How to Start a Company in Portugal? Essential Steps

Wondering how to start a company in Portugal? This article demystifies the process, guiding you through the essential steps to get your business up and running.
Ana Fankhauser
May 29, 2024

Wondering how to start a company in Portugal? This article demystifies the process, guiding you through the essential steps to get your business up and running. Avoid the common pitfalls and learn the straightforward necessities for setting up your company in this entrepreneurial-friendly country.

Key Takeaways

  • Starting a business in Portugal requires understanding of various legal forms, with options such as individual entrepreneur, individual limited liability establishment, and single-member limited company, each having different implications for liability and asset protection.
  • Entrepreneurs must navigate registration, initial financial considerations, and structuring, which includes a minimum capital requirement (which varies with the business type), acquiring a Portuguese tax identification number (NIF), and the registration cost and process.
  • Successful operation of a business in Portugal involves acquiring necessary licenses and permits, adhering to specific laws for online businesses, registering with social services, ensuring proper insurance coverages, and understanding the incentives and benefits available for businesses, especially for startups.

Navigating the Portuguese Business Environment

Portuguese Business Environment

Portugal’s dynamic business environment is characterized by:

  • Strategic geographical location
  • Favorable economic indicators
  • Membership in the European Union, which grants businesses access to the EU’s single market

This fosters the free flow of goods, services, capital, and labor, which benefits companies by expanding their customer base and business opportunities.

For potential entrepreneurs eyeing Portugal as their business hub, particularly expatriates, it’s essential to consider several factors before taking the leap. These include:

  • The type of business
  • The country’s supportive entrepreneurial initiatives
  • The necessity of appropriate documentation and visas to legally reside and operate a business in Portugal

Let’s delve deeper into the core perspectives of the Portuguese business environment.

Understanding Legal Forms and Structures

The first step towards establishing your business in Portugal is understanding the country’s legal forms and structures. Portugal offers a range of business structures regulated by the Portuguese Companies Code, including:

  • Freelancers
  • Sole traders
  • Limited liability companies
  • Public limited companies
  • Partnerships

Some business structures to consider are:

  • Individual Entrepreneur: does not separate personal and business assets and comes with unlimited liability
  • Individual Limited Liability Establishment: requires a share capital of at least €5,000 and offers separation between personal and business assets
  • Single Member Limited Company: requires a minimum share capital of €5,000 and keeps personal assets shielded from business risks.

The choice of legal form also depends on whether you intend to run the business alone or as a partnership.

Tackling the Registration Process

After choosing the legal form for your business, the next step is tackling the registration process. The first step in establishing a company in Portugal is obtaining a Portuguese tax identification number (NIF), even if you’re not a tax resident. The registration process, which takes about one hour and costs around €360, can be done in person or online.

It’s essential to have your identification card, passport, or residence permit ready during the registration process. When registering with the Portuguese tax office, also known as the Portuguese tax authority, you’ll need to provide information such as the start date, services provided, and projected annual income to pay taxes accordingly.

Initial Financial Considerations

Setting up a business in Portugal comes with initial financial considerations. The minimum investment varies by company type.

  • For Private Limited Liability and Single-Member Limited Companies, it is €5,000
  • For Public Limited Liability Companies, it’s €50,000
  • Partnerships, limited liability partnerships, cooperatives, and sole traders do not need to have any minimum capital

This flexibility allows businesses to start and operate with varying levels of resources.

To open a business bank account for a company in Portugal, an initial capital of €100–150 is required. Furthermore, the standard corporate income tax rate in Portugal is 21 percent, with a reduced rate of 17 percent available for small and medium-sized companies. Companies based in Madeira benefit from a significantly lower corporate tax rate of 5 percent compared to the mainland rate.

Structuring Your Business in Portugal

Structuring Your Business in Portugal

Structuring your business effectively in Portugal involves:

  • Deciding on the right company type
  • Ensuring the protection of your personal assets
  • Working with an accountant to assist with setting up a bank account and registering the business with tax authorities in Portugal.

Portugal has made the setup process simpler by offering online registration via the Portuguese government’s website. Let’s delve deeper into the factors that contribute to structuring your business in Portugal.

Deciding on Company Type

Choosing the right company type is a key decision in structuring your business. Some options include:

  • Private limited company: requires a minimum capital of at least €1
  • Limited partnership: demands a significantly higher minimum authorized capital of €50,000
  • Public limited company: also requires a minimum authorized capital of €50,000

Consider your specific needs and requirements when deciding on the best company type for your business.

Private limited companies are popular in Portugal due to the ease of establishment and the protection they offer for personal assets against business liabilities. Establishing a Private Limited Company in Portugal requires a minimum of two partners and a minimum investment of €5,000. On the other hand, general partnerships do not have a minimum share capital requirement, but partners hold unlimited liability for the company’s obligations.

