Setting Up of a Bussiness Structure in Portugal

Portugal is a renowned destination for business start-ups, notably favored by foreign based entrepreneurs. Divers incentives aimed at fostering small businesses, havebeen instituted by the Portuguese government, which are widely regarded as pivotal to the Portuguese economy’s foundation.

To legally establish a business in Portugal, foreign nationals must fulfill several requirements:

  1. Obtain a Portuguese residency card.
  2. Acquire a local tax register number.
  3. Obtain a local Social Security registry number.
  4. Select a name for the business and provide a Portuguese address for company registration.

A. The “SET UP”

To set up a company in Portugal, there are three primary methods available, each with its own procedures:

Traditional Method Setup: Involves obtaining a Company Name Certificate issued by a public service (IRN “Institute of Registries and Notaries “). This certificate formally identifies the new company. The company’s primary identity is established through a Company Card and a Collective Card, both issued by the IRN.

Online Setup: This method, known as “Empresa Online,” typically takes one to two days to complete. It requires electronic certification for validation.

On-the-Spot Entity Setup: Referred to as “Empresa de Hora,” this option is commonly utilized by sole traders and limited companies. It involves establishing the company through a government scheme, with the presence of the company’s principals and required documentation. Legal representatives are also recommended to be present during this process.

Upon company establishment, several additional steps are necessary:

Opening a business bank account and making an inaugural deposit.

Informing the local Tax Office about the initiation of commercial activities.

Registering the business with both the Commercial Registry Office to formalize the Portuguese business and the Social Security Office to register as an employer.

B, TYPES OF BUSINESS ENTITIES

In Portugal businesses can take on various legal structures, catering to different ownership arrangements and liability considerations:

a.) Single Owner Structures:

  1. Sole Trader
  2. Single-member Limited Company
  3. Individual Limited Liability Establishment

b,) Businesses Owned by Multiple Individuals:

i.Private Limited Company (Sociedade por Quotas): Requires a minimum capital investment of €5,000, with each shareholder contributing a minimum of €100 per share. Shareholders have joint responsibility for matters outlined in the Articles of Association and are liable for debts up to the value of the business assets.

ii.Public Limited Company (Sociedade Anónima): Requires at least five shareholders and a minimum capital investment of €50,000. Liability for debts is limited to the value of the business assets, shareholders bear personal responsibility for the worth of their shares.

 C. PARTENERSHIP STRUCTURES

  1. Partnership (Sociedade em Nome Colectivo): Requires a minimum of two partners, with their liability extending to personal assets to cover accrued debts.
  2. Limited Liability Partnership (Sociedade em Comandita): Involves different types of partners, including general partners with unlimited liability for business operations and sleeping partners who provide capital with limited liability.
  3. Cooperative and Not-for-Profit Organizations: Operate on the principle of mutuality for the benefit of members; these are regulated by the “Antonio Sergio Cooperative Sector Institute” (Cases).

Each legal structure offers distinct advantages and considerations, allowing businesses to choose the most suitable option based on their needs and objectives.

D. ABOUT FOREIGN COMPANY BRANCHES OR SUBSIDIARY 

A foreign business seeking to establish a branch or subsidiary in Portugal must undertake the following formal procedures:

Registering the branch office’s name with the Institute of Registries and Notaries (IRN).

Registering with the Commercial Registry Office.

Providing the incorporation documents of the parent company.

Presenting confirmation from the board of directors affirming the decision to open a branch.

Submitting a power of attorney as required.

These steps ensure compliance with Portuguese legal requirements for establishing a foreign business presence in the country.

For more information, please contact us.