The thought of moving to Portugal with the further opening of the business came after a fateful meeting with an old friend Alexei. At that time, he had already lived in Portugal for about 12 years and knew everything about successful entrepreneurship. He talked about the difficulties of choice, the first successes, and the country’s peculiarities. Our conversation of that day, without any embellishment, was the beginning of my new life.
As for me, I already had the experience of doing business in Russia. Moreover, when I met Alexei, I owned a chain of coffee shops in Novosibirsk, and things seemed to be going well; there was profit. My personal enthusiasm and passion were overwhelmed by the terrible competition. Still, it was not in my nature to give up, so I worked with the marketing guy at the time to develop a new concept, using various sources of inspiration.
Why I decided to open a business in Portugal
It just so happens that my longtime comrade was the ideal inspiration for me at the time. But the decision of virtually my life took my ambition far away from the Russian expanse. At first, I rejected Alexei’s suggestion to move to Portugal and basically start all over again.
I thought it was impossible, that if I quit here, I might end up with nothing. There was a lot of doubt, fear of the unknown, and I knew I was taking a big risk. But on the other hand, my coffee shop was at a waiting point, which was the best time to invest resources into a new project. Plus, my friend’s healthy confidence in the best outcome of the planned venture, his successful experience was impressive and energizing to build far-reaching plans in Europe.
Telling me about all the advantages of doing business in Portugal, the different sides of life, the opportunities, Alexei invited me to visit. Of course, I wouldn’t be me if I didn’t go to my friend’s house and see the future place of life and work in person. After that trip, a lot of things fell into place in my head; I already had a serious intention to succeed here.
Why did I decide to open a business in Portugal? Because I saw great prospects for development, the realization of exactly the concept for which there could be ambiguous demand in Russia. As well as a high standard of living, the prices for housing, food, and education were lower than in Europe as a whole. I was impressed by the conditions for obtaining a residence permit, tax benefits, and a stable social and political situation. In the end, I felt a kind of moral support from Alexei.
Preparing to move
It took several months to finalize things in Russia, specifically in Novosibirsk, prepare documents and personal packing. Of course, I wanted to do everything faster, but Russian bureaucracy is permanent, and I applied for everything legally.
Even before I met with the agency expert, I was thinking about what to do first – the visa, registering my company, or applying for a residence permit. Next, about the sequence of actions.
How to start a business in Portugal
There are two ways to register a company as a legal entity:
- Empresa a Hora. The business registration takes place in the territory of Portugal, for which there are special centers. To open a business, you need to come already with the registration documents collected. One of the main ones is a tax number. The presence of all founders of the company is required. The cost of registration is €360.
- Empresa Online. Online business registration is not necessary to be in Portugal. All owners need to have an electronic certificate as proof of identity. Also, the applicant’s signature will be required. The cost of starting a business is €360.
I chose the first option. During my 30-day visit to Alexei, I had time to visit agency MoveToCascais and register the firm. Thus, I have laid the minimum base for the move. I will tell you about the process of business registration in Portugal.
I will clarify at once that not only to open a business, but also to buy real estate, to apply for a residence permit, and other actions in Portugal a tax number is mandatory. You can obtain it with the help of a guarantor – a citizen or a resident of the country. The tax number is issued by the Portuguese Tax AuthorityFinanças within 10-15 minutes of request.
There are 2 simple steps
The registration of the new company takes place at the service center through the On The Spot Firm system and takes no more than 1 hour. Before this, the applicant must choose a company name from an existing list of names published on the one-stop-shop website at least three months before the date of registration. If the investor chooses to use a shareholder’s name or wants to suggest a name, a confirmation procedure must be carried out. It is a check to see if the name matches existing company names on the EU market.
It is important! You do not need a Portuguese founder to register the company. It can be a foreigner.
The specialists of the registration center offer the investor a set of basic founding documents, taking into account the type of company he chooses. The convenience of this is that it is not necessary to notarize these documents. The company registration and articles of association can be prepared on-site.
The investor must provide a certificate or tax number, the legal entity must provide an abstract of the business register.
What do you receive in return:
- Certificate of the company registration;
- Corporate ID card;
- Certificate of incorporation;
- Social security number.
While many local companies advertise registering a company in Portugal in 1-2 days, it is worth considering the time spent waiting for your turn. It could be several days or a week.
The applicant must register his company with the regional social security center and the social insurance center for accidents at work. Some activities will require a license. This primarily applies to activities that could potentially harm customers. In a private case, it is better to ask local lawyers about this issue.
What forms of legal entities there are in Portugal
I think it will be useful to talk about the forms of legal entities in Portugal. It will help you better understand the Portuguese business system and choose the right one for your company:
1. Private Limited Liability Company by Quotas
- The scheme is available to private investors and legal entities.
- Business is conducted exclusively through the company and only after its registration.
