According to Eurostat, Portugal is among the top 10 European countries with the largest number of foreign entrepreneurs. According to the Global Citizen Solution Quality of Life Index, which evaluates countries on environmental sustainability, cost of living, infrastructure, and personal and political freedoms, Portugal currently ranks 13th among the best countries in the world. And the World Bank ranks it 39th in the list of 190 countries on the ease of doing business index. In recent years, there has also been a significant upturn in the Portuguese economy, which makes this country one of the fastest growing economic players in the European area.
Foreigners are opening businesses in Portugal quite actively. This is due to the relatively simple and transparent company registration procedures, as well as the availability of support programs for startups and small businesses.
Portuguese legislation is quite loyal to foreign entrepreneurs and grants them equal rights with Portuguese citizens in matters of starting and running a business. There is no obligation for foreigners to have a Portuguese co-owner or hire locals to work. However, there are some nuances and recommendations that are worth knowing about. For example, for some types of business, you will need to appoint a local representative. In some cases, a foreign company may need to appoint a tax representative or a local director who will be responsible to the Portuguese tax authorities. This is usually relevant if the owner of the company does not live in Portugal.Opening a company in Portugal is a process that can be completed relatively quickly and at relatively low cost, especially if you prepare the necessary documents in advance and get expert advice. You can open a company yourself online. But in order to choose the right type of activity and optimize taxation, you will need a specialist in a specific jurisdiction. To choose the area of investment, solve migration problems and tax issues, it is advisable to find competent experts: an accountant, a tax consultant, a lawyer specializing in commercial law.
Certain restrictions apply to Russian citizens when opening bank accounts. But if a citizen of the Russian Federation has If you have a residence permit in Portugal, then it will be much easier to open a bank account, both personal and for a company.
It will take 2-3 weeks to open a company. The exact time depends on the type of business and the number of partners. Legal services for the opening of the company will cost about 2,500 euros, state duties will amount to about 360 euros. You will have to spend about 100-300 euros on notary expenses, and 100-200 euros on other administrative expenses. The amount of the authorized capital is determined depending on the type of company, the number of founders and the registered activities.
The most promising business areas in Portugal
Among the most promising areas for starting a business in Portugal, the following industries can be distinguished:
1. Tourism and hospitality.
Tourism is one of the most important sectors of the Portuguese economy, so it is very easy to find yourself in this area. The hotel business, sightseeing services, ecotourism, cleaning services are what will be in demand for a long time.
2. Real estate and construction.
3. Agribusiness using eco-technologies.
Due to the climate, agriculture is well developed in Portugal. The country actively exports olive oil, fruits and vegetables, and the demand for environmentally friendly products is constantly growing.
4. Renewable energy.
Portugal is a leader in Europe in the use of renewable energy sources such as wind and solar. Investments in such projects are actively supported by the state.
5. Food and beverage production.
The country is famous for its wine-making traditions, which attracts wine tourism enthusiasts and investors in this area.
6. IT technologies and software.
Portugal is actively developing the IT sector and the startup ecosystem. Companies that develop technologies and applications that simplify life and make it more comfortable are in great demand here. Porto, Lisbon, Braga are modern technology centers that offer many opportunities for startups and IT companies. The country hosts many international technology events, such as the Web Summit. Thanks to government programs and the support of European funds, favorable conditions have been created here for entrepreneurs who seek to start a business from scratch or scale an existing one.
Features of the Portuguese business mentality
Developing a business in Portugal, a foreign entrepreneur will have to learn to understand the specifics of the Portuguese mentality. And here it would be good to have a reliable partner or representative who is already familiar with this specifics.
Foreigners who are used to quick responses from government agencies, lawyers, partners and other businesses in Portugal will have a difficult time. One of the features of the country is its slowness in solving any issues, postponing "tomorrow" even urgent matters due to personal reasons or just mood. Such an approach is usually difficult for a business person from New York, London or Moscow to understand. In terms of working with people, a foreigner will have to accept the fact that many business issues are resolved through personal contacts, in person, often over lunch or business dinner.In solving any issues, it is important to establish personal contact and establish communication with the Portuguese responsible for this issue. Or, at least, find a local representative who will be responsible for this direction.Practice shows that for successful business management, it is important for a foreigner to have a partner/co-founder/co-investor or at least friends in Portugal who are professionally connected with the chosen type of activity.
