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Work, housing, business

Doing business in Portugal

A country open to foreign investment, with fast procedures to start a company, but one to study carefully before you go.

Since joining the euro, Portugal has been through very different phases: slow growth in the early 2000s, the severe 2010-2014 crisis and then a solid recovery, with budget surpluses and growth above the EU average. Today the country has established itself not only as a tourist destination but also as a place to do business, especially in tourism, property, technology, renewable energy and food. The general picture is described on the page on the Portuguese economy.

First, study the market

Starting a business in Portugal is relatively simple bureaucratically, but you need to spend time on market research, to understand whether an idea really pays and how much competition there is in your chosen area. That applies everywhere, but especially in Portugal, where in some tourist areas opening a bar, restaurant or holiday let means facing very strong competition, much higher commercial rents and, for holiday lets, increasingly strict rules. A well-planned business, on the other hand, can be rewarding for a long time. Bear in mind too that Portuguese purchasing power is below the EU average.

Use experienced advisers

It is advisable to get to know the Portuguese legal, tax, social security and commercial systems well and, of course, to learn Portuguese, although English is widely used in business. Chambers of commerce, such as the British Portuguese Chamber of Commerce and the Italian one, can help you find qualified lawyers (advogados) and accountants (contabilistas certificados). A certified accountant is compulsory for companies and many self-employed people, since all bookkeeping and tax returns go through them.

Alongside large international companies, Portugal is above all a country of small and medium-sized, often family-run, businesses. The most common forms are:

  • Empresário em Nome Individual (ENI): sole trader, simple to set up but with unlimited personal liability;
  • Sociedade Unipessoal por Quotas: a single-member limited company, widely used by professionals and small business owners;
  • Sociedade por Quotas (Lda): a limited company with two or more partners, the most common form; minimum capital is free, from 1 euro per partner;
  • Sociedade Anónima (SA): a public limited company, for larger businesses, with minimum capital of 50,000 euros.

There are also general and limited partnerships, rarely used, and SGPS, holding companies.

Setting up a company

The fastest route is the Empresa na Hora ("company in an hour") service, which lets you form a company at a single registry desk or online, choosing a pre-approved name and a standard articles of association: on the same day you get the deed, the company code and registration, for about 360 euros. Alternatively you can first request a name certificate from the IRN, the registries and notary institute. After incorporation you must:

  • declare the start of activity to the Finanças within 15 days, through your accountant;
  • register the company and employees with Segurança Social;
  • take out the compulsory workplace accident insurance, not covered by public social security;
  • obtain any licences from the town hall or sector authorities for businesses open to the public, such as restaurants and shops;
  • register the beneficial owner in the central register (RCBE).

Self-employment

Many Portuguese and foreigners choose self-employment. EU and EEA citizens can work as self-employed on the same terms as Portuguese nationals; those in regulated professions, such as lawyers, doctors, architects or engineers, must join the Portuguese professional body after their qualifications are recognised. You register your activity with the Finanças, also online, and issue electronic invoices, recibos verdes. Social security contributions are 21.4%, calculated on 70% of income, with an exemption in the first year of activity. Under EU rules, contributions paid in Portugal count towards a pension together with those paid in other member states. As a business grows, switching to a single-member company to limit liability can pay off.

Taxes

Standard VAT is 23% on the mainland, with reduced rates of 13% and 6% for some goods and services, and lower rates in Madeira and the Azores. Corporate income tax, IRC, has been cut in recent years and is around 19-20%, with a reduced rate for small and medium-sized companies on the first 50,000 euros of profit, plus a municipal surcharge and, for large profits, a state surcharge. Individuals pay IRS, income tax, at progressive rates. Rates change often with budget laws: always check with an accountant.

Main banks

  • Caixa Geral de Depósitos (CGD), the state bank: cgd.pt
  • Millennium BCP: millenniumbcp.pt
  • Santander Portugal, formerly Banco Totta: santander.pt
  • BPI, part of the CaixaBank group: bancobpi.pt
  • Novo Banco, created in 2014 from the sound assets of Banco Espírito Santo: novobanco.pt
  • Crédito Agrícola, widespread in rural areas.

Useful addresses

To follow the Portuguese economy, useful sources are the dailies Jornal de Negócios, Expresso and Público and the business news site ECO. For opportunities to meet companies and customers, see also the page on trade fairs in Portugal.