Portugal attracts many retirees in search of the good life and tax advantages, but entrepreneurs and freelancers are not left out. According to the Franco-Portuguese Chamber of Commerce and Industry (CCIFP), 2,500 French professionals moved to Portugal between 2013 and 2017. Since 2017, the country’s unemployment rate has fallen to 6.7% and the Portuguese economy has grown by 2.7%. All the lights are green to start a business in Portugal.

Why start a business in Portugal?

Portugal offers many advantages for those who want to invest and do business. First and foremost, the cost of labor is very moderate, especially for highly qualified, bilingual or even trilingual employees. The minimum wage is €677 per month (compared to €1498 in France and €858 in Spain).

However, the labor market is becoming tense for those looking for high value-added profiles. Following the recession of 2011, the most qualified profiles have left the country and the trend is slowly reversing. These are mainly profiles with 4 years of higher education or more, scientists, engineers or managers. However, a more operational workforce is easy to find in Portugal. There is no shortage of quality profiles.

Among the other reasons to create a company in Portugal are the cost of living, the climate, the quality of the infrastructures and the means of communication… All reasons that push many French people to expatriate. Let’s also mention the relations of Portugal with the Lusophone countries: Brazil, Angola and Mozambique. If you plan to develop commercial exchanges with these countries, Portugal is the ideal location.

Tax advantages for entrepreneurs

If you have RNH status, your professional income, whether from a salaried or self-employed activity, from a Portuguese source received by a non-habitual resident is taxed at the preferential rate of 20% in Portugal, as long as it relates to a scientific, artistic or technical activity with “high added value”.

A decree of January 7, 2010 defines these “high value-added” activities as, among others, the professions of architects, engineers, auditors and tax advisors, doctors, dentists, university professors, archaeologists, biologists, professionals, senior executives, artists, sculptors, actors, musicians, painters. Unfortunately, artisanal professions such as bakers, pastry cooks, restaurant owners, etc. are not included.

List of high added value activities

• Architects, engineers and similar technicians
• Engineers
• Geologists
• Plastic artists, actors and musicians
• Artists of theater, classical dance, cinema, radio and television; 202 – Singers;
• Sculptors
• Musicians
• Painters
• Auditors
• Consultants
• Doctors and dentists
• Teachers
• Psychologists
• Independent workers, technical and similar
• Archaeologists
• Biologists and life scientists
• Computer programmers
• Information agency activities
• Investigators, administrators and managers
• Corporate executives.

Professional income that does not fall into the category of “high value-added” activities is subject to the progressive scale of income tax under ordinary law.

There are five income tax brackets in Portugal:

• Less than 7,000 euros: 14.5
• Between 7000 and 20 000 euros: 28.5
• Between 20,000 and 40,000 euros: 37%.
• Between 40,000 and 80,000 euros: 45%.
• Over 80,000 euros: 48%.

Which legal structure for your company in Portugal?

As in France, there are many legal forms of business in Portugal. It is important to choose the most suitable one according to the structure of your capital, the type of activity you plan to carry out and its potential outlets.

• Sole proprietorship (EI)

No capital required, the founder is the sole proprietor of the company and his assets are shared with the company.

• Company Unipessoal per Quotas SUQ

With a minimum capital of 1 € the SUQ requires a single partner (natural or legal person). The sole shareholder is responsible for the amount of his contributions.

• Portuguese Company per Quotas (with limited liability) LDA

With a minimum of 2 partners (natural or legal person) and a minimum capital of €5,000, the company is managed by one or more managers who may or may not be partners. The partners are responsible for their contributions and are jointly and severally liable with the other partners. One of the founders must reside in Portugal.

• Limited company SA

A minimum of 5 shareholders is required to create this status. Rather intended for large units, which must bring a capital of 50 000 €.

• General partnership SNC

At least 2 partners who all have one vote. Decisions concerning the company will be taken by a simple majority, except in the case of the appointment of a non-partner manager or a modification of the status. In this case, unanimity is required. No minimum capital is required.

The process of creating your company

First of all, you should know that you will need to obtain a NIF, the Portuguese tax identification number that all citizens have and which is an indispensable key to carry out many current operations. Learn more about the NIF.

It is strongly advised to be assisted by a chartered accountant to perform these operations.

1- You must register your company with the Commercial Registry (instituto dos registos).

If you are a Pessoa Singular, that is to say an individual person, you will need the following documents
– NIF
– Identity document

In the case of a Pessoa Coletiva, i.e. a “collective person” :
– Cartão da Empresa (Company Card)
– Certidão de Registo Comercial (Certificate of Registration in the Commercial Registry)
– Minutes of the last general assembly.

Please note that if your funds and the company’s share capital come from abroad, you will have to register with the Portuguese Office of Commerce, Investment and Tourism (ICEP). You must also open an account in a Portuguese bank.

Once the registration in the commercial register is completed, you will receive the following documents
– Certidão do Pacto Social (Social Pact Certificate) ;
– Access code to the permanent certificate of the commercial register;
– Social Security Number (NISS);
– Access code to the company’s electronic card

2- Declaration of commencement of activity

The declaration of commencement of activity must be made at the time of the incorporation of the company by choosing a TOC (Técnico Oficial de Contas) from a list available at the Commercial Registry office. Then, within 15 days (important deadline), transmit the declaration to the Finanças duly completed and signed by a TOC.

Empresa na Hora, a simplified procedure to create a company in one hour

This system recently implemented (2007) in order to simplify the administrative procedures allows to create a company by going to a single office dedicated to the creation of a company with quotas or a uni-pessoal company. You will have to choose the name of the company, its legal status, its registered office, define the starting capital, define the field of activity, sign and pay to validate the procedure. Finally, you must have the articles of association ratified before a notary.

After these preliminary steps, it is then necessary to declare the beginning of your activity to the tax authorities. This step can be carried out on the Internet or in a physical way according to your preference. The creation of a company following this express procedure costs 360 € (including commercial registration and publications). If the company’s capital is also made up of assets, it will have additional costs:
– 50 € per real estate or social participation;
– 30 € for each “mobile” asset: car, boat, truck);

Finally, you can optionally create a trademark in Portugal for a fee of €200 for 1 class of goods or services (€44 per additional class) which can be paid in cash, by check or through Mulitbanco and ATM. The procedure is similar to what is done in France with the INPI.

VAT came into force in Portugal on January 1, 1986, in application of the European Directive of May 17, 1977. This tax works in the same way as in France. The standard VAT rate in Portugal is 23%.

A French ecosystem in Portugal

There are approximately 750 French subsidiaries in Portugal, mainly in the trade and services sectors. They employ around 60,000 people, making France the second largest foreign employer in Portugal after Spain.

Note: there is a program called “gold residence visa” which aims to encourage entrepreneurs to settle in Portugal. This is a fast-track program to obtain a residence permit. To obtain it, you must have at least €500,000 in real estate investments in Portugal or transfer at least €1 million or create at least 10 jobs in Portugal.