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Characteristics

GENERAL
Type of entity
Public Limited Liability Company (SA)
Private Limited Liability Company (LDA)
Type of law
Continental law
Shelf company availability
Yes
Our time to establish a new company
1-3 days
Migration of Domicile permitted
Yes
Corporate taxation
21 %
Double taxation treaty access
More than 70 countries
SHARE CAPITAL OR EQUIVALENT
Standard currency
EUR
Permitted currencies
Any
Minimum paid up
50 000 EUR for SA
No requirements for LDA
DIRECTORS OR MANAGERS
Minimum number
Board of Directors for SA
1 director for LDA
Local required
No
Corporate directors permitted
No
Publicly accessible records
Yes
Location of meetings
Anywhere
SHAREHOLDERS OR MEMBERS
Minimum number
5 shareholders for SA
1 or 2 shareholders for LDA
Publicly accessible records
Yes
Location of meetings
Anywhere
COMPANY SECRETARY
Required
No
Local or qualified
No
ACCOUNTS
Requirement to prepare
Yes
Audit requirements
Yes for large companies
Requirement to file accounts
Yes
Requirement to file accounts
No
OTHERS
Language
Portuguese
Controlled foreign companies, transfer pricing
Yes
Thin capitalization, exchange control
No
Change in domicile permitted
Yes

INTEREST OF THE JURISDICTION

Advantages of a company in Portugal

  • Low corporate tax rates;
  • Simple and convenient conditions for creating a business;
  • Attractive state incentives for inviting investments and creating jobs;
  • Access to the EU market and the world market;
  • An excellent environment for life and work.

Possible disadvantages of a company in Portugal

  • Portugal in comparison with other EU countries lags behind in the pace of economic development;
  • Relatively high unemployment rate.

Main info

Portugal is a Western European country that is washed by the Atlantic Ocean to the west, and borders Spain on the north and east. The area of Portugal is slightly more than 92 thousand km², and the population – almost 11 million people

A convenient geographic location became decisive for Portugal. That were Portuguese who made many geographical discoveries and created an extensive colonial empire, which has now turned into Portugal’s strong economic ties with the countries of South America and Africa. Today, Portugal is part of the EU and the Schengen area, and attracts businessmen and investors from around the world.

Behind the state system, Portugal is a parliamentary-presidential republic. The head of the country is the President, who is elected for 5 years. He exercises his powers with the help of a special body – the State Council. Legislative power belongs to the Parliament – the Assembly, which consists of 230 deputies elected for 4 years. Executive power is exercised by the Council of Ministers, headed by the Prime Minister.

The judiciary is independent, represented by the Constitutional Court, the Supreme Court, the courts of general jurisdiction of the first and second instance, the Supreme Administrative Court and the lower administrative courts. There are also maritime, arbitration and world courts.

Types of companies and incorporation procedure

The most commonly accepted forms of doing business in Portugal are the Public Limited Liability Company (Sociedade Anónima, or S.A.), Private Limited Liability Company (Sociedade por Quotas, or LDA) and branch of a foreign company. Other forms include partnerships and cooperatives.

In S.A. and LDA the responsibility of shareholders is limited by their contribution to the authorized capital.

01. Public Limited Liability Company

The minimum authorized capital for S.A. is 50 000 EUR, divided into shares of at least 0.01 EUR each, so this form of business organization is suitable for large companies. The authorized capital can be paid in cash and in kind. The minimum number of shareholders for S.A. is 5 participants.

02. Limited Liability Company

The Limited Liability Company (LDA) is suitable for small and medium-sized businesses. LDA does not have a minimum prescribed share capital, but usually the authorized capital is 5,000 EUR, and is divided into shares. To create LDA, you need at least 2 members, but even one individual or legal entity can create such a company.

03. Partnerships

For companies S.A. audit is mandatory. For LDA, audit is also mandatory if two of the following three limits are exceeded for two consecutive years: the amount of income is 3 million EUR; total net assets: 1.5 million EUR; number of employees: 50.

Taxation

  • The rate of corporate income tax in Portugal is only 21%, this tax is levied on the worldwide income of residents and income from a source in Portugal, if it is a non-resident.

    A resident is a company whose main office or management place is located in Portugal.

    The taxable profit of the company is based on its annual published accounts, subject to certain tax adjustments.

    Capital gains are usually included in taxable income. However, the exemption from participation can be applied to capital gains from the sale of shares.

    The tax rate for repatriation of income is 25%, however it can be reduced according to double taxation treaties to 15 or 10%.

    Thus, dividends paid by Portuguese companies to another Portuguese company are usually subject to an income tax of 25%, but dividends that claim to be exempt are exempt from withholding tax. Interest paid to a non-resident company is subject to a final withholding tax of 25%, but interest paid to a related company within the meaning of the Remuneration and Royalty Remuneration Directive (2003/49 / EC) may be exempt from withholding tax. The same goes for royalties.

    A reduced rate of 17% of corporate income tax is applicable to the first EUR 15 000 of the taxable income of small and medium-sized companies

    The Azores of Portugal attract a reduced corporate income tax rate, which is only 16.8% (the reduced corporate income tax rate is 13,6%). As a member state of the European Union, Portugal has a value-added tax regime similar to the VAT regime throughout the European Union. The standard VAT rate is 23%, the reduced rates can be applied to certain types of goods and services in the amount of 13 and 6% (in Madeira, respectively, 22, 12 and 5%, in the Azores – 18, 9 and 4%).

    In Portugal, stamp duty is levied – a tax on a wide range of transactions and documents, such as loans, bank interest, written contracts, insurance premiums, gifts and inheritance. Tax rates depend on the type of operation.

Banking system and economy overview

Portugal is an industrial-agrarian country. An important sector of the economy is also the sphere of services and the development of tourism. In recent years, Portugal’s economy is gaining momentum. This rapid growth is due to the European policy of ultra-low interest rates, a tourist boom, diversification, the growth of the automotive industry, energy, electronics, pharmaceuticals, information and communication technologies.

Advantages for investment and a special tax regime are offered by the Portuguese autonomous territories – the Azores and Madeira.

Today, Portugal is one of the most attractive locations for doing business alongside such developed countries as Great Britain, Germany, Spain, Italy, France and Greece.

Doing business in Portugal is governed by the Commercial Companies Code, the Commercial Code, the Competition Legislation and the Securities Code.

In Portugal there is a competitive system of banking and financial services, in which there are numerous financial instruments for those who want to raise funds or manage financial risks.

Companies must have at least a bank account to manage their finances. Banks and other financial institutions offer opportunities for investment in the form of bank deposits or investment accounts.

In Portugal, the banking sector is regulated by the Bank of Portugal; The mission of this institution is to ensure the stability, efficiency and validity of the financial system.

HOW TO
PROCEED

To incorporate or purchase a company the following documentation should be provided:

01

A completed application form signed by the company or by the representative

03

A personal bill, which is less than 3 months old from the date of the application

02

Copy of valid passport

04

Payment of our fees

Note: additional documents may be required depending on the certain offshore bank.

Set-up time: From the moment, we are in possession of all required documents:

3 days

Incorporation of
a company or purchase
of an existing company

15 days

Delivery of the original
company documents

3 weeks

Offshore Bank: offshore
bank account opening