How to Open a Company in Portugal - The Ultimate Guide

September 29th, 2020
This is the ultimate guide on how to open a company in Portugal, while also hiring your high performance software development team for your project.

##Here's a quick index for this informational guide:

1. Why open a company in Portugal? 🇵🇹

2. Main steps to setting-up a business in Portugal 🧠

3. Setting-up your business in Portugal 🤝

4. What to expect when hiring Portuguese tech talent 🔍

##1. Why open a company in Portugal?

Your first question is probably “Well, why a business in Portugal?”. The answer is that the best of both worlds is right here:

Your CFO-friendly dream a team studied at engineering universities linked to MIT, works on a UK timezone, is involved in a booming startup ecosystem and has incredible quality of life at a very competitive cost of living.

Lisbon Portugal Facade

Campo de Santa Clara, Lisbon, Portugal. By @isabelarachide

There are over 600 software companies in Portugal, and that list is growing. There’s a whole "list of support documentation" on relocation, innovation, foreign direct investment, startup visas and venture capitals you can go through.

🎓 Portuguese tech talent is highly requested since most of them studied at renowned universities linked with MIT. Notable local faculties include FCT-UNL, IST and ISCTE, in Lisbon; with strong tech culture in cities like Porto, Braga, Aveiro, and Faro too, as well as plenty of tech and programming boot camps - all educating hundreds of junior engineers and developers every year. These juniors then have incredible contact with a bubbling tech ecosystem where they gain experience and become high performing professionals.

☀️ Portugal offers such an amazing quality of life at a competitive cost of living while operating on a UK time zone. Besides retaining most of its local talent, it also attracts a lot of digital nomads and adventurous developers who’d like to settle in a sunny, ocean-rich, foodie country.

Magoito Beach Sintra Portugal

Magoito Beach, Sintra, Portugal. By @jacek.patora

##2. Main steps to setting up a business in Portugal

For this guide we’re assuming you have your business and financial plan set up for open your company in Portugal.

Lisbon Portugal Tram

Príncipe Real, Lisbon, Portugal. By @outsiteworkcafe

Before anything else, here’s the disclaimer you can’t skip:

Setting up your company in Portugal can’t be done without first consulting a certified accountant and lawyer to make sure all the necessary registrations and permits are covered.

A certified accountant will be registered at the OCC. Your chosen accountant doesn’t need to be present at your appointments, but has to be identified with his OCC number.

You’ll need a tax representative to arrange your personal tax number prior to any of the business set up processes we’re suggesting. In case your company is foreign you’ll also need to request a Portuguese tax number for your business.

The values presented below are calculated based on the constitution of a limited liability company (if your intention is to open a branch, there may be variations regarding the process and values).

Nevertheless, the values indicated in this guide may always vary according to your partners, business volume and area, number of employees or other criteria.

Generally speaking, these are the 5 main steps for opening a business in Portugal:

  1. Prepare Documentation: collect the Articles of Association with information about the owners, the activities, general rules, business address, etc;
  2. Choose your name: make sure the business name is available (a name verification can be done at the Portuguese Trade Register);
  3. Licensing: research whether you’ll need to apply for special licenses and permits;
  4. Taxing: The registration for tax purposes is required;
  5. Hiring: after recruiting and hiring your employees, make sure you pay the social contributions.

##3. Setting up your business in Portugal

Let’s start with a quick ramp up on business structure. A LDA (the Portuguese equivalent to limited liability company, LLC) is probably the most popular business structure in Portugal for entrepreneurs looking for a quick and practical start.

Web Summit, Lisbon, Portugal

Web Summit, Lisbon, Portugal. By @websummit

Essentially there are two ways to set-up your company in Portugal. You can choose to open your business in person at one of the “Empresa na Hora” desk services or online with “Empresa Online”. Here’s what you’ll need:

🛎 For the “Empresa na Hora” desk service:

Empresa na Hora is the fastest option. Your company will be immediately available in Portugal. You’ll have to book your appointment, collect all the information you need and then start your journey to success with your new business. Before the appointment, you’ll need to start by collecting all your paperwork and information, including:

  • Personal identification card or passport of the legal representatives;

- **Legal persons identification card** or e-card access code;
- **Updated documentation from the Commercial Registry** about the incorporation of the company in its origin country;
- The **Minutes of the General Meeting** identifying legal representatives;
- **Identification of the person who is granted power to sign** the incorporation of the new company;
- The **Memorandum and Articles of Associatio**n in its origin country.