You need to be prepared for the fact that Portuguese people's personal life issues are more important than the most urgent business problems. It is not accepted to work on weekends, it is also considered bad form to bother someone about work issues. Exceptions are businesses that focus on working on weekends.
It is worth noting that at the same time, the laws in Portugal work clearly, and the agreements prescribed in the documents are observed in accordance with the established conditions. The Portuguese themselves are generally friendly and open to working with foreigners. The official state language here is Portuguese, but English is widely used in business circles, which greatly facilitates mutual understanding.
Organizational and legal forms of business in Portugal
In Portugal, the following organizational and legal forms of business are available to entrepreneurs:
- Empresário em Nome Individual (ENI) is an analogue of individual entrepreneurship. It is managed solely, registered to one individual, whose name must be indicated in the title. The minimum authorized capital for opening an ENI is not set. The owner is responsible for the financial activities of the company and debts with his personal savings.
- Sociedade por Quotas (Lda) is an analogue of a limited liability company. A legal entity provides for one or more founders, whose rights and obligations are regulated by the charter. The minimum capital is 1 euro, but in practice it is usually set to several thousand euros. The Lda is managed by one or more directors. Each of the partners or founders is responsible for the company's activities within its share of the charter.
- Sociedade Unipessoal por Quotas – a kind of Lda withby a single participant (an analogue of a sole proprietorship). The company is managed by a single founder. The minimum capital is 1 euro, the liability is limited to the participant's contribution.
- Sociedade Anónima (SA) is an analogue of a joint-stock company. This form is used for large companies with at least 5 partners involved. The authorized capital should be from 50,000 euros. Each of the partners owns a certain part of the company's shares, according to their own contribution. The responsibility of the founders is limited by the amount of capital invested. This form of ownership requires the appointment of a board of directors and the holding of annual shareholder meetings.
- Cooperativa – cooperative. A non-profit legal entity that is established in order to satisfy the economic, cultural or social aspirations of the members of the organization. It is most often used in agriculture and other sectors that require collective management. At least 5 partners are required for the foundation. The minimum capital is determined by the charter. The charter of the cooperative may limit the responsibilities and powers of each member in the management of the company.
The choice of form depends on the size of the business, the goals of the company, the management structure, the number of partners and the level of responsibility of the founders.
Does doing business make it easier to legalize?
Starting a business in Portugal can really help with legalization. The following visa programs are available for foreign entrepreneurs in Portugal:
- The D2 visa (Visa para Imigrantes Empreendedores) is intended for foreign citizens who want to invest or open a business in Portugal. Such a visa provides the possibility of legal residence in the country for a period of up to 2 years with the possibility of extension. The Golden Visa program allows you to obtain a residence permit for investing in the country's economy in the form of creating a business with a certain number of jobs. Startup Visa is a program that allows foreign entrepreneurs to open a startup in Portugal and obtain a residence permit. The startup must be approved by one of the Portuguese certified incubators in Portugal, and the entrepreneur must have the means to live in the country, and a business plan showing the long-term development potential of the project.
It is quite simple to open a D2 visa on the basis of doing business. You need to submit the necessary documents to the Portuguese consulate in your country and provide a business plan. It is not necessary to open your own business to open such a visa. You can invest in a development project and thus become a co-founder of a Portuguese company. This status opens the way to obtaining a D2 business visa and subsequently a residence permit.
You can also enter the country on a tourist visa and apply for a residence permit there based on the launch of a startup or business operation. After 5 years from the date of issue of the first residence permit, you can apply for Portuguese citizenship. The country allows you to have two nationalities, so you will not have to give up the other one.
The main stages of opening a company in Portugal
1. Choosing the type of company.
The most common types of companies are Lda,ENI and SA. Lda is popular among small and medium-sized businesses due to its ease of management and minimal capital requirements.
2. Checking and registering the company name It takes 5-10 days.
It is necessary to check the uniqueness of the selected company name in the National Register of Legal Entities (Registo Nacional de Pessoas Colectivas RNPC) and register it.
3. Opening a bank account and depositing the authorized capital It takes 1-3 days, but sometimes the whole procedure can take up to 1 month.
4. Notarization of documents It takes 1 day.
Preparation and certification of constituent documents by a notary. The documents may include the articles of association of the company, the protocol on the appointment of the director, etc.
