With investments from global leading companies, such as Google and Mercedes-Benz opening tech and digital hubs in Portugal, to unicorns like Farfetch and Outsystems, multiple government initiatives for start-ups, a highly qualified workforce and Lisbon securing the Web Summit until 2028, Portugal shows its highest growth figures in over a decade.
According to the Bank of Portugal the projections for the Portuguese economy point to the maintenance of an expansion trajectory over the 2019-21 period, although at a slower growth rate than in recent years.
In 2017 the Portuguese economy presented a real growth of 2.7% which represents the highest since the year 2000, and as a result that stood out of the remainder of EU countries by posting figures above the average EU growth of 2.3%. Since then, the economic growth has been decelerating, as expected. Following the growth of 2.1% in 2018, real gross domestic product (GDP) is expected to grow by 1.7% in 2019 and 1.6% in 2020 and 2021.
In the near future the Portuguese economy should continue to benefit from a relatively positive economic and financial framework. Financing conditions will remain broadly favorable for all sectors of the economy and external demand for the Portuguese economy is expected to grow on average slightly below 3%.
Inflation, as measured by the rate of change of the Harmonized Index of Consumer Prices (HICP), is expected to remain contained throughout the horizon, rising from 0.9% in 2019 to 1.3% in 2021.
Investing in Portugal usually requires the incorporation of an entity in the country. There are several investment mechanisms at the disposal of potential investors.
Branches
Branches are entities without legal personality and, therefore, dependent on the parent entity, which does not require the allocation of a certain amount of capital towards their activity in the Portuguese territory. To conduct their activities in Portugal, a branch must be registered under the Company National Registry (“Registo Nacional de Pessoas Coletivas”), as well as under the Commercial Registry.
Companies
Differently from the branches, a company is a legal entity, with all the associated relevant legal effects.The most frequent type of company in Portugal is the limited liability company, which may assume two distinct forms: limited liability by quotas (“sociedade por quotas”) and limited liability by shares (“sociedade anónima”).
Traditional Procedure for Company Incorporation
Incorporating a company in Portugal requires several formalities. The incorporation of a company may, however, be simplified by the “Empresa na hora” procedure or via online company incorporation.
Company Incorporation via “Empresa na hora”
For the purposes of incorporating a company under one of the company types above described, an interested party may resort to a service desk created for this purpose, where the interested party may choose the company name from a list of pre-approved names. A name approved by the Company National Registry may also be chosen. The same applies to the articles of association, as there are several pre-approved models at the disposal of the interested party. The incorporation document will be drafted on the service desk, followed by its registry.
Online Company Incorporation
Alternatively, a company may be incorporated online. Any interested parties must submit all the information and documentation on the website created for this purpose. The interested party may choose a pre-approved company name or a name approved by the Company National Registry. Regarding the articles of association, the interested party may choose from one of the standard models or use a custom version of their choice. The required information for the initiation of activity must be submitted online. If the company should be incorporated with assets for whose transfer the law requires a higher level of formality, the online incorporation service may not be used.
A company’s taxable profit will be taxed at a 21% rate, except in cases where the company is considered, under Portuguese law, as a small or medium-sized company. In these situations, the applicable rate will be 17% to the first €25,000, the rate of 21% is applied to the taxable profit in excess.
In addition, a Municipal Surtax (“Derrama Municipal”) rate may also be applicable, which can vary between 0% and 1.5% on the taxable profit, depending on the municipality where the company's headquarters is located.
Lastly, on the taxable profit exceeding € 1,500,000, a State Surtax (“Derrama Estadual”) is levied, according to the following rates:
Tax losses generated in years beginning on or after January 1, 2017, may be reported for a period of 5 years, subject to limitations.
Tax and financial incentives may be available for new investments.
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