The Importance of Protecting Personal Assets

Protecting personal assets is a crucial consideration when starting a company in Portugal. A Limited Liability Company (LDA) or Single-Member Private Limited Company (Unipessoal LDA) provides protection for personal assets by separating them from business liabilities. This protection is an important factor to consider when choosing the type of business to start and can have significant implications for your financial risk and liability.

Launching Operations: Practical Steps to Get Started

Launching Operations: Practical Steps to Get Started

Once your business is structured and registered, the next step is to launch your operations in Portugal. This involves acquiring necessary licenses and permits, setting up a registered office address, and hiring an accountant. The Business Development E-platform (BDE) offers a streamlined and efficient digital platform for the submission of company set-up applications, reducing bureaucratic hurdles and expediting the licensing process.

In addition, e-residence provides online services that help with administration related to:

  • tax numbers
  • bank account creation
  • social security
  • company formation
  • apostille services

All accessible remotely for entrepreneurs starting their business in Portugal. Now, let’s delve deeper into the practical steps involved in launching your operations.

Acquiring the Necessary Licenses and Permits

Acquiring necessary licenses and permits is a critical step in launching your business operations in Portugal. The Directorate-General for Economic Activities (DGAE) is the central authority responsible for overseeing business activities in Portugal and is key in granting licenses and permits necessary for business operations.

Starting an online business in Portugal requires compliance with national laws, including:

  • Price Law
  • Consumer Law
  • Data Protection Law
  • Copyright Law
  • Publicity Law
  • E-commerce Law

Entrepreneurs must submit an application to the DGAE using the Balco do Empreendedor platform to acquire the correct licenses and permits for specific business operations in Portugal.

Certain business activities, such as construction, retail, and restaurants, necessitate specific licenses and permits, including:

  • a construction license
  • a retail license
  • an alcohol license
  • adherence to health and safety regulations.

Setting Up for Success

Setting up your business for success involves several key steps. When hiring employees in Portugal, you need to:

  1. Register your business with the social security office.
  2. Notify the social security office of new hires.
  3. Pay social security contributions, which consist of around 11 percent from employees and roughly 23.75 percent from employers.
  4. Pay the contributions between the 10th and 20th of the month following the month of salary payment.

Businesses in Portugal are also required to have a range of insurance, including:

  • Public liability
  • Employer’s liability
  • Professional indemnity
  • Product liability
  • Commercial property insurance
  • Workplace accident insurance

This step is critical in protecting your business from potential liabilities and risks.

Financing Your Portuguese Venture

Financing Your Portuguese Venture

Financing your venture is a key step in the process of starting a business in Portugal. New businesses can apply for financial support through programs like Investe Jovem and can access services from Startup Lisboa such as mentoring, networking, investment, and office space. The Institute for Employment and Vocational Training (IEFP), along with Startup Lisboa, are pivotal in managing financial support programs geared towards entrepreneurial ventures in Portugal.

The Startup Portugal+ Programme aims to bolster corporate and entrepreneurial innovation, serve as a liaison between the government and entrepreneurs, and attract foreign entrepreneurial talent, founders, and investors. Businesses in Portugal profit from a favorable investment climate that includes access to EU markets, a strategic location, and support for innovation. Targeted incentives, such as the SI Productive incentive for creating new goods and services, are also available. Let’s delve deeper into the financing options available.

Exploring Government Support and Tax Benefits

Portugal offers initiatives designed to substantially support the growth and development of startups and enterprises, including the SME Qualification and Internationalism assistance program. Businesses operating in Portugal are required to pay corporate income tax (IRC), VAT (IVA), and customs duties, with certain tax benefits potentially available for new businesses.

Tourismo de Portugal, supported by the Portuguese government, promotes the growth of tourism-related ventures, contributing to the enrichment of Portugal’s broader economy, including the tourism industry, through mutual guarantee companies. These government supports and tax benefits can significantly ease the financial burden when starting a business in Portugal.

Accessing Financial Aid and Incentives

Accessing financial aid and incentives can be a game-changer for your business. The Portugal Golden Visa Program allows investors, which can include entrepreneurs aiming to start a business, to obtain residence permits by investing in the Portuguese economy. Within the Golden Visa framework, there are seven investment options, two of which specifically cater to those looking to establish a business in Portugal.

Moreover, entrepreneurs in Portugal can access hiring incentives provided by the Instituto do Emprego e Formaço Profissional, which includes free recruitment services and financial incentives for hiring. These aids and incentives can provide a much-needed boost to your venture.

Corporate Responsibility and Ethics in Practice

Corporate Responsibility and Ethics in Practice

In today’s business landscape, corporate social responsibility (CSR) and ethical business practices play a significant role. They have been gaining traction among companies in Portugal, becoming significantly relevant in its business landscape. Adopting standards for corporate social responsibility can increase brand recognition and gain a competitive advantage in the market.

The Portuguese market considers CSR and ethical business practices as growing concerns, with organizations such as the RSO and APEE actively promoting them. Embracing CSR and practicing ethical conduct can enhance a company’s reputation and contribute positively to society’s well-being. In fact, the Cambridge Sustainable Development Report highlights the importance of these integral aspects of running a business. Let’s delve deeper into these crucial elements.

