In 2018, Portugal saw a start-up rate of 45,000 new companies. With a growing GDP and a tourism sector that welcomes 21 million guests throughout the year, it is a dynamic time for new ideas and new business in the Portuguese economy. But what does it takes to start a company in Portugal? Learn step by step all you have to do.
1 – Make a business plan
The first step to start a company in Portugal is having an idea with potential. With that idea, you can then develop a business plan.
This plan is very important for you and to others. If you need financing, this is the first thing banks will ask to see. If you want to apply for state support, they will also request this information. Expanding on this, you should know that since March 2018, IAPMEI offers a support program for foreign entrepreneurs who want to set-up a company in Portugal.
2 – Choose what kind of company you want to start
To register a company in Portugal, you have to choose a structure. Decide whether it will be as an individual or with more people (known as a collective).
There are three types of individual companies:
- Self-employed: No share capital and the entrepreneur is responsible for all debts and liabilities of the company;
- Sole trader with limited liability: a minimum share capital of €5000, and the assets of the entrepreneur and of the company are separated;
- Individual limited liability company: a minimum share capital of €5000, and it can only be established for commercial activities.
There are five types of collective companies (in addition to limited companies and cooperatives):
- Public limited company: They must have five members and a minimum capital of €50,000. The liability of each partner is limited to the value of the shares that they hold;
- Limited liability company: They must have two partners and a minimum share capital of €5000.
- General partnership: They must have two partners and have no minimum share capital. However, the partners are jointly responsible for all liabilities.
3 – Start a company in Portugal
If you want to use Empresa na Hora (On the Spot Firm) you can open an individual or collective company. These branches are scattered throughout the country and allow you to establish a company in Portugal in less than 1 hour.
To speed up the process you should bring with you:
- Official identification;
- A company charter: The articles of charter. There are various pre-approved models available on the website of “empresa na hora”.
- Admissibility certificate: If you want your company to have a specific name, you must ensure that it is valid and is not already in use.
You can also get your company up and running in Portugal through Portal da Empresa. You need to have a citizen card and card reader to authenticate the process.
The cost of registration is €360.
4 – Pay the taxes due
After you set-up your company you will receive a “Cartão de Empressa” (company card). This document contains your “número de identificação de pessoa colectiva” (company ID number) and the “número de inscrição na segurança social” (social security inscription number), in addition to other information. Registering at the “Balcões de Empressa” will automatically enroll you with Finanças and Segurança Social. This saves you the trouble of doing it again.
After this you must pay:
- Imposto sobre o Valor Acrescentado (Value added tax) in February, May, August and November (if paid quarterly). If you have a turnover exceeding € 650,000 in the previous year, you have VAT payments monthly;
- Taxa Social Única (Social tax) between 10th and 20th of the month following the remuneration of workers;
- Imposto sobre o Rendimento das Pessoas Coletivas (Corporation tax) before 31st May of the year following, minus any payments already made.
5 – Choose between a simplified accounting or organized accounting system
When you decide to start a company in Portugal, you have to choose between a simplified and organized accounting scheme.
This is the most common. Here, accounting is done by a “Contabilista Certificado” (certified accountant) which will reduces operating costs. The main disadvantage is that 75% of revenues as liquid by the tax authority. This means only 25% is considered for expenses.
This system is mandatory for public limited companies, limited companies and all self-employed people or companies with net incomes in excess of €200,000. The accounts must be done by a certified accountant, but there is no limit for submitting expenses against your tax return.
The public limited companies are required to request an audit of their accounts from a Statutory Auditor. Other companies also have this obligation if two of the following three assumptions occur in consecutive years:
- sales volume exceeding € 3.000.000;
- balance sheet value exceeding € 1.500.000;
- have more than 50 employees.