TransferGo is a strong supporter of entrepreneurs. One of our major initiatives is providing entrepreneurs with information to help them start and run a business. Part of that initiative is our ongoing series of Business Abroad articles, which are designed to give a quick overview of how to start or expand a business in different countries.
In this installment we look at doing business in Portugal.
Types of Businesses in Portugal
Portugal has a fairly standard system of classifying a business. The most common types are:
- Individual Company or Sole Proprietorship.
- Single Shareholder Limited Liability Company – This type of sole proprietorship offers a degree of protection for the business owner’s personal assets.
- Individual Limited Liability Establishment – This business structure requires a capital investment of € 5,000, and at least two thirds (€ 3,333.33) must be paid up and the remainder in kind liable to pledge.
- Public Limited Company – Generally public limited companies have at least five shareholders. The minimum capital requirement for a Public Limited Company is €50,000.
- Private Limited Liability Company – This is a very common business structure in Portugal.
Partnership Company – A partnership must have a minimum of two shareholders. A partnership company does not provide protection for personal assets.
- Limited Partnership Company – In a limited partnership at least one member has unlimited personal liability for the partnerships liability while the other partners’ liability is limited to the percentage of their contribution. A minimum of five limited partners and a general partner is required.
Portugal offers a number of services to expedite starting a business. One of the most common ways to register a business is at an On the Spot Firm Office.
As is the case, whenever one is starting a business in another country obtaining the services of a local business or tax consultant is advisable.
Over the past few years Portugal has made changes in their tax laws that are designed to make starting and operating a business easier. The taxes levied are fairly typical of EU member nations:
- Social security contributions.
- Corporate income tax.
- Municipal business tax.
- Interest tax.
- Property tax.
- Vehicle tax.
- Value added tax (VAT).
- Fuel tax.
- Check transaction tax.
Opening a Business Bank Account
The Portuguese banking system is considered to be state-of-the art and consists of a large network of both international and local banks. The main banks are Atlantico, Banco BPI, Banco Espirito Santo, Banif, Barclays and Caixa Geral de Depósitos. Many of the banks offer online and telephone banking services.
Opening an account is best done at a local office and can take a fair amount of time due as some banks seem to have a considerable number of forms to be completed.
To open an account it is generally necessary to have the following documentation:
- Passport or Identity Card.
- Tax Number and card.
- Residency Card.
- Proof of Residence.
- Business registration documents and forms.
- VAT Registration certificate.
Requirements vary from bank to bank, so enquiring as to each bank’s particular requirements will save time.
Bank fees vary based on the type of account and the particular services offered. Comparing the various types of accounts and fees is advisable.
International transfer fees tend to be high. TransferGo offers low-cost, fixed rate transfers for companies making purchases from international businesses and receiving payments from customers outside of Portugal.
Obtaining business credit, especially for a non-resident is difficult and interest rates may be quite high. It is advisable to retain the services of a business financial advisor to seek investments from private lenders and to research various grants and incentives offered by the Portuguese government.