Setting up a business
In Portugal
INLIS Consulting offers expert guidance on company incorporation in Portugal, helping you choose the best structure for your business.
Different Legal Forms for Company Incorporation in Portugal
In Portugal, incorporating a commercial company involves three key steps:
• Choosing a legal name
• Preparing the necessary incorporation paperwork
• Registering with the Commercial Registry Office
Here, we outline the various ways to start a business in Portugal, including the processes and procedures involved.
If you prefer not to establish a new business entity, we also explore alternative options, such as setting up a branch, subsidiary, or other business structures, highlighting the key differences between them.
Types of Businesses You Can Open in Portugal In Portugal, you can choose from three primary types of business entities. Here's a breakdown of each option, its requirements, and key features: 1. Single-member Company (Unipessoal Lda) This type of company is owned by a sole partner or shareholder, with liability limited to their share. There is no specified minimum share capital, and it’s mandatory to appoint a chartered accountant to manage finances and taxes. 2. Private Limited Company (LLC - Lda) An LLC requires at least two partners, with liability limited to each partner’s share. The minimum share capital is €1 per partner. A chartered accountant must be appointed for financial and tax matters. 3. Public Limited Company by Shares (PLC - S.A.) This company form requires a minimum of five individual shareholders or one legal entity shareholder. The minimum share capital is €50,000, and each share is issued for a minimum of €0.01. Shareholder liability is limited to the value of their shares. In addition to a chartered accountant, a statutory auditor must also be appointed. Each business structure has its own set of benefits, depending on your company's scale and goals. Consider these factors when deciding on the best option for your business in Portugal.
Alternative Forms of Doing Business in Portugal If you prefer not to establish a formal company in Portugal, there are several alternative business structures available. Here are some options: 1. Sole Proprietorship (Empresário em Nome Individual or ENI) Operating as a sole proprietor allows you to run your business without creating a separate legal entity. You are personally responsible for all aspects of the business, including liabilities and taxes. 2. Self-Employment / Freelancing You can work as a self-employed individual or freelancer without the need for formal business registration. This option is ideal for service providers and independent professionals. 3. Partnerships (Sociedade em Nome Coletivo or SNC) A partnership allows you to collaborate with others in your business ventures. Partnerships can be formed between individuals or entities, with shared responsibilities and liabilities. 4. Limited Liability Individual Entrepreneur (Empresário em Nome Individual de Responsabilidade Limitada or EIRL) EIRL is a variation of the sole proprietorship, allowing you to limit your liability by separating business assets from personal assets. 5. Cooperative (Cooperativa) Cooperatives are formed by a group of individuals or businesses with common goals. They operate democratically and distribute profits among their members. 6. Branch Office If you're representing a foreign company, you can open a branch office in Portugal. While not a separate legal entity, a branch allows you to establish a presence and conduct business on behalf of the parent company. 7. Temporary Establishment For short-term business activities in Portugal, you can establish a temporary presence without the need for full incorporation. These alternative structures offer flexibility depending on your business needs and goals in Portugal.
Difference between a Branch and subsidiary and new entity. If you want to open a business in Portugal, you have several options, each with its own advantages and disadvantages. The main differences between a branch, subsidiary, and new entity are as follows: Branch: • A branch is an extension of the parent company, not a separate legal entity. • It operates under the parent company's name and legal structure. • The parent company is fully liable for the branch's debts and obligations. • Branches are subject to the same tax regime as the parent company. • Branches are generally suitable for companies that want to expand their existing operations into Portugal without creating a separate legal entity. Subsidiary: • A subsidiary is a separate legal entity from the parent company, and it is incorporated under Portuguese law. • It has its own distinct name, management, and legal structure. • The parent company's liability is limited to its investment in the subsidiary's shares. • Subsidiaries are subject to Portuguese tax laws and regulations. • Subsidiaries are often chosen by foreign companies looking to establish a permanent presence in Portugal while maintaining a degree of legal separation. New Entity: • Creating a new entity in Portugal typically involves forming a limited liability company (Sociedade por Quotas or Sociedade Anónima). • This entity is entirely separate from the parent company and is subject to Portuguese law. • The parent company's liability is limited to its investment in the new entity's shares. • New entities are subject to Portuguese taxation and regulatory requirements. • Creating a new entity allows for full control over the business and is often chosen by startups and companies seeking complete autonomy in Portugal. In summary, the choice between a branch, subsidiary, or new entity when setting up a company in Portugal depends on your business goals, the level of control and liability that you want, and the extent to which you want to integrate into the Portuguese market. Each option has its own legal and tax implications.
Company Incorporation in Portugal: 3 Procedures to Start Your Business
When it comes to company incorporation in Portugal, there are three main procedures you can follow to open your business:
1. Traditional Procedure
The traditional procedure for company incorporation in Portugal is a more lengthy process compared to other options. It involves several steps, including:
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Name Approval: Obtaining approval for your company name.
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Opening a Bank Account: Setting up a business bank account.
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Incorporation Documents: Preparing and having the incorporation documents validated and notarized.
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Commercial Registration: Registering your business with the Commercial Registry.
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Commencement of Activity: Officially starting your business activities.
2. "On-the-Spot Firm" (Empresa na Hora) Procedure
The "On-the-Spot Firm" procedure is a faster way to incorporate a business. This streamlined process allows you to register your company and receive all necessary documents in a single visit to the official office, significantly reducing the time and paperwork involved.
3. Online Set-up Procedure
For added convenience, Portugal offers an online option for company incorporation. This allows you to handle the entire process electronically, from submitting your documents to registering your business with the authorities, all from the comfort of your location.
Each of these procedures offers different levels of speed and convenience, so choosing the right one will depend on your preferences and time constraints.
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