5. Registration of a company with tax and social services It takes 1-3 days.
The company must be registered with the Tax service (Autoridade Tributária e Aduaneira) to obtain a tax number (NIF) and with the social service to register employees.
6. Registration in the Trade Register It takes 1-5 days.
After registration of the company in the Commercial Register (Conservatória do Registo Comercial) she receives a certificate of registration and a NIPC number (identification number of a legal entity).
For startups and small businesses in Portugal, there is a simplified registration program Empresa na Hora. It allows you to open a company in just 1 day. Procedures such as registration of the name, obtaining a tax number and registration in the Trade Register are carried out simultaneously. The main documents and capital must be prepared in advance. The cost of simplified registration is about 360 euros and takes only a couple of hours.
Is it possible to buy a ready-made company?
A foreigner in Portugal can buy a ready-made company. This option can be a good way out in cases where you need to start an activity quickly or if a business story is important to an entrepreneur. However, it requires careful verification and assessment of all risks.
Advantages of buying a ready-made company:
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Save time and effort – no need to go through the registration process.
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The speed of starting a business you can start working almost immediately after purchase.
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Having a history A ready-made business often has a credit and business history, which makes it easier to obtain financing or conclude contracts with partners.
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The possibility of participating in tenders – some tenders and contracts may require a certain duration of the company's existence, which makes the finished business more attractive for such purposes.
Cons:
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Risks of having debts A firm may have hidden obligations, debts, or legal problems that were not identified before the purchase.
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Additional Costs – buying a ready-made company can be more expensive than registering a new one. You pay not only for the company, but also for its history.
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Difficulties with adaptation if the company had previous owners, it may be difficult to change the constituent documents, which will require time and additional costs.
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Limited options by choice Ready-made companies, as a rule, have a standard charter and structure that may not meet your specific needs.
If we talk about real estate, then buying a ready-made company with an asset or real estate assets on it may be a profitable option. This will help to reduce the taxation on the transaction for both parties, both the seller and the buyer. You can also buy a ready-made company that manages a real estate object. hotels, guest houses, commercial areas.
When buying a ready-made company, it is necessary to conduct a full audit of the Due diligence of the company, its history, all its co-founders, property and businesses.
The tax system
The Portuguese tax system is regulated at the state and municipal levels. For legal entities, including foreign companies, there are several types of taxes that depend on the type of business, income and location. Portugal has concluded more than 70 double taxation agreements with various countries, which allows foreign investors to avoid double taxation on dividends, interest and capital gains.Basic taxes for legal entities:
- Corporate Tax (IRC – Imposto sobre o Rendimento das Pessoas Coletivas). This is the company's income tax, it is 21%.
- Value added tax (IVA Imposto sobre o Valor Acrescentado). The standard VAT rate in Portugal is 23% (in some autonomous regions the rates are lower: in the Azores 16%, in Madeira 22%). Reduced rates are applied for some goods and services. For food, certain medical services, catering – 13%. For basic food, books, medicines and educational services - 6%.
- Social Contributions (Segurança Social). This is a tax,which hits the company's pocket the most. Employers are required to make social security contributions for their employees. The employer's contribution is 23.75% of each employee's salary. The employee also pays a contribution of 11% of his salary. These contributions cover health insurance, pensions, unemployment benefits and other social benefits.
Taxes for various types of legal entities:
- The main taxes for Lda include corporate tax, VAT (if turnover exceeds 12,500 euros), social contributions and other taxes on capital gains, real estate and dividends, as described above. Lda is usually taxed at the basic corporate tax rate of 21%.
- Taxation for SA is similar to LDA, but SA may have a more complex management structure and the obligation to conduct annual audits, which adds administrative costs.
- Individual entrepreneurs (ENI) are taxed on personal income (IRS Imposto sobre o Rendimento das Pessoas Singulares). The rates range from 14.5% to 48% depending on the income level. Sole proprietors also pay social contributions, which depend on the income of the entrepreneur.
Portugal also has startup support programs that provide tax incentives, especially in the technology and innovation sector. Some startups may even be exempt from paying corporate tax in the early years of their existence.
Thank you for the help in preparing the material from our experts in Portugal:
Evgeny Berezin, CEOMENU Portugal;
Oleg Rilyan, Lucia Rusetskaya, CEO and founders of the company Amber Star Real Estate, Victoria Vdovichenko, Head of Marketing at Amber Star Real Estate;
Tatiana Shchenina, co-founder of the company Azimute Advisors.
