Portugal is the western most country in Mainland Europe. The country lies on the western coast of the Iberian Peninsula, where on the north and east it is bordered by Spain, while at the south and west lies the vast Atlantic Ocean. Portugal has a rich history spread over centuries; from Celts to Romans to Moors, and finally Portuguese.
Known worldwide for its colorful and vibrant culture, cuisine, and music, Portugal hosts some of the most stunning beaches in the world. The official language of the country is Portuguese, has around 10 million population with Lisbon as its capital.
Types of business structures in Portugal
In Portugal, there are several types of business structures available to entrepreneurs and business owners. The most popular business structures along with required paid-up capital are tabulated below:
| S# | Type of business | Local name | Min.required paid-up capital |
| 1. | Sole Proprietorship | Empresário em Nome Individual | No minimum capital requirement |
| 2. | Limited Liability Company | Sociedade por Quotas | €5,000 |
| 3. | Public Limited Company | Sociedade Anónima | €50,000 |
| 4. | Limited Partnership | Sociedade em Comandita Simples | No minimum capital requirement |
| 5. | Joint Venture | Associação em Participação | No minimum capital requirement |
Sole Proprietorship
Sole proprietary business is the simplest format of doing business where the owner is responsible for all the company’s debts and obligations. Preferred by individuals with experience and skills but little to no capital to form a bigger company, a sole proprietary business allows a person to initiate and establish a company over a period of time.
Limited Liability Company
An LLC is a company structure that has limited liability for its shareholders. It requires a minimum of two shareholders, and each shareholder’s liability is limited to the amount of their investment in the company.
Public Limited Company
A company structure that can be listed on the stock exchange and is suitable for larger businesses. It requires a minimum of five shareholders, and each shareholder’s liability is limited to the amount of their investment in the company.
Limited Partnership
A partnership where there are two types of partners: general partners who manage the business and have unlimited liability, and limited partners who contribute capital but have limited liability.
Joint Venture
A Joint venture is usually a partnership between two or more companies who come together to achieve a certain common objective. Various companies may otherwise compete each other in market but form an alliance for a single or multiple objectives whereby investing money, time, and experience to collectively succeed.
Costs involved in registering and incorporating a company in Portugal
The cost of registering and incorporating a company in Portugal depends on several factors, including the type of company, the services required, and the legal and administrative fees.
Here are some approximate costs for registering and incorporating a company in Portugal:
Sole Proprietorship
The cost of registering a sole proprietorship is around €360, including legal fees and taxes.
Limited Liability Company
The cost of incorporating a limited liability company is around €1,000 to €1,500, including legal fees, notary fees, and taxes.
Public Limited Company
The cost of incorporating a public limited company is around €2,500 to €3,500, including legal fees, notary fees, and taxes.
Limited Partnership
The cost of incorporating a limited partnership is around €1,000 to €1,500, including legal fees, notary fees, and taxes.
Joint Venture
The cost of registering a joint venture is around €360, including legal fees and taxes.
Process of registering a company in Portugal
The process of registering a company in Portugal involves several steps, which can vary depending on the type of company being registered. Here are the general steps for registering a company in Portugal:
Choose a legal form
Decide on the legal form of the company, such as a sole proprietorship, limited liability company, or public limited company.
Reserve a company name
Check the availability of the company name with the National Registry of Legal Persons (RNPC) and reserve it.
Obtain a Tax Identification Number (NIF)
Apply for a Tax Identification Number (NIF) for the company and its owners at the local Tax Office (Finanças).
Deposit the capital
Deposit the required minimum paid-up capital for the chosen legal form in a Portuguese bank account and obtain a bank statement.
Draft the articles of association
Draft the articles of association, which set out the rules governing the company’s operations.
Notarize the documents
Notarize the articles of association and other company documents with a Portuguese notary public.
Register the company
Register the company with the Commercial Registry (Registo Comercial) and the National Registry of Legal Persons (RNPC).
Obtain a Business License
Obtain any necessary licenses and permits to operate the business, if applicable.
Register for social security
Register the company and its employees for social security at the Social Security Institute (Segurança Social).
Operational costs of business in Portugal
The operational costs of companies in Portugal can vary widely depending on the industry, size, location, and other factors. However, here are some of the typical operational costs that companies in Portugal may incur:
Labor costs
Labor costs in Portugal are relatively low compared to other Western European countries, but they still make up a significant portion of operational expenses. The average monthly salary in Portugal is around €1,200, but this varies depending on the industry and job type.
Rent and utilities
Rent and utilities can be a significant expense for businesses, particularly those located in prime areas or larger cities like Lisbon or Porto. Average rent prices vary widely, but a small office space in Lisbon can cost around €800 per month.
Taxes and fees
Companies in Portugal are subject to various taxes and fees, including corporate income tax, social security contributions, and value-added tax (VAT). The corporate income tax rate is 21%, and the standard VAT rate is 23%.
Marketing and advertising
Companies may need to allocate a budget for marketing and advertising to promote their products or services. The cost of marketing and advertising can vary widely depending on the media used and the target audience.
Supplies and materials
Companies may need to purchase supplies and materials to operate, such as office supplies, raw materials, or equipment. The cost of supplies and materials can vary depending on the industry and the specific needs of the business.
Insurance
Companies may need to purchase various types of insurance, such as liability insurance, property insurance, or workers’ compensation insurance. The cost of insurance can vary depending on the size and type of the business.
Business environment in Portugal
Portugal has a relatively stable and business-friendly environment, making it an attractive destination for foreign investment and entrepreneurship.
Below stated are some key factors that contribute to the business environment in Portugal:
Strategic location
Portugal’s location on the western coast of Europe provides easy access to European and global markets, making it an ideal location for international trade.
Skilled workforce
Portugal has a highly educated and skilled workforce, with a high proficiency in English, which makes it easier for companies to operate in the global market.
Competitive costs
Portugal offers relatively low labor and operational costs compared to other Western European countries, making it a cost-effective destination for doing business.
Supportive government policies
The Portuguese government has implemented a range of policies and incentives to encourage investment and entrepreneurship, including tax incentives and support for research and development.
Access to funding
Portugal has a range of public and private funding programs available to support startups and SMEs, including venture capital, angel investment, and grants.
Modern infrastructure
Portugal has a modern and well-developed infrastructure, including high-speed internet, advanced telecommunications, and transportation networks.
