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Setting up a company in Portugal

When setting up a company you may want to consider these factors:

  1. Business Factors

    The Portuguese government is highly supportive of foreign investments into the country, with several incentives and tax benefits provided for large-scale investments into Portugal. Portugal provides significant financial incentives, tax relieves and aids for foreign companies investing in particular sectors as well.

    There is no discrimination against foreign investments in Portugal, where foreign companies are free to invest in almost any economic sector in Portugal.

    The process of incorporation for foreign entities is very similar to that of local businesses, where initiatives have been implemented to expedite the process of incorporation to under one hour for most cases using One Stop Shop services.

    You may also want to consider the following when making your decision:

    • The industry and type of business that will be conducted
    • Nationality of headquarters/individuals
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Language

    Regional language may be an important consideration. The official language in Portugal is Portuguese which is largely spoken throughout the country, with some differences in dialects between regions. The main foreign languages spoken in Portugal are English, French and Spanish. 32% of citizens in Portugal have some level of understanding of English.

Your Options

There are three broad forms of incorporation available to foreign companies in Portugal. Each of these business forms have distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Portugal and the planned business activity.

When setting up a company in Portugal, you have the following options:

  • Limited Liability Company
  • Partnerships
  • Branch Office/Representative Office

This article provides a general guideline for foreign businesses on entering Portugal for business purposes. In particular, it looks at some common pathways to establishing a business presence in Portugal, generally through a limited liability company, partnership or a branch/representative office. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Portuguese economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.

Limited Liability Company


The limited liability company structure of incorporation can be private or public.

1. Private Limited Company

The Private Limited Liability Company (Sociedade por Quotas, “LDA”) is recommended for entities that wish to establish an enterprise on a small scale in Portugal, with low initial capital investment and expenses. It is the most widely used type of incorporation in Portugal due to its convenience for small enterprises and its more simplistic administrative and supervisory structure.

The LDA must be established by at least two founders with a minimum share capital of €5,000. Each shareholder’s liability is limited to that of their contribution.

The management of the LDA is assured by a single director who is appointed through the general meeting of shareholders, who are the supreme authority in the Portuguese LDA.

In the Portuguese LDA, shareholders do not own shares, but instead they own “quotas”. Quotas represent the capital in the company, and are described in the Articles of Association. Transferring these quotas do not require a public deed, as a private document is sufficient.

The LDA company once incorporated are not subject to an annual audit if they have satisfied two out of three requirements during the two preceding years:

  • Total assets below €1.5m
  • Total revenue below €3m
  • Less than 50 employees


2. Public Company

The Public Company or Corporation (Sociedade anónima, “S.A”) is more suited to those incorporating a medium or large enterprise with high levels of investment capital and has a more complex administrative and supervisory structure. This is most appropriate for entities seeking to raise large levels of finance to fund expansion. This method of incorporation also allows the listing of shares on the Portuguese Stock Exchange.

The S.A must be established by at least five shareholders with a minimum share capital of €50,000. Each shareholder’s liability is limited to that of their contribution.

The management of the LDA is assured by a board of directors who are appointed through the general meeting of shareholders and are supervised by the Supervisory Board.

There are two types of shares: certificate and bearer shares, which can take one of two forms of representation: held or scriptural shares.

The S.A once incorporated must be subject to an annual audit.


Incorporation Process

The incorporation process in Portugal is designed to be highly efficient and fast via the “One-stop shop” service provided by certain Portuguese agencies. These agencies provide an “On the Spot Firm” (Empresa na Hora) service which expedites the company set-up process in under an hour through a single service, assuming all documents are present. The steps are as follows:

1. Register the name at the National Registry of Collective Entities (Registro Nacional de Pessoas Colectivas, RNPC)

A newly formed company must have its name checked with the RNPC to ensure it is not in used in the register. If the name is available, it may be reserved for a period of 48 hours for a fee. Selecting from the RNPCs list of pre-approved names in the database is also an option. Once the name has been successfully processed, the company is given the name approval certificate.

2. Open a bank account

A bank account must be opened by the founders with a deposit for the minimum required share capital for each member.

3. Obtaining the Certificate of Registration

The founders must request a Portuguese Tax Identification Number from the National Registry of Collective Entities, a current extract of the entry in the Commercial Registry and the minutes of the inaugural meeting of incorporation. The On the Spot firm may facilitate this process and provide a standard memorandum and articles of association once the documents have been submitted.

