Setting up a Company in Portugal in 2023

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Opening a business in a European country is an attractive prospect for many Entrepreneurs. After all, such countries typically offer favorable business environments and enjoy perks that come from EU membership. However, few European companies can compete with Portugal when it comes to offering a great environment for new businesses. Businesses in Portugal can benefit from receiving venture capital, loans, and grants. The country’s business environment is also favorable to startups thanks to the numerous incubators and accelerators present there.  If all these points have gotten you excited about starting a business in Portugal, you might be wondering where to start. In this guide, we will go over the steps necessary to set up a company in Portugal.
  1. Research the Local Industry

Creating a successful business requires plenty of planning and preparation beforehand. For this reason, you should spend some time researching different markets in Portugal and finding out which ones offer the best prospects for your new business venture. For example, Portugal has a strong food and agriculture sector. The country already has many established businesses that produce or manufacture such products. However, there are plenty of opportunities for businesses that cater to such manufacturers. For this reason, you may find success by starting a food processing or exporting business in Portugal. Similarly, Portugal also has a thriving healthcare industry. This European country is quickly becoming a hub for medical tourism, with thousands of foreigners flying in each year for affordable medical treatments. This means companies that deal in pharmaceuticals or medical equipment are likely to find plenty of business in the country.
  1. Choose a Good Company Name

Many people overlook the importance of selecting a good business name, but the truth is that this aspect could make or break your business. Your company name serves as the first point of contact with customers, so selecting a memorable one could help boost sales. Your company name will also impact your company image and how people perceive your brand. For this reason, it is vital to choose a name that reflects the way you would like your company to be viewed. For example, if you intend to start a sports clothing brand, you should choose a name that sounds exciting and relates to fitness activities. Once you have chosen a prospective company name, you should look up whether another company in Portugal has already taken it. You can check this at the country’s company name registry.
  1. Select a Business Type

Next, you should select a suitable business type. Portugal recognizes numerous business types, so you will have plenty of choices in this area. However, it is important to understand the benefits and drawbacks of each business type before making your selection. Some important business types to familiarize yourself with include: 

Individual Entrepreneur

This is a company structure in which ownership is held by a single person. The company’s name should be the full or abbreviated name of the individual and there is no minimum capital share requirement to start an individual entrepreneur business. This company structure doesn’t distinguish between the entrepreneur’s business and personal assets. They are also solely liable for the company’s debts, which can make this company structure risky to keep.

Individual Limited Liability Establishment

An Individual limited Liability Establishment (EIRL) is a bit different from an Individual Entrepreneur company type. This company is also owned by a single individual. However, there is separation between the entrepreneur’s business and personal assets. In this structure, only the individual’s business assets are liable for company debts. This makes it better than an Individual Entrepreneur structure. However, you will need to put up a minimum share capital of €5,000 if you select an EIRL company type.

Limited Partnership

A limited partnership is a type of partnership company founded on a collaboration between two or more individuals. These partners can set up the company without having to put up any capital. However, one partner will be burdened with having full liability of the company’s obligations. The other partner will get to enjoy limited liability. 

General Partnership

A general partnership is similar to limited partnerships in many respects. It consists of two or more partners and there is no minimum capital requirement. However, the key difference here is that all the partners are fully responsible for their general partnership company’s obligations. Each partner is also capable of managing the company and making decisions.

Private Limited Company

A Private Limited Company, or Sociedade por Quotas (LDA), as it is locally known, is a company structure where the business is owned by shareholders rather than the founder. This LDA must have a minimum of two shareholders, with a maximum of fifty shareholders. Each shareholder’s liability in the company will be determined by the capital they contributed. This company structure requires an initial capital of just €1. This structure is also flexible, which makes it popular with many small and medium-sized businesses in Portugal.
  1. Get a Tax Number

It is vital to obtain a tax number Numero de Identificacao Fiscal (NIF) to complete business payments for your business in Portugal. If you aren’t currently residing in Portugal, you can apply for a tax number using an attorney. If you are in the country, you can obtain your NIF by filling out some forms and gathering the appropriate documents before submitting them with Portugal’s tax office. This includes key documents such as:
  • >The tax number registration form
  • A copy of your international passport
  • A copy of your internal passport
  • A bank statement verifying your income is legal
  • A tax ID number from your home country
Once you have submitted for NIF application, you should receive the tax number within two weeks. 
  1. Obtain a Social Security Number

Next, you should obtain a Social Security Identification Number. This number is necessary for any employer operating in Portugal. Once you have obtained this number, you will also need to inform the Social Security Office when you start hiring workers. The process of applying for your Social Security Identification number is straightforward. You must fill out an application that asks for key details such as your full name, date of birth, nationality, gender, current address, tax identification number, and residence permit. You can then submit this form to the Segurança Social. There is no charge to submit this application, and you should receive your Social Security Identification Number within a week.
  1. Open a Business Bank Account

You can now open a business bank account in Portugal. There are many local banks to choose from, and each one offers a distinct account type with different terms and conditions. Be sure to research each account type before selecting the one that suits your business needs. Once you have made your choice, you will need to provide the bank your passport details, tax number, and income details to open your account.
  1. Register Your Business

Once you have completed each of the steps described above, it’s time to register your business in Portugal. Portuguese company registration is vital because it offers your business legitimacy. Customers are more likely to visit registered businesses that are operating within the country’s legal framework. Registering your business also enables you to receive legal protections. You will get to enjoy legal rights related to your company name, branding logo, and other types of intellectual property. This protects your business from others who wish to use your company name or logo without getting permission from you.  You can register your business in Portugal quickly by using a professional service. This allows you to focus on other business setup aspects and start operating your business sooner.
  1. Start Operating Your Business

Assuming you have set up a business location and have hired workers, you can now start operating your business in Portugal. Be sure to comply with Portuguese laws and regulations in your activities. If you run into legal issues, you will need to consult a lawyer, which can be expensive. For this reason, you should familiarize yourself with these laws and regulations beforehand.

Why Choose OpenAEuropeanCompany?

Many entrepreneurs have set up successful businesses in Portugal by following the steps described above, so be sure to consult this guide when you set out to start your business in this European country. You can also read more on Portugal company formation FAQs, setting up a Portugal subsidiary, setting up a Portugal Branch. If you need assistance navigating through the various company setup hurdles, consider reaching out to OpenAEuropeanCompany. Our experts are familiar with Portuguese business laws and regulations and can confidently guide you through the business setup process. We can also help set up a company in multiple countries.

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