Company registration in Portugal

Portugal is a country that successfully coped with the consequences of several crises that have proven influential in the local economy, and also created favorable conditions for doing business. The country has developed tourism sectors, but the jurisdiction also offers numerous opportunities in trade and finance. Setting up a business in Portugal can be advantageous due to the following benefits.

Benefits of Jurisdiction

Company registration in Portugal provides access to the following benefits:

• the existence of special economic zones with a 5% tax rate. In Portugal, this is Madeira International Business Center, for instance
• stable political and economic environment
• favorable conditions for starting and doing business around the world
• quick and easy procedure for company registration in Portugal
• skilled Portuguese workers
• tax and other incentives in certain sectors of the economy

Types of Legal Presence and Doing Business

If you intend to set up a company in Portugal or otherwise establish your business presence, you have the following options to achieve this goal:

• Private Limited Company – one of the most popular types of Portuguese companies. As a rule, these companies are incorporated by two or more shareholders, whose financial obligations are limited to the amounts of investments in the authorized capital of the legal entity. A minimum share capital is EUR 5,000 A company may have one or more managers. Accounting and reporting standards are not onerous to comply with. Participants are entitled to receive a share of the profits that corresponds to their shares, as well as data on the current state of affairs of the Portuguese legal entity.
• Public Limited Company – a variant of the Portuguese legal entity, which is usually created to attract external funding. As a rule, there must be at least five shareholders (individuals or legal entities), domestic or foreign, whose financial obligations do not exceed the number of funds spent on the acquisition of shares of the company. The minimum capital required is currently € 50,000. Management functions require a board of directors. This legal entity may offer shares to third parties as part of a public offering and such shares may be transferred by participants without restrictions. This type of Portuguese legal entity is subject to more stringent accounting and reporting standards.
• Branch - a formation that is preferred by non-resident legal entities intending to conduct the same activities as in the country of primary incorporation. It is the non-resident legal entity that is 100% responsible for the activities of the branch, including potential losses.

Registration Procedure

To register a company in Portugal you should pass the following steps:

1. Formation of an accurate list of business priorities and types of entrepreneurial activities that you intend to conduct.
2. Definition, verification, and reservation of a business name for a company in Portugal.
3. Collection of details about owners, beneficiaries, and managers of the company.
4. Selection and registration of a legal address for registering a Portuguese legal entity.
5. Contributing the amount of the authorized capital of the company.
6. Drafting and execution of founding and incorporation documents for a proposed Portuguese company.
7. Submission of documents to the registrar along with confirmation of payment of registration fees.
8. Obtaining a registration certificate (subject to approval).
9. Registration to pay fees, taxes, and fulfilling social security requirements.
10. Selection of a bank for registering a corporate account.
11. Submission of documents for obtaining additional licenses and authorizations.

Legislation and Regulatory Environment

Portuguese legislation is loyal to foreign entrepreneurs and provides equal opportunities for entrepreneurship within this jurisdiction. The process of opening and managing a company is simple. Basic Law in the business sector is the Commercial Company Act. Government agencies, with which non-resident investors have to work in the process of resolving business issues, are the Ministry of Justice of Portugal through the Institute of Registrars and Notaries, the Bank of Portugal, as well as the Commission on Stock Markets.

Portugal Tax System

If the intention is to buy a company in Portugal or create a new one, then you need to consider the following taxation nuances:

• The corporate tax rate is from 5% (Madeira) to 21%
• Income tax rates for individuals - (1) for residents - 48%, but the rate can be increased if the income is above 80,000 euros (2) for foreigners - 25%
• Value added tax rate – 23%
• Withholding tax rates (for non-residents) - (1) dividends - 25% (2) interest - 0% or 25% (3) royalties - 0% or 25%
• Capital gains tax rates – may vary depending on the source and amount of income

How Aotopay Lawyers Can Help

If you intend to buy a business in Portugal or create a new one, Aotopay lawyers will help you achieve your business goals, as well as develop a profitable business strategy. Inter alia, our lawyers will take the following steps:

• request and collect information for local authorities
• fill in the required registration forms
• negotiate with local partners and government agencies
• draw up constituent and other necessary documents
• open corporate accounts in local and foreign banks

Contact us for individual offers and plans on how to buy or open a company in Portugal.