Embracing Corporate Social Responsibility

Corporate Social Responsibility (CSR) involves companies playing a responsible role in society beyond profit-making. This includes voluntary contributions to environmental protection, social equity, and economic development. Engaging in CSR can improve relations with the community by directly contributing to social welfare, which demonstrates the company’s commitment to the well-being of its environment and stakeholders.

CSR practices, such as supporting local charities or engaging in sustainable practices, enhance the public perception of a company, foster loyalty, and potentially lead to a stronger customer base. Embracing CSR is not only beneficial for the community and environment but can also lead to a significant increase in your company’s brand value and customer loyalty.

Ethical Conduct in Business

Ethical conduct in business is another significant aspect of corporate responsibility. Organizations in Portugal have seen an increase in awareness of ethics programs among employees, yet still face challenges, with a relatively high percentage of employees not familiar with the main components of such programs. Portuguese workers frequently feel compelled to act against their company’s ethical standards, with the main pressures arising from following managerial orders and dealing with unrealistic deadlines.

Employees in Portugal are notably strict in condemning questionable ethical practices at work, with a high rate of acknowledgment of abuse of authority as a form of misconduct. However, compared to the global average, fewer Portuguese employees are inclined to report misconduct, with concerns about job security and doubts about effective resolution being the primary deterrents. Navigating these ethical challenges and maintaining a strong ethical code is crucial for the success and reputation of your business.

Building International Connections

Building international connections is an integral part of expanding your business in Portugal. This involves forging partnerships and networks and navigating foreign investment projects. AICEP, Portugal’s Trade & Investment Agency, plays a pivotal role in selecting and nurturing initiatives that bring substantial value to the local economy and attract foreign capital, which is highly beneficial for foreign entrepreneurs looking to establish a presence in Portugal.

Building these connections can help your business reach new markets, attract investment, and gain a competitive edge. Now, let’s explore how to forge these partnerships and navigate foreign investment projects.

Forging Partnerships and Networks

Forging partnerships and networks can help your business expand its reach and access new markets. Lisbon, known as Europe’s Silicon Valley, is a prime spot for startups due to its dynamic tech scene, extensive events like the Web Summit, and a high number of STEM graduates.

Startup Portugal, established by the government, aims to bolster entrepreneurship through structural support, funding, and internationalization. Portugal’s strategic geographic location, coupled with its tech talent, community, and infrastructure, offers a valuable opportunity for startups seeking expansion into Europe.

Navigating Foreign Investment Projects

Navigating foreign investment projects involves understanding the regulatory landscape and working with organizations like AICEP to oversee and support foreign investment initiatives in Portugal. Foreign companies can establish a branch or subsidiary in Portugal, providing a gateway for foreign investment and expansion into the Portuguese market.

Utilizing these channels for foreign investment can significantly enhance your business’s growth and success in Portugal. Some of the benefits include:

  • Access to a larger customer base
  • Increased brand visibility and recognition
  • Opportunities for collaboration and partnerships
  • Enhanced market presence and credibility

Leveraging these opportunities can lead to fruitful collaborations and partnerships, further solidifying your company’s presence in the Portuguese market.


As we conclude this comprehensive guide to starting a business in Portugal, it’s clear that the country offers a vibrant business environment with numerous opportunities for entrepreneurs. From understanding the legal forms and structures to navigating the registration process to financing your venture, each step of the process has been simplified for your understanding.

Starting a business in Portugal is not just about navigating the steps involved but also about embracing corporate social responsibility and ethical conduct, building international connections, and continuously striving for growth and success. Embarking on this entrepreneurial journey in Portugal is indeed a promising and exciting endeavor. Now, it’s your turn to make your mark in the Portuguese business landscape.

Frequently Asked Questions

What are the different legal forms for businesses in Portugal?

In Portugal, the different legal forms for businesses include freelancers, sole traders, individual entrepreneurs, individual limited liability establishments, and single-member limited companies. Choose the structure that best suits your business needs.

What are the initial financial considerations for starting a business in Portugal?

When starting a business in Portugal, consider the minimum investment required for different company types, ranging from €5,000 to €50,000, and an initial capital of €100–150 for opening a business bank account. This information can guide your financial planning.

What are the steps involved in registering a business in Portugal?

To register a business in Portugal, start by obtaining a Portuguese tax identification number (NIF), which can be done in person or online within about an hour.

What is the role of corporate social responsibility in Portuguese businesses?

Corporate social responsibility in Portuguese businesses plays a significant role in enhancing companies' reputation and contributing positively to society's well-being. It involves taking a responsible role in society beyond profit-making.

How can businesses in Portugal build international connections?

Businesses in Portugal can build international connections by forging partnerships, networks, and navigating foreign investment projects with the support of organizations like AICEP. This is essential for expanding their global reach and opportunities.

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Ana Fankhauser
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