Portugal is often considered a strategic location for starting a business in Europe, as the process is generally straightforward, making it a practical option for those looking to establish businesses in the European Union.
This guide aims to provide a practical overview of the main options for setting up a company in Portugal, the most common legal structures, the main procedural steps, and the typical timelines and costs involved.
A. Methods of Company Formation
Portuguese legislation provides several mechanisms for establishing a company. The choice of method usually depends on the desired level of flexibility, the complexity of the company structure, and whether the partners intend to complete the process remotely or in person.
1) Online Incorporation: Companies can be incorporated electronically through official government platforms. This method allows partners to submit the necessary documentation digitally and complete the registration process without being physically present in Portugal.
2) In-Person Incorporation: Alternatively, incorporation can also be carried out directly at a Commercial Registry or before a notary. The partners (or their representatives) personally present the necessary identification documents and forms for incorporation. This approach may be preferable when personalized documentation is required or when partners seek more direct assistance during the process.
3) Company in an Hour: Portugal also offers an accelerated incorporation service known as Company in an Hour. This service is available at designated public service counters and allows members to complete incorporation in a single visit, often on the same day, using documentation that has already been pre-approved.
B. Common Corporate Structures
Portuguese legislation provides for several legal forms, each differing in terms of capital requirements and shareholder liability. The most commonly used structures include:
1) Limited Liability Company (Lda.): The Limited Liability Company is the most common corporate structure for small and medium-sized enterprises. The liability of the partners is, as a rule, limited to the value of their respective capital contributions.
2) Single-Member Limited Liability Company (Unipessoal Lda.): This structure is similar to that of a limited liability company, but allows the company to be owned by a single shareholder. It is frequently used by individual entrepreneurs seeking limited liability protection.
3) Public Limited Company (S.A.): A public limited company is typically used by larger companies or businesses that wish to raise significant capital. This structure implies more stringent requirements, including a more structured corporate body and a higher minimum share capital.
C. Main Stages of the Incorporation Process
Regardless of the method chosen, forming a company in Portugal generally involves some fundamental steps.
1) Company Name: The partners must choose the company name. This can be selected from a list of pre-approved names or requested through a certificate of admissibility confirming the availability of a specific name.
2) Determination of Share Capital: The partners must define the company's share capital and the method of contribution. Contributions can be made in cash or in kind, and Portuguese law offers flexibility regarding the timing of capital payments.
3) Defining the Corporate Purpose: The company's bylaws must specify the activities that the company intends to carry out. These activities define the corporate purpose and the scope of the business.
4) Drafting the Articles of Association: The partners must approve the articles of association that regulate the structure and internal rules of the company. In simplified procedures, standard templates can be used, although customized articles of association are often prepared when the company needs specific provisions.
5) Appointment of a Certified Accountant: Although not legally mandatory at the exact moment of incorporation, the appointment of a certified accountant at an early stage is highly recommended to ensure compliance with accounting and tax obligations in Portugal.
6) Requirements After Incorporation: After registration, several additional steps must be completed to ensure that the company can operate in full compliance with Portuguese law. These typically include obtaining official registration and tax identification documents for the company; registering the company's beneficial owners in the Central Register of Beneficial Owners (RCBE); and opening a bank account in the company's name.
D. Estimated Timelines and Costs
The time required to set up a company in Portugal depends mainly on the registration method chosen and the complexity of the company structure.
In most cases, the initial preparation phase takes a few days, during which the partners gather the necessary documentation and define essential aspects such as the company structure and share capital. The incorporation process itself can vary in duration. For example, when using the "Company in an Hour" service, the company can usually be created on the same day. On the other hand, online incorporation procedures usually take about ten days to complete, while in-person registrations depend on the availability of appointments at the competent notary office. After the formal registration of the company, the additional administrative steps are usually finalized in a few days or a few weeks.
The total cost of setting up a company in Portugal can vary depending on the method used and the need for professional assistance. The most common expenses include business registration fees (around €360), notary or lawyer fees, where applicable, fees for a certified public accountant, and the costs associated with opening a business bank account. In many cases, the "Empresa na Hora" (Company in an Hour) procedure is the most economical option, while incorporations involving customized articles of association or additional legal services may result in higher total costs.
E. Final Note
Before starting the process of setting up a company in Portugal, it is important to ensure that the partners meet the legal requirements to conduct business activity in the country. For individuals who are not citizens of a European Union Member State, a Portuguese residence permit is generally required to open a business.
Therefore, it is important to note that Portugal also offers several visa options designed to facilitate entrepreneurial activity and foreign investment in the country. One of the most common is the D2 Visa, intended for foreign entrepreneurs and independent professionals who wish to develop a business project in Portugal. Applications can be submitted through Portuguese consulates abroad, and the visa typically costs around €90. It is initially issued for a period of four months, during which the applicant can travel to Portugal and apply for a residence permit.
For investors planning larger investments, Portugal also offers the ARI, commonly known as the Golden Visa. This residence permit is granted to foreign citizens who make qualified investments in Portugal for a minimum period of five years, also offering freedom of movement within the Schengen Area. One of the investment options consists of creating at least ten jobs through a Portuguese company or an investment of €500,000, with the creation of at least five jobs.
This article does not replace consulting the relevant legislation, nor does it hold Prime Legal responsible.
The idea that Portugal is a “strategic location for starting a business in Europe” is quite intriguing, as it's often mentioned that the process is generally straightforward. I've had some experience with this, having set up a few companies in the region, and I can attest that the bureaucracy can be manageable, especially when compared to some of its European counterparts. One thing to consider, though, is the cost of setting up a company, which can add up quickly – I've seen cases where the initial investment can be around 1,500 euros, not including any additional fees for lawyers or accountants. The parallel between the ease of setting up a business in Portugal and its economic indicators, such as GDP per capita, is something I have been thinking about because it seems that there might be a correlation between the two, and I wonder if the author has considered exploring this relationship further, perhaps in relation to neighboring countries.
Thank you for sharing your perspective, Lars. Your point regarding the potential relationship between Portugal's business environment and broader economic indicators is indeed very insightful. There is certainly some correlation between the two, and we might explore these comparative perspectives in greater detail in a future publication.