal, you will need to register the name with the National Registry, the Instituto dos Registos e do Notariado (IRN). Following this, you will need to cooperate with the Commercial Registry Office.

You will need the following documents:

• Statement of power of attorney
• Document from the Board of Directors that confirms the opening of a branch in Portugal
• Parent firm’s incorporation papers

Starting an online business in Portugal

Launching an online business in Portugal follows the usual registration process, but there are extra legal steps to consider. Most importantly, your company must adhere to Portuguese laws. These include laws on pricing, consumer protection, data privacy, intellectual property, and advertising. If you open an online store, understanding the E-commerce Law is crucial.

Buying a Shelf Company in Portugal

For foreign investors in Portugal who want a simple solution to registering a company, purchasing a shelf company could be a good option. A shelf company is a business that has already been registered but has since been ‘left on the shelf’ until someone decides to buy it. If you intend to start a small business quite quickly after moving to Portugal, this could be an ideal opportunity to do so.

Opening a business bank account

Setting up a business bank account for your company should be a priority. The best way to approach this is to do your research and compare the offerings of different banks in terms of business bank accounts, considering factors such as fees, interest rates, online banking capabilities and international reach (if needed). If possible, it would be advantageous to find a bank with some experience of working with businesses in your industry.

To open a business bank account, you’ll need your company registration certificate, proof of your NIF, articles of association, and proof of the identity of your company’s directors and shareholders. In some cases, the bank may request to see a business plan and financial projections.

Hiring Employees in Portugal

If you need to hire employees in Portugal, you can employ staff for a fixed or temporary (not less than six months) period.

As an employer, you are required by law to pay more than the minimum wage, as established by Portuguese law. In 2024, this amount is €820 per month.

The approximate working time is 40 hours per week, as is the case in many other European countries. You’ll find that the work culture of Portuguese companies is quite varied. For example, corporates have a more hierarchical business structure, while startups will have a more relaxed atmosphere.

Another consideration when hiring employees is that you’ll have to make social security contributions. You’ll need to get business registration with the social security office and notify them when you hire employees so that these contributions can be made. In Portugal, social security contributions are shared between employees and employers.

Typically, social security contributions are based on a percentage of an employee’s gross salary, with employees paying around 11 percent and employers contributing roughly 23.75 percent. These contributions go toward benefits such as family support, retirement pensions, and unemployment assistance.

Taxes and Accounting for Starting a Business in Portugal

If you are considering starting a business in Portugal, you must be aware of the tax regulations and pay taxes.

In Portugal, if you own a company/business, you must pay corporate income tax at a flat rate of 21 percent on any taxable profits. Local municipality surcharges of up to 1.5 percent apply, as do additional charges on profits of more than €1.5 million.

Small- and medium-sized companies can pay a reduced corporate income tax rate of 17 percent on their first €15,000 of taxable profit.

Small businesses and sole traders with an annual turnover of less than €200,000 can pay business taxes through a simplified regime, through which they pay tax on their turnover rather than their profit.

The deadline for completing Portuguese corporate tax returns is between 16 April and 16 May each year. Finanças is the Portuguese Tax Office that you will be dealing with regarding all tax-related matters in the country.

We recommend working with an established accountant who can assist you with all tax matters and identify potential areas where you may be eligible for tax breaks. In the long run, there can be financial benefits to working with an accountant.

If you need assistance with corporate income tax, you can phone the Tax and Customs Authority (Autoridade Tributária e Aduaneira or AT) on 217 206 707. This number is available from 9 a.m. to 7 p.m. on business days. Alternatively, you can get in touch with them via their online contact form.

Registering your company with the Portuguese tax office (Finanças)

To start a business in Portugal, you must register with Finanças, the Portuguese tax authority. To do this, you will need to provide information about your estimated start date, the services your business will provide, and the projected annual income of your business.

Based on the information you provide, Financas will categorize your business through activity codes, and determine the amount of tax you should pay. If your business has an annual income of €200,000 or higher, you’ll be required to use the organized accounting regime. If it earns less than that amount, you can choose between the organized regime and the simplified regime.

Obtaining Business Licenses and Permits

It’s essential that you obtain any necessary licences or permits for your business operations and ensure your business adheres to any relevant regulations.

For example, if you are involved in construction projects, you’ll need to obtain a construction license from the municipality. Likewise, if you’re involved in retail, you must get a retail license from the municipality. Meanwhile, if you’re opening a restaurant, you will likely need an alcohol license for your business, and you will have to ensure your business complies with the health and safety regulations set by the Food and Economic Safety Authority in Portugal (Autoridade de Segurança Alimentar e Económica, or ASAE).

If your business has any trademarks, patents, or designs that you intend to protect, you should contact the National Institute of Industrial Property (Instituto da Propriedade Industrial or INPI).

Once you’ve obtained any licenses or permits that you’re legally obligated to have, you are free to officially launch your business and commence trading.

