Investor's Guide – How to set up a company - Foreign Investment

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Investor's Guide

 

 

How to set up a company

  

1. Overview

  

There are no restrictions in Portugal as to foreign investment. Portuguese law is based on a principle of non-discrimination based on the investor’s nationality. There are no requirements as to a mandatory Portuguese shareholder and no limitations on the repatriation of profits or dividends.

 

The rules that will apply to a foreign investor are the same that rule the national investment and the foreign investment is not subject to any special registration or notification to any authority (without prejudice of mandatory registration obligations or compliance with regulatory obligations in specific activities).

 

Notwithstanding the above, the shareholders that are not resident in Portugal must obtain a Portuguese taxpayer number for tax purposes. For EU residents, this taxpayer number may be obtained directly with the tax administration (in presence or by means of an appointed proxy); as to non-EU residents the same must appoint a Portuguese tax resident representative to handle matters with the tax authorities.

 

Portuguese law offers several different investment possibilities both for individual and shared investments. The investment may assume the following types: 

 

Individual Investment Structures

Structure

Type of investor

Main characteristics

Individual Sole Trader

Personal Investor

• Individual business, no legal entity is incorporated

• Unlimited liability

• No share capital required

• No articles of association

• Commercial name required (personal name of investor may be used)

Individual Limited Liability Establishment

Personal Investor

• Individual business, no legal entity is incorporated

• Liability is limited to the assets autonomously brought to the business

• Share capital required (minimum € 5,000)

• No articles of association

• Commercial name required: personal name of investor + reference to activity (not required) + EIRL, which stands for the Portuguese initials of this business structure (required)

Sole Shareholder Private Limited Liability Company

Personal Investor or Corporation

• Company: business through a corporation (incorporation required)

• Limited liability

• Share capital required (minimum € 1)

• Articles of association required

• Commercial name required: choice of name + reference to scope of activity + Unipessoal (which stands for “sole shareholder”) + Lda. (which stands for “Private Limited Liability Company”)

Public Limited Liability Company
with a sole shareholder

Corporation

• Company: business through a corporation (incorporation required)

• Limited liability

• Share capital required (minimum € 50,000)

• Articles of association required

• Commercial name required: choice of name + reference to scope of activity + S.A. (which stands for Public Limited Liability Company)

Branch

Corporation

• Individual business through a local representation (no legal entity incorporated, branch subject to mandatory registration)

• Liability in accordance with the investor’s legal statute

• Share capital not required

• Articles of association are those of the investor

• Commercial name is that the investor + Sucursal or Sucursal em Portugal (which stands for “branch” or “branch in Portugal”)

 

Shared Investment Structures

Structure

Type of investors

Main characteristics

Private Limited Liability Company

Personal investors or Corporations

• Company: business through a corporation (incorporation required)

• Limited liability

• 2 shareholders minimum

• Share capital required (minimum € 2), only capital contributions allowed (in cash or in kind)

• Articles of association required

• Commercial name required: choice of name + reference to scope of activity + Lda. (which stands for “Private Limited Liability Company”)

Public Limited Liability Company

Personal investors or Corporations

• Company: business through a corporation (incorporation required)

• Limited liability

• 5 shareholders minimum

• Share capital required (minimum € 50,000), only capital contributions allowed (in cash or in kind)

• Articles of association required

• Commercial name required: choice of name + reference to scope of activity + S.A. (which stands for “Public Limited Liability Company”)

European Company

Corporations

• Company: business through a corporation (incorporation required)

• Limited liability

• Minimum 2 founders/shareholders

• Share capital required (minimum € 120,000)

• Articles of association required

• Commercial name required: choice of name + reference to scope of activity + SE (which stands for “European Company”)

• Observation: European Companies requires their shareholders to be linked to more than one EU State

Joint Venture

Corporations

• No legal entity created; the Joint Venture is incorporated through the execution of an agreement by the participating entities

• Unlimited liability

• No share capital required

• Joint venture agreement required

• Commercial name not required

Enterprise Grouping

Corporations

• Business through a grouping (incorporation required)

• Unlimited liability

• No share capital required

• Articles of association required

• Commercial name required: commercial name + ACE (which stands for Enterprise Grouping)

Holding Companies

Personal investor(s) or
Corporation(s)

• Sub-type of company: holding companies are used to hold participations through a corporation (incorporation required)

• Limited liability: holding companies shall assume the form of limited liability company by quotas or by shares

• Share capital required (minimum €1 or €50,000 depending on the type of company adopted)

• Articles of association required

• Commercial name required: choice of name + SGPS (which stands for “participations’ management company” + Lda. or S.A. (depending on the type of company adopted)

 

Portuguese law also sets forth the incorporation of Unlimited Liability General Partnership and of Unlimited Liability Limited Partnerships. These two additional shared investment structures are characterized by the unlimited liability of at least one shareholder and, consequently, are virtually extinct.

 

 

 

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