Company Formation Portugal
Updated on Monday 02nd August 2021
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BridgeWest provides company formation services in Portugal. Our assistance includes the service mentioned in the list below, but you can also address to our consultants for offshore company formation; we can represent foreign investors in numerous legal matters, including in the following:
- drawing up the articles of association that can be signed through power of attorney (Portuguese laws require power of attorney for any public notary proceedings);
- drawing up documents for company incorporation in Portugal - specimen signatures, identification papers copies, application form required by the Portuguese Company Registration Office;
- arranging public notary proceedings (all procedures for company incorporation are done in front of a Portuguese public notary);
- providing a registered office in Portugal on demand - the registered office serves as the headquarters for the company in Portugal and it will be made public;
- setting up a bank account for the company in Portugal - BridgeWest will help in setting up the share capital bank account, as well as a current bank account once the company is incorporated;
- recommending a Portuguese accountant, as accounting services are needed for new businesses in Portugal.
The most common types of companies in Portugal
The Portuguese public company (Sociedade Anónima SA) – the Portuguese public company is required to have at least five shareholders who can be natural persons or legal entities. The shareholders of a public company in Portugal are held liable for the company’s debts and obligations to the extent of their share contributions. The minimum share capital for a Portuguese public company is EUR 50,000.
The Portuguese private limited company (Sociedade por Quotas - LDA) – the Portuguese private limited company is the most common type of company because it requires at least two shareholders who can be individuals or a legal entity and a director. The minimum share capital for a private limited company in Portugal used to be EUR 5,000; however, under the latest regulations of the law, the capital requirement was reduced to only EUR 1.
In a private limited company, the shares are divided into quotas. Shareholders are held accountable for the company’s obligations and debts to the extent of their share contribution. Our team of consultants in company registration in Portugal can offer more information with regards to the shareholding structure of this company type.
The private limited company is the most common way to start a business not only in Portugal, but also in other European jurisdictions. It can also be referred to as the limited liability company or it can be identified under other names; the same company type can also be available for offshore company setup.
The Portuguese branch, subsidiary or representative office - foreign companies are allowed to set up separate enterprises from the parent company, where the foreign company will be a shareholder in a Portuguese company. Foreign companies can also open extensions of the parent companies in Portugal.
What documents are necessary for company formation in Portugal?
The list of documents that investors should prepare for the registration of a local company are generally the same, but small differences can appear based on the company type. For instance, the public company and the private company are known as corporate entities, that have their own legal personality, which is gained when the statutory documents are signed.
In the case of partnership, the statutory documents will be different than the ones necessary for the private or the public company – the partnership is based on a partnership agreement, while the private and the public company are founded based on the articles of association.
Considering that the public and the private companies are the most common ways to open a company in Portugal, we will present in the next section the main provisions that have to be included in the articles of association. For legal advice regarding this document, we invite you to address to our team of specialists in company formation in Portugal:
- the articles of association have to be drawn and signed in front of a public notary in Portugal;
- the document must contain the name of the company and the legal entity under which the business will operate;
- the business sector in which the company will operate and the specific business activities that it will develop here;
- information regarding the company’s shareholders and directors (name, address, nationality);
- information regarding the shareholding structure of the company – how many shares are owned by each investor, how can the company’s shares be transferred, etc.
Taxation in Portugal
The corporate tax in Portugal is 21%. Although the standard tax rate is charged in Portugal is at a rate of 21%, reduced rates are also available. The reduced tax rates apply not only in terms of the goods and services sold by the company, but also on the region where the company is based. Thus, if you want to open a company in Portugal, the following should be of interest for you:
- the standard corporate tax of 21% is charged to businesses located in the mainland Portugal;
- the Autonomous Region of Madeira and the Autonomous Region of Azores charge to local businesses a corporate tax of 14.7%;
- foreign companies operating in Madeira and Azores can also benefit from the corporate tax of 14.7%, and this applies to permanent establishments as well;
- Mainland Portugal charges a reduced corporate income tax rate of 17% to small and medium-sized companies for their first EUR 25,000 chargeable income;
- Small and medium-sized companies in Madeira and Azores benefit of reduced corporate tax of 11.9% for the same EUR 25,000 chargeable income.
Please mind that the corporate tax system applicable in Portugal is created in accordance with the regulations of the European Commission Recommendations 2003/261. The tax legislation in Portugal also regulates the right of local and state tax authorities to charge surtaxes; the rates at which surtaxes are charged here vary based on the income and on the region where the taxable income is created.
The regulations concerning the corporate taxes charged to companies are created in accordance with the national law of each state, as all countries have autonomy in this matter. However, all EU member states can create their own tax systems, but which have to follow specific guidelines and recommendations, in accordance with the EU law.
In other states, the corporate tax may not be charged, as it can be the case of countries where offshore incorporation is possible. Still, even in such states there will be a tax liability of a sort or another, for the company itself, but also for the businessmen setting the respective companies.
Portugal also charges the value added tax (VAT), as a standard rate, and as reduced rates. The standard VAT charged for most of the goods and products traded here is imposed at a rate of 23%; with regards to reduced taxes, there are two rates – of 13% and 6%; our team of consultants in company registration in Portugal can provide more details. Please mind that Portugal charges 0% VAT to the intra-community passenger transportation, as well as for the international transportation of passengers.
The withholding tax on distributed profits in Portugal for dividends, royalties and interests is 25%, unless double taxation treaties are enforced. Companies repatriating profits in countries listed as tax havens are subject to a 35% tax rate. However, the tax rates can vary based on the stipulations of the double tax treaties that were signed by the representatives of the state. BridgeWest is also able to offer ready-made Portuguese companies and VAT registration. Please contact us for more information regarding how to open a company in Portugal and prices.