Portuguese Business Insurance

If you start a business in Portugal, you need to consider business insurance. There are several types that you can buy, such as credit insurance, but there is one type of insurance, which is mandatory for any company with business operations in Portugal: workplace accident insurance (seguro de acidentes de trabalho). There are various plans available, and the cost will depend on factors such as the number of employees you have as well as the region of Portugal your company is based in. To calculate how much you should pay for your plan, you can use this simulator.

Maintaining compliance

If you make any modifications to a company’s structure, representatives, or capital, you need to register them with the registry to ensure you maintain legal compliance and update public information. The registry also enables you to register any mergers and acquisitions your company is involved in, ensuring legal validity and transparency in these transactions.

Should you need to dissolve your company, you can initiate its dissolution process through the registry, which will enable you to finalize its operations and close its legal existence.

Company Lawyers for Startups

We recommend working with a lawyer to help you set up your company in Portugal. The process will be different in other countries, and you may have difficulties with the language barrier if you are not fluent in Portuguese.

Legal professionals can guide you through the intricacies of business formation, ensure compliance with regulations, and offer valuable advice on various matters impacting your startup’s growth.

Look for law firms or lawyers with a proven track record in advising startups. These specialists will understand the unique challenges and opportunities faced by young companies. There are several firms in Portugal with dedicated teams focused on the legal aspects of startups, encompassing corporate law, identifying potential tax benefits, employment, and intellectual property.

Government Agencies and Company Support

To get acquainted with valuable information on establishing a company in Portugal, including data and assistance, the following agencies can help:

IAPMEI (Agency for Competitiveness and Innovation)

To support Portugal’s national entrepreneurship ecosystem, IAPMEI offers targeted incentives and support programs tailored for entrepreneurs.

Focusing on corporate and entrepreneurial innovation, IAPMEI provides qualification of SMEs, international expansion, research, and technological advancement.

Turismo de Portugal (Portugal’s tourism board)

Turismo de Portugal, the country’s tourism authority, supports projects within the tourism sector through venture capital, real estate investments, and mutual guarantee firms.

AICEP (Portuguese Agency for Investment and Foreign Trade)

AICEP (Portuguese Agency for Investment and Foreign Trade) is responsible for overseeing foreign investment projects. They carefully choose initiatives that enhance the local economy, with the goal of boosting Gross Value Added, mitigating the trade deficit, and generating employment opportunities.

Other governmental bodies that provide support for businesses in Portugal include:

• Portuguese Ministry of the Economy
• Portugal Global
• Program of Support for Local Employment Initiative

Corporate Social Responsibility and Ethical Business Practices in Portugal

Corporate social responsibility (CSR) is becoming increasingly pertinent in the Portuguese business landscape. In the last couple of years, Portugal ranked 20th in the world for sustainable development goals, according to the Cambridge Sustainable Development Report.

While it’s not mandatory for your business to adopt Portuguese or international standards for corporate social responsibility, it can provide added value for your company. For example, receiving certifications in these standards can increase brand recognition and give you a competitive advantage. If you’re interested in pursuing this route, you can apply for CSR recognition from the Portuguese Association for Business Ethics — APEE.

Further Information

The following article may be of interest to you.

• How to Invest in Portugal and Get Citizenship – The Ultimate Guide
• Portugal Golden Visa: A Complete Step-by-Step Guide 2023
• How to get Portugal Citizenship by Investment
• The Tax System in Portugal: A Guide for Expats
• Your Comprehensive Guide to Jobs and Working in Portugal

Note: The Portugal Golden Visa, where you can obtain residence in Portugal in return for business investments, has gone through significant changes. Read more here: Portugal Golden Visa Changes, Updates, and New Rules for 2024

Exploring Visa and Immigration Options for Portugal

If you're considering making the move to Portugal, it's essential to be informed about the various visa and residency options available. The Golden Visa Portugal program is an attractive option for many, offering residency to investors and their families. For those eyeing retirement in this beautiful country, the Retirement Visa (D7) is tailored for you. Digital nomads can take advantage of both short and long stay options with the Nomad Visa (D8). Meanwhile, the NHR - Non Habitual Tax regime provides significant tax benefits for new residents. 

For the entrepreneurial spirit, Portugal offers the Entrepreneurship/startup Visa (D2) - Start-up Visa (open company) tailored for those looking to establish their businesses in the country. Those with specialized skills can explore the Work visa for highly qualified employees (D3). Additionally, if you have Portuguese ancestry, you might be eligible for Citizenship by descent. 

However, moving to a new country isn't just about visas. If you're thinking of buying property, our guide on Buying Property in Portugal can offer invaluable insights. Dive deeper into the immigration process with our comprehensive Portugal immigration guide. For Americans specifically looking to relocate, we have curated information on Americans moving to Portugal. Lastly, one can't forget the importance of the NIF (Tax Registration Number), a crucial step in any relocation process. 

Why choose Global Citizen Solutions for your Immigration Visa?

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• GCS has offices located across Portugal.
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• All data is stored within a GDPR-compliant database on a secure SSL-encrypted server.

Frequently Asked Questions about Starting a Business in Portugal