How to set up a company
1. Overview
As a general rule, there are no restrictions in Portugal with respect to foreign investment. Portuguese law follows a principle of non-discrimination based on the investor’s nationality. There are no requirements as to having a Portuguese shareholder and no limitations on the repatriation of profits or dividends.
The rules applicable to foreign investment are similar to those that rule domestic investment. Foreign investment is not, as a general rule, 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, shareholders of a Portuguese company that do not reside in Portugal must obtain a Portuguese taxpayer number for tax purposes. For EU/EEA residents, this taxpayer number may be obtained directly with the tax authorities (in person or by means of an appointed proxy); non-EU/EEA residents must appoint a Portuguese tax resident, who can be either a natural person or a legal entity, as representative to handle matters with the tax authorities.
Portuguese law offers several different investment possibilities both for individual and collective investments. The investment may assume one of the following types:
|
INDIVIDUAL INVESTMENT STRUCTURES |
|
Structure |
Type of investor |
Main characteristics |
|
Sole Trader |
Natural Person |
-- Individual business, no legal entity is incorporated Unlimited liability
-- No share capital required
-- No articles of association
-- A business name is required, which shall be composed of the entrepreneur's name, complete or abbreviated, and a nickname or expression alluding to the activity carried out may be added |
|
Individual Limited Liability Establishment |
Natural Person |
-- Individual business, no legal entity is incorporated
-- Liability is limited to the assets allocated to the business
-- Minimum capital required: €5,000
-- No articles of association
-- Commercial name required: personal name of investor + reference to activity (optional) + EIRL/Estabelecimento Individual de Responsabilidade Limitada (which stands for the Portuguese initials of this investment structure (required)) |
|
Sole Shareholder Limited Liability Company |
Natural Person or Legal Entity |
-- Company: business through a company (incorporation required)
-- Limited liability
-- Minimum share capital: €1
-- Capital contributions allowed in cash or in kind
-- Articles of association required
-- Commercial name required: choice of name + reference to corporate purpose (optional) + Unipessoal (which stands for “sole shareholder”) + Lda./Limitada (which stands for “Private Limited Liability Company”) |
|
Joint-stock Limited Liability Company with a sole shareholder |
Legal Entity |
-- Company: business through a company (incorporation required)
-- The sole shareholder must be a commercial company
-- Limited liability
-- Minimum share capital: €50,000
-- Capital contributions allowed in cash or in kind
-- Articles of association required
-- Commercial name required: choice of name + reference to corporate purpose (optional) + S.A./Sociedade Anónima (which stands for “Joint-stock Limited Liability Company”) |
|
Branch |
Legal Entity |
-- Individual business through a permanent representation in Portugal of a company headquartered abroad (no legal entity is incorporated)
-- Subject to mandatory registration at the Commercial Registry
-- Liability in accordance with the investor’s legal statute
-- No additional share capital contributions are required
-- Articles of association are those of the investor
-- Commercial name is that of the investor + Sucursal or Sucursal em Portugal (which stands for “branch” or “branch in Portugal”) |
|
COLLECTIVE INVESTMENT STRUCTURES |
|
Structure |
Type of investors |
Main characteristics |
|
Limited Liability Company (Sociedade por Quotas) |
Natural Persons or Legal Entities |
-- Company: business through a company (incorporation required)
-- Limited liability
-- 2 shareholders minimum
-- Minimum share capital: €2
-- Capital contributions allowed (in cash or in kind)
-- Articles of association required
-- Commercial name required: choice of name + reference to corporate purpose (optional) + Lda./Limitada (which stands for “Private Limited Liability Company”) |
|
Joint-stock Limited Liability Company (Sociedade Anónima) |
Natural Persons or Legal Entities |
-- Company: business through a company (incorporation required)
-- Limited liability
-- 5 shareholders minimum
-- Minimum share capital: €50,000
-- Capital contributions allowed (in cash or in kind)
-- Articles of association required
-- Commercial name required: choice of name + reference to corporate purpose (optional) + S.A. (which stands for “Joint-stock Limited Liability Company”) |
|
European Company |
Legal Entities |
-- Company: business through a company (incorporation required)
-- Limited liability
-- Minimum 2 founders/shareholders
-- Minimum share capital: €120,000
-- Registered office and central management must be located in the same EU country
-- Articles of association required
-- Commercial name required: choice of name + reference to corporate purpose (optional) + SE/Sociedade Europeia (which stands for “European Company”)
-- Observation: European Companies require their shareholders to be linked to more than one EU State |
|
Consortium |
Natural Persons or Legal Entities |
-- No legal entity created; the Consortium 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 (“EG”) |
Natural Persons or Legal Entities |
-- Business through a group (incorporation required)
-- Unlimited liability
-- Can be incorporated with or without equity
-- Articles of association required
-- It cannot have as its main purpose the obtaining and distribution of profits, but that may be an ancillary purpose as long as expressly authorized by the articles of association
-- Grouped enterprises are jointly and severally liable for the debts of the EG, unless otherwise stipulated in the contract entered into with a specific creditor (subject, however, to the prior execution (excussão prévia) of the EG's assets)
-- Commercial name required: commercial name + ACE/agrupamento complementar de empresas (which stands for Enterprise Grouping) |
|
Holding Companies |
Natural Persons or Legal Entities |
-- Sub-type of company: holding companies are used when the corporate purpose is limited to holding shareholdings in other companies (incorporation required)
-- Limited liability: holding companies shall assume the form of a limited liability company or of a joint-stock limited liability company
-- Share capital required (minimum of €1 or €50,000 depending on the type of company incorporated)
-- Capital contributions allowed (in cash or in kind)
-- Articles of association required
-- Commercial name required: choice of name + reference to corporate purpose (optional) + SGPS (which stands for “shareholdings management company”) + Lda./Limitada (which stands for “Private Limited Liability Company”) or S.A./Sociedade Anónima, (which stands for “joint-stock limited liability company”), depending on the type of company adopted |
Portuguese law also allows for the incorporation of Sociedades em Comandita Simples and Sociedades em Comandita por Ações, as well as Sociedades em Nome Coletivo. The use of these structures is currently very unusual due to their misalignment with the common needs of investors, whether national or foreign.
Content supplied by
