Have you thought about creating your company in Portugal?

With an attractive tax framework, this country has become the preferred destination for entrepreneurs and businessmen.  Here’s everything you need to know to get into the Portuguese market.

Ways to set up a company in Portugal

There are different ways to set up a company in Portugal, depending on the number of partners or the way in which the activity is going to be carried out:

• LDA Company (Limited Company) o LDA Sole Proprietorship, this type of company is a good option when there are one or more individual partners.
• Subsidiary, in this case with a legal partner and a minimum stake of 10%, taking advantage of the parent-subsidiary regulations of the European Union.
• Branch, It is an extension of the parent company, permanently representing a foreign company.

1. Foreign Entity Without a Stable Establishment, Temporary representation of a company (to carry out a single activity or one limited in time – less than 1 year).

The 6 steps to start a company in Portugal

• Step 1: Obtaining the NIFs of the partners, whether they are individuals or legal entities, the estimated time is from 2 to 10 days.
• Step 2: Choose the company name, the term ranges from 24 hours to ten days, the term can be reduced if you choose the name from the list of predefined names.
• Step 3: Define the type of company, location, activities and share capital, on the same day.
• Step 4: Sign the bylaws and partnership agreement, for this you must schedule a day and time.
• Step 5: Opening the bank account and depositing the share capital, the term depends on the policy of each bank.
• Step 6: Process the registration with the Tax Agency and appoint a certified accountant, and manage the registration with the Social Security, the deadline is approximately 15 days, from the creation of the company.

These steps and deadlines may vary depending on the type of company chosen.

Taxation in Portugal

Portuguese entities, as in any other European Union country, are subject to corporate income tax (IRC Imposto sobre o Rendimento das Pessoas Coletivas):

• Up to €50,000 of taxable base (benefits), 17% will apply. If you exceed €50,000, 21% will be applied.
• For companies located in inland areas of Portugal, the tax rate drops to 12.5% up to €50,000 of taxable base.
• City Tax: Variable (up to 1.5%).

In Madeira, the tax rate drops to 14.7% up to €50,000 of profit. Another case is the Madeira Free Trade Zone (ZFM), which carries other conditions.

Value Added Tax (VAT / IVA)

Regarding Value Added Tax (IVA), it differs, like corporate income tax, depending on geographical location:

• Continent: General 23%; Intermediate 13%; Reduced 6%.
• Madeira: General 22%; Intermediate 12%; Reduced 5%.
• Azores: General 18%; Intermediate 9%; Reduced 4%.

If you need advice to create your company in Portugal, check out our Consulting services for companies in Portugal, at CE Consulting we can help you. Contact us!