In the last few years, Portugal has been soaring as a hotspot for entrepreneurial activity in the last few years. Due to its strategic location in Europe, the country has attracted numerous companies that want to benefit from technological innovations, robust infrastructure, and business-friendly laws. The economy has positioned itself as a growing market, with a GDP of $251B in the last year! That highlights the country's active consumption and vast consumer base.
Are you planning to expand your business in the European markets? Consider establishing a company in Portugal in 2024. Now is a good time as the country is rapidly evolving and welcoming startups and entrepreneurs to increase its economy.
In this detailed guide, we will go over the benefits of starting a business in Portugal, the procedures for company registration, the required paperwork, deadlines, and more. Let's explore Portugal's vibrant entrepreneurial landscape.
Advantages of Starting a Business in Portugal
For good reason, Portugal has been gaining recognition as a top destination for entrepreneurs and investors. Here are some compelling advantages of starting a business in Portugal:
1. Strategic Location in Europe
Portugal's geographical location at the crossroads of Europe, Africa, and the Americas offers excellent access to global markets. The country's extensive network of ports and airports makes it a logistics hub for international trade.
2. EU Membership
Portugal's membership in the European Union (EU) provides businesses with access to the EU's single market, fostering a free movement of goods, services, capital, and people. This opens up a vast customer base and business opportunities.
3. Supportive Business Environment
Portugal is renowned for its pro-business policies and incentives. The government offers grants, tax benefits, and financial support programs to encourage entrepreneurship and innovation.
4. Skilled Workforce
Portugal boasts a highly skilled and educated workforce, making finding talent in various industries easier. Many Portuguese professionals are fluent in English, a significant advantage for international businesses.
5. Quality of Life
Portugal is celebrated for its exceptional quality of life. With a Mediterranean climate, beautiful landscapes, and a rich cultural heritage, it's a place where work-life balance is achievable.
6. Innovation and Technology
The Portuguese government is committed to promoting innovation and technology. Initiatives like the Startup Visa program attract tech entrepreneurs and startups worldwide.
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Talk to an expertHow to Start a Business in Portugal as a Foreigner
Starting a business in Portugal as a foreigner is a straightforward process. Here are the essential steps to get you started:
1. Choose Your Business Type
Before you can proceed with company registration in Portugal, you need to decide on the type of business entity you want to establish. Standard options include sole proprietorships, partnerships, limited liability companies (LDA), and public limited companies (SA).
2. Choose a Business Name
Select a unique and distinctive name for your business. Ensure it is not already in use by another company in Portugal.
3. Obtain a Fiscal Number
For tax purposes, you will need a fiscal number (Número de Identificação Fiscal or NIF). You can obtain this from the Portuguese Tax and Customs Authority.
4. Open a Bank Account
Next, you'll need to open a business bank account in Portugal. This is where you'll manage your finances and transactions related to your business.
5. Register Your Business
Register your business with the Portuguese Commercial Registry (Registo Comercial). This involves submitting the necessary documents and paying the registration fees.
6. Comply with Licensing and Permits
Depending on your business type and industry, you will need specific licenses or permits. Ensure you understand and comply with all legal requirements.
7. Register for Social Security
If you plan to employ staff, you must register with the Portuguese Social Security system (Segurança Social).
8. Tax Registration
Register your business for taxation with the Portuguese Tax Authority (Autoridade Tributária e Aduaneira). This will involve obtaining a VAT number (NIF-IVA) if applicable.
9. Hiring Employees
If you intend to hire employees, ensure you are aware of Portugal's labor and employment laws and regulations. This includes employment contracts, minimum wage, and working hours.
10. Stay Informed
Keep yourself informed about Portugal's latest business regulations and tax changes to ensure ongoing compliance.
Business Types in Portugal
Portugal offers several business structures to choose from, each with its own advantages and disadvantages. Here are the most common business types:
1. Sole Proprietorship (ENI - Empresário em Nome Individual)
A sole proprietorship is the simplest form of business, with the owner being personally responsible for all business liabilities.
2. Partnership (Sociedade em Nome Coletivo)
Partnerships involve two or more individuals who share profits and losses. Partners are personally liable for business debts.
3. Limited Liability Company (LDA - Sociedade por Quotas)
An LDA is a popular choice among small and medium-sized businesses. It provides limited liability to shareholders, protecting their personal assets.
4. Public Limited Company (SA - Sociedade Anónima)
An SA (or PLC) is a suitable option for larger businesses. It allows for the sale of shares to the public and has more extensive reporting requirements.
Documents Required for Portugal Company Registration
You will need specific documents to register your company in Portugal. The exact requirements may vary depending on your business type, but generally, you will need:
Company Deed: This document outlines the company's name, objectives, address, shareholders, and capital.
Articles of Association: These detail the company's internal rules, management structure, and shareholder agreements.
Proof of Fiscal Identification: Your NIF, obtained from the Portuguese Tax and Customs Authority.
Proof of Address: Evidence of your business address in Portugal.
Bank Statement: Confirmation of your business bank account.
Shareholder IDs and Tax Numbers: Copies of identification and tax numbers for all shareholders.
Declaration of Acceptance of Office: For company directors and legal representatives.
License or Permit (if applicable): Any industry-specific licenses or permits.
Timeline for Portugal Company Registration
The timeline for company registration in Portugal can vary based on factors such as business type, location, and government processing times. However, a general estimate is as follows:
Obtain Fiscal Number (NIF): Within a few days.
Open a Bank Account: Typically, within a week.
Company Registration: This can take anywhere from a few days to several weeks, depending on the complexity of your business.
Licensing and Permits: The time required varies based on your industry and specific requirements.
Social Security Registration: Usually within a week.
Tax Registration: Within a few days.
Hiring Employees: The time to hire employees can vary, but it typically takes several weeks to find suitable candidates and complete the hiring process.
Remember that this is a general timeline, and the actual duration may differ in your specific case.
Setting up a Company vs. Partnering with an Employer of Record in Portugal
When starting a business in Portugal, you have two main options: setting up your own company or partnering with an Employer of Record (EOR). Each approach has its advantages and considerations. Let's compare them in a table to help you make an informed decision.
Partnering with an EOR can be an excellent option for those looking to establish a presence in Portugal quickly without the administrative burden of setting up and maintaining a company.
Hire Talent in Portugal Compliantly with Skuad
Starting a business in Portugal in 2024 offers numerous advantages, from its strategic location and EU membership to a supportive business environment and a skilled workforce. Whether you set up your own company or partner with an Employer of Record, Portugal's entrepreneurial landscape is ripe with opportunities for success. However, setting up a company is a complex and time-consuming process.
Partner with Skuad to work with Portugal's talented workforce without setting up a separate legal entity. Skuad, a unified EOR platform helps you expand your global workforce compliantly and efficiently. With Skuad, you can focus on growing your business while we handle all HR, payroll, and compliance matters in over 160 countries, including Portugal.
Book a demo today to learn more!
Can foreigners start a business in Portugal?
Yes, foreigners can start a business in Portugal. The country welcomes foreign entrepreneurs and investors and provides a conducive environment for setting up and running businesses.
How much does it cost to start a business in Portugal?
The cost of starting a business in Portugal varies depending on business type, location, and specific requirements. You should budget for initial setup fees, annual taxes, administrative costs, and industry-specific licenses or permits. Partnering with an Employer of Record (EOR) may have lower initial capital requirements.