Registration of a company in Portugal

Registration of a company in Portugal

Fancy arranging business negotiations in cozy oceanfront restaurants and relaxing in comfort on well-maintained beaches? Or do you want to live with your family in one of the European countries, being able to travel freely throughout the EU? All this can be done in Portugal by registering your business there and obtaining a legal status that gives you certain rights and privileges.

Why particular Portugal?

Here are some arguments in favor of this country:

1. Relatively fast and successful exit from the crisis of 2008-2009.
2. Rapid development of the economy and excellent prospects for the near future.
3. Mild climate and affordable living standard (compared to neighboring countries).
4. Acceptable conditions for starting business for non-residents of the country.

The most popular sector for those who come from another country and want to establish their own company here is tourism. It is very quick to familiarize yourself with it, and the process of opening and promotion of travel agencies is quite successful. However, in recent years, the industry with good prospects for market newcomers has been actively catching up with it.

However, it should be noted that Portugal continues to actively protect the interests of its citizens. Therefore, in the fierce competition between a Portuguese businessman and a foreigner, the former will have an advantage in the form of powerful state support.

Having your own company gives you the opportunity for:

• Obtaining a residence permit.
• Registration of permanent residence under a simplified procedure (after a 6-year period of residence in the country).

The main advantages of establishing and conducting business in Portugal

Here is a list of the main advantages that attract businessmen and encourage them to register their companies in Portugal:

1. One of the top ten safest countries;
2. Minimum level of corruption;
3. An acceptable level of prices and a decent quality of various goods and services  along with this. It is clear that food products that are too cheap are unlikely to be selected. However, you can buy products for a reasonable amount without denying yourself anything;
4. The most affordable rate of an authorized capital in Europe (to obtain a residence permit);
5. Opportunity for foreigners to act as founders and owners of companies (even without registering a residence permit);
6. Small tax rates;
7. Accelerated registration procedure ( 2 days in average by express method);
8. Obtaining the possibility of free travel throughout the EU.

Another plus for those who are going to register a company in Portugal. You can start exploring other countries from there – the free economic zone in Madeira,  for example.

What should you know about the Portuguese residence permit and citizenship

The legislation of Portugal provides for several ways to obtain a residence permit and citizenship. Let’s consider them in more detail.

1. Golden Visa program
   It provides several ways to obtain the status of a citizen and a Portuguese passport within a 5-year period. This is 2-2,5 times faster than in other countries of Europe. The most popular way is to invest amounts starting from 500 thousand euros in the economy and culture. A special advantage of this program, according to many investors, is that you do not need to live permanently in the country for most part of the year.
   
   If you obtain a Golden Visa for the first time, it is valid for 1 year and then you have to prolong it (which is not difficult at all). Further, the validity period shall be doubled, and it must be prolonged every 2 years.
2. Green Visa Program
   It was introduced 2 years ago. It is designed for those who care about the environment and the planet as a whole. It implies investing in environmental projects, which may include:
   • Agriculture (growing and selling organic food);
   • Green tourism;
   • Protection of nature;
   • Development and implementation of renewable energy sources.
3. Residence permit when registering a company
   In Portugal, it is possible to obtain a residence permit by registering a company that will operate. Basically, the options for obtaining a residence permit through the Start-up project, innovations, etc. are described in great detail. But, when establishing an ordinary company, it is also possible to become a resident of Portugal.

   To do this, you need to be employed in your company and pay taxes for yourself.

   GetResidence specialists will help you prepare all the necessary documents, as well as establish and fully support your business.

Conditions for obtaining a residence permit in Portugal

The main requirements for persons wishing to obtain a Portuguese residence permit are as follows:

1. Reaching the age of majority (age of 18 and older);
2. Absence of problems with the law;
3. Legal stay in the country;
4. Availability of a “native” passport;
5. At least 5 years of investment history in the Portuguese economy;
6. Compliance with the rules of the minimum stay in the country (from 7 to 14 days);
7. Availability of a valid medical insurance policy.