It is possible to receive the certificate of incorporation, corporate identification card, the Social Security number, the deed and business registration certificate all at once through the On the Spot process, otherwise it must be submitted to the relevant authorities no later than 15 days from incorporation.

4. Registration of employees

The entity must register all employees at the Centros de Formalidades das Empresas (CFE) or the Business Registry Offices 24 hours before they commence activities or no later than 10 days after the declaration of starting the business.

The employer must also register the employees with the Portuguese Social Security services in the area within 24 hours of the employment agreement’s entry into force. Failure to follow these procedures of registering the employee will result in a fine ranging from €75 – €4,800.

5. Notifying the Labor Inspectorate

The employer must provide the business name, tax number, copy of the company incorporation announcement, the company activity description and headquarter address to the Labor Inspection Office (Inspecção-Geral do Trabalho). This may be submitted through the One Stop Shop who will deliver it on behalf of the business.

6. Registration of insurance

The last step is to register for the employee’s accident compensation insurance with a private insurer for all employees and managers who receive a regular salary. The insurance is underwritten by a private insurer and can be done after the business has begun activities.


1-2 days if carried out through a One Stop Shop.

2-3 weeks if incorporating manually.


€3340 on average including taxes, duties and fees.


In Portugal, a partnership arrangement occurs when there are two partners who will form the business entity in Portugal. Partnerships are prevalent for professionals, such as lawyers, economists and engineers. They are not often used as a method of incorporation in Portugal for most types of businesses as one or both partners are subject to unlimited liability. The partnership requires a notarized deed signed by both partners which outlines the contribution of each partner, how the profits will be distributed and the admittance process of new partners.

There are three types of Partnerships:

Limited Partnership (Sociedade Em Comandita Simples, “SC”)

A limited partnership is formed by at least two partners, where at least one is a general partner who takes on unlimited liability for the company’s obligations, while the others have limited liability. The general partner executes all decisions and may claim all profits, while the limited partner remains ‘silent’, has no decisional power or claim on profits, but is entitled to a return for their investment. The limited partner is only liable to the extent of their contribution to the business.

General Partnership (sociedadeem Nome colectivo, “SNC”)

A general partnership is formed by at least two partners where both have full liability of the company. Both partners are equally responsible for making decisions and may manage the company as they see fit. Both partners are entitled to the distribution of profits as outlined in the deed.

General partnerships have no minimum share capital requirements.

Limited Partnership with Share Capital (Sociedade em Comandita por Acções)

This is a third form of partnership which is similar to the limited partnership where there are both general partners and limited partners. There is a key difference in that the capital contributed by the limited partner must be divided in shares, essentially transforming limited partners to shareholders. The minimum share capital is €50,000 and the Partnership’s name must include the name of at least one general partner.


Branch/Representative Office

A branch office (sucursal) or representative office (escritório de representação) may be established by the foreign business that operates under the company name while carrying out regular business activities. Foreign companies may find this option attractive as it provides greater exercise of control over business operations, while business functions like accounting, HR and tax do not become burdensome. It is intended for those who do not intend to incorporate a fixed corporate structure.

Branches in Portugal are relatively easier to establish as there are no minimum share capital requirements as the initial capital investment is provided by the parent company.  Branches are not considered as an autonomous legal entity and instead are extensions of a foreign company, so the liability for the obligations of the branch office rests with the parent company.

The incorporation procedure for a branch is similar to incorporating a regular Portuguese company, which has its own “Branch on the spot” service as well to expedite the process. The branch office name must be registered with the national Registry of Collective Persons (RNPC) and the business must be registered with the Commercial Register. The following documents are required for this process:

  • Parent company’s incorporation documents
  • Documents of the parent board of directors confirming the establishment of the branch
  • A power of attorney
  • Certificate of registration
  • Articles of association
  • List of management and supervisory board
  • All documents must be written or translated into Portuguese

A Portuguese branch is subject to the same treatments as a local company. It must be registered with Social Security, the Labour Inspectorate and a private insurer similar to any normal incorporation process.

Cost: €200

Time: Up to one week


Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Portugal, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Portugal they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Portugal
  • the company needs help with tax, employment, immigration and payroll compliance in Portugal

The complexity of employment regulations in Portugal makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Portugal allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Portugal.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Portugal. Read more about outsourced employment through Shield GEO.



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