Starting a business in Portugal is a relatively easy process but requires making some crucial decisions. LACA has created a Guide to Starting a Business in Portugal to assist you on your entrepreneurial journey, which can be summarized in the following steps:
1. Choose the Legal Structure:
- Limited Liability Company (Lda): Best for small and medium-sized enterprises, requires a minimum capital of €1 per shareholder.
- Joint Stock Corporation (SA): Ideal for larger companies, requires a minimum capital of €50,000.
2. Required Documentation:
- Tax Identification Number (NIF): Necessary for all shareholders and for the company, this identification number is crucial for any economic activity in Portugal.
- Company Registration: The company must be registered with the Commercial Registry Office. The “Empresa na Hora” service allows for same-day registration, simplifying the process.
- Bank Account: A business bank account must be opened in Portugal to deposit the initial share capital.
3. Tax and Social Security Registration:
- Company Registration with the Tax Authority: Register the company with the Tax Authority to ensure compliance with Portuguese tax laws.
- Social Security Registration: Employers must register their employees and make contributions to the social security system, making the company’s registration with Social Security also mandatory.
4. Understanding the Tax System:
- Corporate Income Tax (IRC): The standard rate is 21%, with reduced rates available for small and medium-sized enterprises (PMEs). The current government has announced a reduction of this rate to 17%.
- Value Added Tax (IVA): Rates range from 6% to 23%, depending on the type of goods or services.
- Social Security Contributions: Employers are required to contribute to social security on behalf of their employees.
5. Incentives and Benefits:
- Research & Development (R&D) Incentives: Companies investing in R&D can benefit from significant tax deductions.
- Regional Development Incentives: Companies investing in less developed areas of Portugal may receive fiscal benefits.
- Free Trade Zones: Madeira and the Azores offer reduced tax rates and other incentives to encourage investment in these regions.
6. Operational Steps:
- Choosing a Company Name: You can choose a pre-approved name or request a certificate of admissibility for a unique name that suits your preference.
- Professional Assistance: Hiring specialized professionals such as lawyers and accountants will certainly help throughout the process and optimize existing tax benefits.
7. Registration Process and Costs:
- “Empresa na Hora”: This one-stop service allows for immediate company registration (standard application fee of €360), covering NIF registration, social security registration, and more (completed on the same day except in rare cases).
- Cost Considerations: In addition to the above, initial registration costs can vary based on urgency, including notary fees, registration fees, and bank charges for opening business accounts.
8. Compliance and Ongoing Obligations:
- Accounting and Auditing: Companies must maintain accurate accounting records and may be subject to annual audits depending on their size and business volume.
- Annual Reports: Companies are required to submit annual reports and tax declarations to comply with Portuguese legislation.
By understanding the legal, tax, and operational requirements, and leveraging available incentives, you can successfully establish and grow your business in Portugal.
Seek assistance from specialized professionals to navigate the process smoothly and ensure compliance with all legal and tax requirements. At LACA, we have an experienced team ready to help just a click away.