Features of registration of a company in Portugal: the choice of legal forms of business

Many businessmen prefer Portugal because there is no obvious bureaucracy, and the procedures for registering business, Golden or Green Visa, as well as a residence permit and permanent residence are carried out in an expedited manner.

To register your company in this country, you will have to choose between several legal forms. Among them:

• LDA Company
  It combines several advantages. This is a joint-stock company that is well known to us and has a limitation on liability. The amount of the authorized capital is limited to 5 thousand-1 million euros. It is appropriate for small and medium business. For registration, in addition to collecting and submitting the usual package of documents, you will also need to:
  • Come up with a name (it must be unique);
  • Outline future activities;
  • Appoint a director (1 or more);
  • Specify the founder (at least two people);
  • Issue shares (nominal shares only).

  Please note that the value of each share must amount to 1 euro and more. The liability of the founders depends on the ownership interest in the total capital.

• SA Company
  SA is an open joint-stock company. It is appropriate for large business. There must be at least 5 founders, and the amount of the authorized capital shall start from 50 thousand euros. You can pay the third part of the authorized capital immediately, and pay the remaining amount later. The council should be convoked instead of one director.
• Individual enterprise EIRL
  EIRL is an individual enterprise (should not be confused with a private enterprise). The founder can simultaneously be a director, managing the company. Liability is limited.
• Private Entrepreneur ENI
  ENI looks like our individual person-entrepreneur. It is not necessary to give a name to a company – you can simply work under your last name. It is not required to register the authorized capital and write the articles of association. However, you will have to fully meet your obligations.

Each legal form has its own advantages and disadvantages. Therefore, before registering a company in Portugal, it will be useful to read the legislation and get professional legal advice.

By the way, our lawyers will give you a free consultation.

How to register business in Portugal: description of the procedure

If you have carefully considered all pros and cons and resolved to establish business in Portugal, we suggest you familiarize yourself with the main stages of the procedure.

• Choosing the name of a future company

The main requirement is uniqueness, as well as the absence of analogies and associations with existing companies. Some words and phrases require special permission.

• Obtaining a legal address

The creation of a virtual office is also allowed, if it is permitted by Portuguese laws and the company’s activities.

• Choosing the form of ownership of the company

The form of ownership also determines the required list of documents for further registration.

• Opening a bank account

You need to open a bank account where the authorized capital will be deposited. We provide services for contributing the authorized capital for our clients without their personal presence.

• Registration of the selected name

After registration of the name, it shall be entered into the National Register of Legal Entities after a while.

• Entry into the Commercial Register

After being entered into the Commercial Register, the company shall receive the legal right to conduct business.

• Registration as a taxpayer

It is registration with the local tax office. After that the company receives a VAT number.

• Registration with an insurance company

It is required to make tax payments for employees.

• Completion of registration

Registration of the deed of incorporation with a notary and submission of documents to the Ministry of Economy or the General Directorate within the established time limits.

Nothing comes without a price: briefly about taxes

If you do business in Portugal, you must pay taxes – this point is very strict. The largest tax will be income tax (21%). Moreover, if you have branches in other countries, then their profit shall also be taken into account.

In addition to the 21% rate, the following may be added:

1. Tax allowances. Zero taxation will be imposed on the first 1,5 million of profit. The next 6 million euros shall be taxed at 3%, the next amounts- at a 5% rate;
2. Municipal fees (1.5%).The maximum tax rate can “eat” almost a third part of the profit (31.5% to be exact).
   In addition to income tax, there are also tax deductions (30%). The good news, however, is that there is no capital gains tax.
   The calendar year is taken as the basis for calculations. However, for non-residents an exception is possible – it is available upon request, and allows you to pay tax for a shorter period and in small parts.

   With an annual turnover of more than 650 thousand euros, the VAT will have to be paid monthly. At lower turnovers, this can be done quarterly, simplifying the task for the accountant.
   The deadlines for paying taxes are quite short. Declarations shall be submitted by the 15th day of the month following the reporting one. However, VAT shall be paid strictly before the 10th day.