If you’re considering starting a business in Portugal or becoming self-employed as a foreign resident, you’ll need to understand what types of registered company you can set up and what the process is for becoming a self-employed entrepreneur.
Despite the much talked about start-up scene in Lisbon, the level of entrepreneurship in Portugal is still quite low compared to other European countries. Most businesses are small and self-employed, which limits the amount of money you can hope to make. This means in order to set up in business, you must produce a robust, confident business plan, especially if you’re hoping to secure start-up capital from a lender.
As a foreign resident wishing to set up a business, you’ll need to follow these steps:
Check that you are allowed to legally set up a business in Portugal
In order to trade as a self-employed foreigner in Portugal, you need a Portuguese residency card and a tax number from the Portuguese Tax Office ( Portuguese Tax Office) . You will also need a social security number from the Portuguese Social Security Office ( Portuguese Social Security ).
Check you have a viable business idea
You will need to do detailed, comprehensive market research to check if you have a viable business idea and also to develop a robust business plan that should map out the first three years of your future business in terms of profit & loss and expected cash flow. If you live in the UK, various banks allow you to download business plan templates, such as Lloyds Bank and Barclays for example, and you should also look at sample business plans from various related industries. There are websites like this one , which allow you to compare.
Make a decision about the legal structure of your future business
Portugal allows you to set up in several different types of business. First you need to decide on a name and find a business address, as you’ll need to register them as part of your set-up process.
There are three methods of setting up a Portuguese company, two of which are simplified, immediate and possible to do online, and one that is the traditional way.
Setting up online (Empresa Online) – this allows certain types of businesses to be set up in Portugal and registered over the Internet with one to two days for a cost of EUR 360.00 (price as per 2017). An electronic certificate is required. You can find the Portal de Empresa website for doing here .
Setting up on-the-spot (Empresa de Hora) – sole traders and limited companies can be created in an hour for EUR 360.00 (price as of 2017) via this Portuguese government scheme. All partners should be present along with all necessary documentation and any legal representatives. How to set up using Empresa de Hora can be found here .
If you are unable or unwilling to start up your Portuguese business using these two methods, you can set up using the traditional way (Criacao da Empresa) by following these steps:
Obtain a Certificate of Admissibility to formally identify your Portuguese company name. You can do this via the Institute of Registries and Notaries (IRN);
You need to apply for a Company Card and a Collective Card (the main business ID) from the IRN;
You must open a business bank account and deposit the initial capital;
You must declare commencement of activity at the local Tax Office ;
And register your Portuguese business at a Commercial Registry Office;
Register as an employer at the local Social Security office.
It should take no more than ca.15 days to complete all these steps, and then you can start running your Portuguese business. However, you should check if your particular business activity requires you to fulfil any additional requirements, such as obtaining a licence or certain professional qualifications. It is illegal for some types of business to start activity in Portugal, before having been granted an official status.
Business Types permitted in Portugal
Legal structures for businesses in Portugal range from individual sole traders to large incorporated companies with many employees. The Portuguese Companies Code regulates businesses in the country and defines the different legal forms. Here’s a brief summary:
Businesses owned by one individual
Sole Trader – see section below on freelancers and self-employed for details
Single-Member Limited Company – see below section for details
Individual Limited Liability Establishment – see below section for details
Businesses owned by more than one person
Private Limited Company (Sociedade por Quotas)
This legal set-up describes a Portuguese company with a minimum of two partners and minimum capital investment of EUR 5000.00. Shareholders pay a minimum of EUR 100.00 per share and are jointly responsible for everything agreed in the Articles of Association, which are listed at the time of setting up the company. Shareholders are liable for debts up to the amounts covered by business assets.
Public Limited Company (Sociedade Anomina)
This is a Portuguese company that requires at least 5 shareholders and a minimum capital investment of EUR 50,000.00. Liability of debts is limited to business assets and shareholders are liable for amounts up to their share value.
Partnership (Sociedade em Nome Colectivo)
This is a Portuguese company with a minimum of two partners whose liability extends to personal assets that can be used to cover debts.
Limited Liability partnership (Sociedade em Comandita)
This is a Portuguese company with a minimum of two partners, who are a mix of general partners running the business, who have unlimited liability (including personal assets) and sleeping partners, who provide capital and whose liability is limited to the amount invested.
Non-profit organisations run through cooperative principles and mutual assistance of members. They are freely established legal entities whose capital and composition may vary. Portuguese cooperatives are regulated by the Antonio Sergio Cooperative Sector Institute (CASES).
Freelancers and Self-employed Micro Companies in Portugal
Individuals wanting to start up businesses in Portugal on their own can choose from the following:
Freelancers can operate in exactly the same way as Sole Traders (see below). If you’re supplying a trade rather than operating as a business from fixed premises (e.g. working as an artist, writer, hairdresser, mobile dog groomer), you can work as a freelancer in Portugal as long as you have a residence permit, tax number and social security number. As a freelancer you will be responsible for making your own income tax payments and social security contributions.
Sole Trader (Empresario em Nome Individual)
This is a basic form of self-employment where individuals (sole traders) trade as a business, are free to do what they want with profits once taxes have been paid and have unlimited liability for business debts. There is no minimum capital requirement to start up and no requirement for any formal constitution or listing Articles of Association.
Single-Member Limited Company (Sociedade Unipessoal por Quotas)
Only one person will run the business but debt liability is limited to business assets. There must be a minimum capital investment of EUR 5000.00 with this type of business.
Individual Limited Liability Establishment (Estabelecimento Individual de Responsabilidade Limitada)
Similar to the Single-Member Limited Company above, but the initial capital investment of EUR 5000.00 must consist of at least two-thirds cash. Up to a third can consist of collateral that can be used as security.
For more information on self-employment in Portugal please visit the Portuguese Public Services website here .
Business visas and immigration requirements in Portugal
To start a business in Portugal you need to have a Portuguese residence permit (or a Certificate of Registration if an EU/EFTA citizen who has been a Portuguese resident for less than 5 years).
Non-EU/EFTA nationals wanting to come to Portugal to start a business or work as a freelancer will need to obtain a Portuguese work visa and residence permit. Contact your country’s embassy for information on visas and residency permits.
It is also possible to invest a certain amount in Portugal as a Non-EU/EFTA national and potentially qualify for the Golden Visa programme. This is designed to attract foreign investment.
Article by Maria Thermann on behalf of Propertyshowrooms.com
Source:: Property show rooms