Portugal

About the Country

The Portuguese Republic (Portugal) is s a sovereign state located on the Iberian Peninsula in southwestern Europe. It is bordered by the Atlantic Ocean to the west and south and to the east and north by Spain. The republic also includes the Atlantic archipelagos of the Azores and Madeira, both autonomous regions with their own regional governments. The below content will explain you in detail about the requirements for the company formation in Portugal, know more about the process of trademark registration in Portugal and understand the Portugal Legal and Compliance requirements.

Portugal

Doing Business Introduction

Portugal is a developed and a high-income country, with its GDP per capita in 2014 being 78% of the EU27 average – increasing from 76% in 2012. A booming tourist sector, resilient demand from the Eurozone, a declining unemployment rate and timid gains in wage growth following years of stagnation are driving Portugal’s economic recovery. As per Doing business report of The World Bank –Portugal ranks 25 for 2017 survey in terms of ease in doing business.

Incorporation - Types of Business Entities

Before starting the business, the first decisions to make is to determine what form of business entity to establish. There are several types of entities that can be incorporated in Portugal are as mentioned below:

  • Private Limited Liability Company (Sociedad por Quotas, LDA)
  • Public Limited Companies (Sociedade Anonima SA Corporation
  • Limited Co-partnership Companies (Sociedad em Comandita, SC)
  • General Partnership Companies (Sociedad em Nome Collectivo, SNC)

Time Frame for Incorporation of Company in Portugal varies from depending on the type of entity selected and each business type has its own advantages and disadvantages. YourGlobalPro professionals estimates the time required for the process of Company formation in Portugal to be completed is 4-6 working days.

Benefits of Registration of a Company

Below are the advantages of company formation in Portugal:

  • Operation costs in Portugal are one of the lowest in Western Europe
  • Portugal population provides a young and vibrant population
  • Portugal has strategic relations with other countries through its EU membership and ties with other Portuguese speaking markets
  • Good physical and IT infrastructure
  • Socio-political stability
  • Portugal’s government has put efforts towards diversifying and modernizing its markets
  • Low crime rates

Tax Registration and Filing

Companies resident in Portugal are subject to income tax on their worldwide income while non-resident companies are taxed only on income derived from a permanent establishment in Portugal. Below are some crucial points in relation to taxation rates in Portugal:

Corporate Income Tax Rate 21 %
Capital Gains Tax 21%
Branch Profits Tax Rate 21%
Dividends Tax Rate 25%
Interest Tax Rate 25%
Royalties Tax Rate 25%
Services and Commissions Tax Rate (non-residents only) 25%
Rental Income Tax Rate 25%
General Rates 23%
Intermediate Rates 13%
Fiscal Year 1 January to 31 December
Tax Returns Filing March end or beginning of April (depending on the taxpayer number)
Advance payments of Income Tax Required

Double Tax Treaty

Double Tax Agreements (DTA) regulates the tax treatment of income or capital gains in situations where the same taxpayer is taxed twice in two countries for the same subject.  Portugal has entered into double tax treaties with the following countries: Algeria, Austria, Barbados, Belgium, Brazil, Canada, Cape Verde, Chile, China, Colombia, Croatia, Cuba, Cyprus, Czech Republic, Denmark, East Timor, Estonia, Ethiopia, Finland, France, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, South Korea, Kuwait, Latvia, Lithuania, Luxembourg, Macau, Malta, Mexico, Moldova, Morocco, Mozambique, Netherlands, Peru, Poland, Qatar, Romania, Russian, San Marino, Senegal, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Tunisia, Turkey, U.A.E., United Kingdom

Trademark registration

For trademark registration in Portugal an application must be filed before the Patent Office (INPI) by a local agent. A non-legalized power of attorney is sufficient. The Trademark Registration in Portugal is valid 10 years from the date of filing trademark and is renewable for similar periods of 10 years. It takes approximately 6-8 months from first filing to registration

YourGlobalPro professionals are fully equipped to assist you with the process of trademark registration in Portugal for your business. For assistance or advise in the matter of the trademark registration or intellectual property – please feel free to write or contact us.

