Even if Portugal has not yet taken full advantage of its EU membership with a GDP remaining quite low compared to other Members, its location is still a strategic advantage for foreign investments. As a gateway between Europe, America and Africa, internal policies slowly take the path of a decisive spot for international actors, with significant incentives for foreigners. Corporation tax in Portugal as decreased of 9% since 2005 to achieve 21% in 2017. Portugal facilitates benefits of the Madeira Free Trade Zone which has a much lower rate of corporation tax at 5%.

What are the main types of Company Formation Portugal?

There are two main forms of corporate structure for foreign companies, and they are as follows:

  • public company (S.A.)
  • private limited company (Lda)

Main features of a Lda

  • the most popular format for small and medium businesses
  • minimum share capital is now only €1 (Was previously €5,000)
  • minimum number of directors is one
  • no restrictions on foreign shareholders/directors
  • liabilities are limited to the amount invested

Recruitment environment

Portugal offers a well-developed recruitment industry, and very protective labour laws for employees.

Regulatory environment

Portugal demonstrates a strong will for liberal economy, enhanced by its historical opening to international trade. The regulatory environment is quite flexible, while keeping the line of EU standards. Foreign companies are free to invest as they wish, although there are limits in certain strategic sectors. There are no obstacles to capital entering the country, nor any constraints on the repatriation of profits or dividends.

Financial incentives

Portugal offers targeted incentives to attract foreign investments, fostering in particular large investment projects for the sectors of tourism, science and the environment.

Filing requirements

Annual financial statements must be filed via the internet to the Finance Ministry by the end of June for the previous reporting year. Auditing is not required if the company does not exceed a certain size.

Please contact us and we will be pleased to discuss matters in greater detail.