- Liability is limited.
- The minimum requirement for the number of shareholders is 2.
- The minimum share capital is 2 EUR, but we do not recommend taking this too seriously.
- Only capital investments are permitted (cash / kind).
- Charter is mandatory.
- The type designation format: business name + business area (optional) + Lda (Private Limited Liability Company).
2. Private Limited Liability Company with shares (Personal investors or legal entities)
- Format available for private and corporate investors (FL, CN).
- Limited liability.
- No less than 5 shareholders.
- Minimum share capital from 50.000 EUR, capital investments only (cash / kind).
- Charter is obligatory.
- Approved format of the name: business name + field of activity (may not be specified) + S.A. (Public Limited Liability Company).
3. European Company
- Investors are legal entities only. According to the pan-European model, if you want to register a company in Portugal, this format should be considered above all.
- Corporation registration required.
- Liability limited.
- Must have at least 2 founders / shareholders (some combination is possible).
- Sufficiently high demands on share capital – from EUR 120,000.
- Charter is obligatory.
- Standard of name: business + field of activity (optional) + SE (European Company).
4. Joint Venture
- Investors are legal entities only.
- No need for a separate legal entity. The company is created by agreement between all parties.
- Unlimited liability.
- The share capital is not necessary.
- A joint venture agreement is required for business.
- No commercial name applies.
5. Grouping (Enterprise Grouping)
6. Holding Companies
- Investor format: personal(s), legal entity(ies).
- Participation – through the registration of a new CE.
- Liability limited (LLC format, through shares or quotas).
- Share capital – 1 EUR / 50.000 EUR (depends on the type of CE), only capital investment.
- Charter is obligatory.
- The format of the name: business name + SGPS (participations’ management company) + Lda / S.A. (depending on type of CE). (depends on the type of legal entity).
It is worth noting that the investor is completely free to choose the form of the legal entity.
Relocation and work
So, I am 32 years old, with a successful experience in the coffee business in Novosibirsk, a registered pastry company in Faro, Algarve and grand plans for relocation, business development and living in a comfortable climate. I chose the form “Company with a sole shareholder.” Hence, I immediately paid €2,000 as share capital.
What was the next step – processing a Portuguese residence permit based on the registration of my own company. I chose the “Golden Visa” to invest in a personal business, with the condition that I create 10 jobs in my company for Portuguese citizens.
What are the advantages of the Golden Visa:
- investor’s family members can also expect a residence permit;
- investor receives a special taxpayer status – the tax rate on income in the country for the first 10 years will be fixed at 20%;
- no requirements for knowledge of Portuguese, but before applying for citizenship the language will still need to be mastered;
- In 5 years after obtaining residence permit it is possible to apply for Portuguese citizenship
- residence is possible in case of a minimum of 7 days per year
- will be able to visit 30 EU countries without a visa
- the opportunity to study and work in other EU countries.
I especially want to emphasize that you do not need to be a millionaire to immigrate to Portugal on the basis of an open business, but a stable average income is necessary.
How to get a Portuguese residence permit for business investment
In general, there are 2 ways to get a residence permit – on Portuguese soil and in another state. The second way is suitable for those who have already opened a business in Portugal. I applied while I was in Russia.
It is important to understand that at the time of your application; you must own a document of rental or ownership of the real estate in Portugal.
See more about what documents you would need to gather for a residence permit with or without a D2 visa.
This category of visa is for entrepreneurs who are only going to or have already registered their company. In addition to the basic set of documents, it requires a business plan and capitalization scheme.
List of documents for registration of residence permit with D2 resident visa:
- confirmation documents of the existence of a registered company in Portugal – an extract from the commercial type database, which shows information on the shares and the status of the founder, the charter, the business plan;
- accounting documents (balance sheet, reports);
- documentation on the conduct of business activities;
- bank statement of the legal entity;
- in case of the transfer of the business to the territory of Portugal – documents about it;
- documents about the professional qualification of the founder;
- documents confirming the solvency of the applicant;
- confirmation of the place of permanent residence;
- document about the absence of criminal record from the home country.
List of documents for the registration of the Permanent Residence Permit if you do not have a D2 visa:
- certifying documents of entry into the country;
- personal taxpayer number;
- certifying documents of an active company in the country;
- certifying documents of the solvency of the investor;
- confirmation of the place of residence;
- certificate of the absence of criminal record;
- document from the Social Security Fund not showing any debts.
First time working in various companies, he learned the culture of growing grapes and making wine. After gaining experience, he bought land,
About the Portuguese residence permit – getting, renewing, getting citizenship
Now a few words about the residence permit. The card is issued for the first time in one year. During this period, the applicant must stay in the country for at least 7 days. The renewal procedure will be required approximately one month before the expiration of the first year. It is necessary to submit biometric data and update information about the absence of a criminal record.
