Portugal in general, and Cascais in particular, is a promising place to start a business. This is facilitated by a lighter tax rate, a solvent audience, and the openness of the population to start-ups.
If you decide to become self-employed and start a business in Portugal, first research the business climate in your area. Learn how to register your business in Portugal and why you have a great chance.
The last question is answered at the very beginning – the level of entrepreneurship is still low. That means that competition is low and there aren’t many big businesses. So, a sought-after niche, an original idea, and a competent business plan are enough to start earning.
Will your business be legal in Portugal
The first step a prospective businessman must take is to make sure his business will be legal. To do so, one must comply with the requirements of Portuguese law, which regulates business activities:
- Presence of a residence card.
- Tax number issued from the tax office.
- Business visa or another visa that allows you to do business.
- Get a social security number from the social security authorities.
The second step is the same for all business people — you have to make sure the idea is viable and there will be demand for it. Research the market, competitors, and target audience. Understand what is worth doing and what is not. This will make a great business plan! During this phase, you need to think about the location of the establishment and the name.
Next, you have to choose a legal status. Portugal has its counterparts for limited liability organizations, legal entities, franchises, etc.
Before you start registering, you should gather the minimum documentation you need, choose an address and a name. Next, choose your registration method (online, on-site, and traditional).
Registering online allows you to create and register certain types of Portuguese businesses online within 1-2 days. It costs 360 euros. The procedure will require an electronic certificate and the website Portal de Empresa.
The on-site registration (Empresa de Hora) is suitable for limited companies and sole proprietorships. You will need to come to the place of registration with all the necessary documentation, and pay 360 euros. The entire procedure will take no more than one hour.
The traditional method, unlike the speedy method, involves a number of steps:
- Getting a certificate that will officially identify the company name. To be done at notaries or online.
- Getting a business ID or company card.
- Opening a bank account and depositing bank capital.
- Filing an application at your local tax office.
- Registering the company as an employer at the local social security office.
All steps usually take up to 15 days, except in cases where the chosen field requires additional steps. For example, it may be a health certificate, license, or credentialing document.
Keep in mind that some people can only open a case after gaining Portuguese citizenship.
Startups and types of business
Legal statuses for businesses come in a variety of forms, from sole proprietorships to companies with large numbers of employees.
The country has its own Company Code, which regulates all entities and defines their legal forms.
List of businesses that are owned by a single individual:
- Single proprietorship (e.g., freelancer or self-employed).
- Single proprietorship with limited liability.
- A sole proprietorship with limited liability.
Companies owned by more than one person:
- Private limited liability company. This is a company with at least two owners. The capital investment is a minimum of 5000 euros. Shareholders pay a minimum of 100 euros per share and are jointly and severally liable for the items set forth in the Articles of Association. Shareholders are liable for debts.
- A public limited company requires at least 5 shareholders and a capital investment of at least 50 thousand euros. Shareholders are liable in an amount equal to the value of their shares.
- A partnership is a company with two partners (at least) whose liability extends to personal assets. They can be used to cover debts.
- A partnership is a company with two partners (minimum). The partners do business in Portugal and have limited personal assets, and their liability is limited to the amount invested.
- The cooperative is a non-profit organization that is guided by the principles of cooperation. It is founded by legal entities, the capital can be different.
You can also create an offshore business. An offshore company is registered outside the country of residence but opens within its borders. Taxes are paid to the other country.
If you are a freelancer, you need to think about becoming self-employed to pay taxes. You will need a residence permit, a tax number, and a Social Security number. Once you open a sole proprietorship, you will be responsible for paying your income tax and social security contribution.
Business visas and immigration requirements in Portugal
To open a business, you must have a Portuguese residence permit. The same right is granted by a business visa, which is issued for a long period. In some cases, you can get a work or investment visa – and then you can apply for a residence permit. In addition, if you plan to invest your money in Portugal, then you can get a golden visa, which gives you many advantages. For example, the right of residence and long-term stay in the country.
All funds that a person obtains through entrepreneurial activity are class B and are taxed accordingly. Most often, sole proprietorships receive a simplified system with a progressive income tax rate. In addition, a 23% VAT will be required on all goods other than groceries and necessities.
In addition, all Portuguese residents file tax returns.
In general, we can say that the country has a very favorable business climate. You can start a business in just a few hours, the tax rate is not burdensome, and the population is happy to see new startups.
Purchasing Portugal residence permit gives you the following advantages:
- The possibility to apply for Portuguese citizenship already 5 years after receiving the residence permit. A Portuguese passport gives you all the benefits of an EU citizen.
- Possibility of visiting Schengen without a visa.
- The right to invest in liquid assets such as businesses, securities real estate.
Depending on the type of investment, the amount will vary:
- Purchasing real estate:
- from €500 thousand any real estate in Portugal. The prerequisite – the property must be owned for at least 5 years.
- from €350 thousand property that requires reconstruction and has been built at least 30 years ago in areas of cultural heritage.
- Purchase of shares – from €1 million for the purchase of shares in Portuguese companies.
- Investment in research or the arts – from €350,000.
One of the possible options for obtaining a Portuguese residence permit is an investment. The following investment options are available:
- The purchase of the real estate.
- A single capital transfer for research activities or works of art.
- A capital transfer to register a company with a head office in Portugal combined with the creation of at least 5 permanent jobs.
After applying for a residence permit, you must wait for its processing. It usually takes no more than 3-4 months. Add another 2 weeks for the production of the card and it turns out that the estimated waiting time could take up to 5 months.
A year after receiving the first residence permit, the card must be renewed for the next 2 years.
For more information on obtaining a residence permit in Portugal through investment can be found in an article our blog.
Your family members can be granted residence status (Residence permit) in Portugal with you. This can be applied for:
- Financially dependent children up to 26 years old.
- Parents over 65 years old.
If you add family members to the program, its cost increases For each situation it is calculated individually.
After 5 years of residency status, the holder of a golden visa (GOLDVISA) in Portugal can apply for citizenship. To do so, the following conditions must be met:
- Knowledge of the Portuguese language. Level at least A2.
- No criminal record.
- At least 18 years of age.