Company Formation in Portugal

Company Formation in Portugal: Choosing the Right Structure and Drafting the MOU:

Starting a business in Portugal and the European zone is made easier with the excellent Company Formation services available. Portugal offers various types of companies, but the two most popular and practical options are the "Individual Company (UNIPAL)" owned entirely by one individual, and the "Private Limited Liability Company (LDA.)" managed by unlimited shareholders and partners.
 

Before incorporating a company, it is crucial to prepare and draft a Memorandum of Understanding (MOU). The MOU outlines the company's activities, responsibilities, and the distribution of shares ownership. Shareholders have the option to physically sign the documents, or they can appoint a legal representative to sign on their behalf using a power of attorney.
 

By following these necessary steps, you can embark on your business journey in Portugal confidently and take advantage of the benefits offered by this thriving European market.

To register as a freelancer in Portugal, certain documents are necessary. These include:

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1. Passport or equivalent  

2. Address proof of shareholders and board of directors 

3. Virtual or physical office space 

4. Memorandum of association 

5. Translate documents in Portuguese or English. 

6.  The company must be active in the taxation, labour, and financial department whiten 15 days from the moment of formation. The business account was obligatory with any private and public financial institutions for a limited period. 

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In order to comply with applicable law and regulations, a business must at all times have a certified accountant who is responsible for its accounts and do the following filings:

• Monthly Payroll - filing and payment of Social Security contributions and employees' withheld tax.

• Monthly Withholding Tax - filing and payment of tax withheld on paid professional fees and rents.

• Monthly Invoices Filing with the Tax Office (SAFT).

• Monthly or Quarterly VAT - filing of the VAT return and ECSL, and payment of VAT, if any.

• In January each year - filing of the paid salaries and fees annual report (Mod 10).

• In Month 7, 9 and 12 of the financial year - filing and payment of advance corporation tax on account (PPC).

• In Month 3 and 10 of the financial year - filing and payment of special advance corporation tax on account (PEC), starting in year 3.

• In Month 3 after the FYE - filing the minutes of the ordinary general shareholders meeting (approval of the annual accounts).

• In Month 5 after the FYE - filing of the annual corporation tax return (IRC) and payment of corporation tax on balance, plus payment of autonomous taxation on certain expenses.

• In Month 7 after the FYE - filing and payment of the annual return (IES).

The accounting firm may be also responsible for:

• The mandatory signing and filing of the business commencement form by a certified accountant with the tax office

• Business address and mail-to-email service

• Compliance (bookkeeping, VAT, accounts and tax returns)

• Indication of the registered office address of the company