Secretarial Compliance

Below are some of the important points in relation to Company Secretarial Compliance in Portugal:

  • Proper minutes books and records for the Company must be maintained
  • The company must register pertinent information including articles of association, accounting reference dates, changes in shareholders and number of directors to the Commercial Registry Office
  • By the end of June, information regarding the previous financial year, such as the annual accounts and other elements, must be filed to the Tax Authorities and to the Commercial Register Entity.
  • A general shareholders meeting must be held at least once a year, to approve the accounts prepared by the management and the distribution of profits;
  • Accounts must be prepared in accordance with the Portuguese Chart of Accounts

Accounting Services

Portugal has implemented the provisions of the Fourth EC Directive, giving rise to the publication of an Official Chart of Accounts in 1989. Financial statements of Financial Institutions as well as the consolidated financial statements of quoted companies are required to adopt accounting practices according to IAS. The Companies must maintain proper books of Accounts for the business transactions.

YourGlobalPro professionals assist you with the entire bookkeeping and accounting services for your Portugal Business Setup as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

All public limited companies must have their books audited by a statutory auditor. Furthermore, private limited liability companies that exceed two of the three limits during two consecutive years are also required to appoint a registered auditor. Limits are as follows:

  • Income exceeds 3 million euros
  • Total net assets exceed 1.5 million euros
  • Number of employees exceeds 50

YourGlobalPro professionals provide you auditing services as required by your business in Portugal.

Banking

Opening an account in a bank is quite easy in Portugal. The documentation requirement differs from Bank to Bank and need to be complied for the Bank account opening.

The major banks in Portugal are Millennium BCP, Novo Banco, Banco Bilbao e Vizcaya, Banco Portugues de Investimento SA (BPI), Santander Totta and Barclays Bank. All banks are stable, reliable and offer the same level of services.

YourGlobalPro professionals facilitates all the paper work in relation to banking need and can assist you in opening bank account for your business plan in Portugal.

Legal and Compliance

In Portugal, the responsibility of legal compliance is not a one-time affair, but a continuous process. Below is the various Portugal legal and compliance requirement to be followed by incorporated entities:

  • Private limited companies require at least 2 partners and a minimum share capital of 5,000 euros.
  • Public limited companies require at least 5 shareholders and minimum share capital is 50,000 euros.
  • In a limited partnership, one of the partners must have full liability of the company’s debts.
  • YourGlobalPro professionals can assist you in Portugal Legal and compliance requirements.

HR and Employment Law and Immigration / VISA

Below are some of the important points in relation to HR & employment law in Portugal:

  • Maximum length of single-term contract is 36 and fixed term contracts including renewals is 36 months.
  • Companies should overtime work is a premium of 31.3% of hourly pay.
  • Paid annual leaves regardless years in tenure is 22 days.
  • EU, EEA and Swiss nationals do not need permits to work in Portugal.
  • An EU, EEA or Swiss national who intends to reside and work in Portugal must register with the local city hall if his or her stay exceeds 90 days
  • Non-EU nationals must enter Portugal with the proper visas if they intend to carry out professional activities. The type of work permit and visa required and the required procedures to obtain these items differ depending on how the work relationship is classified

Country Statistics

Capital Lisbon
Largest City Lisbon
Area Total 92,212 Sq. Km.
Population 10,306,573
Density 115/ Sq. Km.
Currency Euro
Government Unitary Presidential Constitutional Republic
Official Language Portuguese
Religion Catholicism: 81% Other Christianity: 3.3% None: 6.8% Undeclared: 8.3% Other: 0.6%
Government Office Hours Mon-Fri (0900-1800 Hrs)
Business Office Hours Mon-Fri (0900-1800 Hrs)
Banks and Exchange Houses Office Hours Mon-Fri (08.30 to 15.00 Hrs)

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