The second term of the residence permit is 2 years. During this time, the resident must stay in Portugal for at least 2 weeks. At the same time, a month before the document’s expiry, as in the first period, it is necessary to go through the procedure of renewal.
The third period of validity of the residence permit is also 2 years. At the end of the 5th year of life in Portugal, the resident can apply for a permanent residence permit. Once approved, he can legally sell the property acquired under the requirement of the Golden Visa program.
The flat rate of 19% is the value of the corporate type tax in Portugal. For small and medium-sized companies with a primary income of € 15,000, there is a reduced rate of 17%.
The value-added tax at the basic rate is 23%. The preferential tax rate of 6% applies to individual businesses in the food, medical device, and hotel business.
The reduced rate of 13% applies to the restaurant and flower business, partially to the food industry. Companies engaged in education, insurance, health, and financial services are fully exempt from VAT payment.
There are other tax rates in Portugal:
- 25% on dividends;
- 23.75% – social security contributions;
- 20% – interest tax;
- 15% – taxation on royalties;
- 0.3-0.8% on property (on assessed value).
Starting a business and living in Faro
Yes, I moved to the southernmost Portuguese region, the Algarve, and specifically to its capital, Faro. It was the place I chose to open my patisserie, to “put down roots” and live a measured life with a special flavor. It is a city very popular with tourists who like to eat well, and in the mornings, the local Portuguese like to have a cup of cappuccino with crcroissants/p>
moving to Portugal, I was in this city several times. When I arrived, I decided to combine business with pleasure – I looked at several sites for a future coffee house, even asked my friend from Alexey to evaluate the investment in repairs and equipment purchase. In the end, I settled on room 136 m2 for € 2 000 per month, which was an excellent deal. I recouped my investment in about six months.
By the way, when I opened my shop 4 years ago, there were very few cozy coffee shops. But I offered the usual concept of a place with a familiar Portuguese people range of pastries, sweets, drinks, adding to the menu some designer products. They were instantly loved by the citizens and visiting tourists. I won’t go into the assortment details; it’s better to appreciate it in person.
I was also pleased that in Faro, I could enjoy my second hobby after work, diving. There are great dive sites and activities here and in the surrounding area.
I also love to stroll through the evening city anlives of the livesof the Ria Formosa Natural Park, inhabitants and sometimes hang out at the local bar with friends. For beach vacations, I usually head out toward Vilamoura. I also sometimes rent a boat there to hang out with the seas.
More about what a business in Portugal gives
I will probably never tire of repeating that not only have I never regretted the decision to open a business in Portugal, but I will be eternally grateful to fate for meeting a friend from my childhood. And now I want to mention again the advantages of doing business in this country:
- gaining a residence permit in a short time and under a simplified scheme, and after 5 years and citizenship;
- doing business under transparent conditions, without participating in corrupt schemes;
- quick and clear business registration procedure;
- favorable taxation system and tax benefits in force;
- capital withdrawal in a country with a stable economic situation and hard currency;
- variety of profitable industries and the opportunity to establish themselves in the international market;
- living in a warm climate, high quality medical care;
- affordable housing and consumer goods prices along with a high standard of living.
Whether you want to become a small, medium, or large business entrepreneur, the country has all the opportunities and conditions to realize your goals. Sometimes it doesn’t work, and there are many reasons for that, from the wrong niche to pricing issues. I, for example, personally know two such enthusiasts. In their case and with other unsuccessful business people, the reason is often an unwillingness to understand the intricacies involved in relocation, obtaining a residence permit, and registering the company.
My opinion and this has always been that it is not worth the risk and try to solve such issuownn their oown if no experience. Securing the help of an expert, as I did by contacting the MoveToCascais consulting agency, is like actually guaranteeing a positive outcome of the venture.
How my life has changed and my plans for the future
Now for the present. The pastry shop is thriving and profits are steadily increasing, which can’t help but make me happy. I have worked out all the details and my goal for the next 3 years is to try to open a couple more places with the same concept in Alentejo. In a year I will apply for permanent residency.
In Faro my life has become better, more cheerful, I learned the language, made many acquaintances, but to be honest, I still can’t get used to their leisure traditions. Here I also met my love. It is a girl from Ukraine, who came as I did a few years ago to Faro to look around for the future.
Frankly, I am happy to share my story of moving to Portugal, because it can inspire someone to make many years of plans. I believe there is no such thing as a pipe dream, it’s important to have a strong intention and take steps towards your goals. And of course, don’t neglect support and advice from close people and friends. After all, who knows, like in my case, what a chance meeting with an old acquaintance can lead to…
Know why moving to PORTUGAL is a great solution for 2021.
*The material reflects the story of the hero of the article as interpreted by the author; concerning the described methods and processes of obtaining a residence permit – they may not coincide with the actual opinion of the editors of move to cascais on this subject.