_The translation and authentication of these documents might be requested, which might have an added cost of anywhere between 15€ and 40€ per page._

Then book your appointment at one of the Empresa na Hora desks, during which you’ll choose your company name (there’s a pre-approved list, but you can also choose your own, which will cost 75€ for a request that can take up to 15 days; or 150€ for a 48h urgent request) and type of company.

At this service you can register three different types of companies:

  • Private Limited Liability Company;

- **Sole Quotaholder Private Limited Company** (Sole Proprietorship);
- **Public Limited Company**.
_This service it does not allow registration of European Companies (SE)._

To start your company, you’ll have to choose a certified accountant. If you don't have a certified accountant when registering your company at "Empresa na Hora", you can choose one from the OCC listing that will charge a maximum of 50€ plus tax to submit the Declaration of Start of Activity to the Portuguese fiscal authorities. The fees for any further services should be agreed with the certified accountant you chose.

During the appointment, you’ll have to state your company‘s registered head office, object, share capital amount, identify the manager and how to bind the company (signature). You’ll be appointed a Tax Identification Number (TIN, or NIF, in Portuguese); you’ll sign the Memorandum and Articles and the registry and partnership agreement will be published online. You’ll also receive an access code to your company’s e-card and a 3-month access code to the commercial registry’s permanent certificate. This service will cost 360€ and can be paid by cash or debit card.

Remember that: All members of the future company have to go to the Empresa na Hora desk to start the incorporation process. If they can't all be present, they have to sign a procuration form that gives powers to a third party.

After registering your company (hurray! 🎉) there’s still a couple of steps for you to complete:

  • Deposit the share capital in a Portuguese credit institution within the set timeframe;

- Submit the **Declaration of Start of Activity** to the fiscal authorities (Finanças) within 15 days (this declaration is submitted directly by the certified accountant);
- Register the company with **Social Security** within 30 days;
- Register the **beneficial owner** at the RCBE registry within 30 days (you can ask for help at the Empresa na Hora desk for this during your appointment).

🌐 For the “Empresa Online” digital service:

Empresa Online is an online commercial register service, so obviously, you won’t need to go to any office to set up your company in Portugal. First and foremost, to use this digital service all partners should have a citizen's card (with an active digital signature), otherwise, it can be done by lawyers, notaries or solicitors who have their profession's digital certificate. At this service you can register three different types of commercial and non-commercial companies in the form of:

  • Private Limited Liability Company;

- **Sole Quotaholder Private Limited Company** (Sole Proprietorship);
- **Public Limited Company**.

The cost of setting up a company using this service varies depending on the type of company pact you chose:
- 220€ - for a pre-approved company pact model
- 360€ - for a company pact designed by the partners

To pay for this service, you can use a credit card, go to an ATM or use your online banking service. Take into account that if your company has a brand associated with a class of products or services, you should pay an additional 100€. Each additional class will cost around 44€.

Once you’ve read all the information about using the Empresa Online services, this is what you’ll need to do:

  1. Access the Portal da Empresa service page;

2. Identify and authenticate yourself with your citizen card’s digital signature, or with your profession’s digital certificate;
3. Follow the service’s instructions (these might be updated from time to time).

On this page you can also register your brand, request a company name, proceed a number of commercial registrations (such as contract updates, share capital changes, or fusions). This is also where you can request your company’s e-card and commercial registry’s permanent certificate. You can also read more about investing in Portugal’s business ecosystem here.

Congratulations on your brand new company! 🥂

💰 Once you have all the paperwork set up, you should start looking into an AT certified invoicing software that helps you stay on top of your invoicing and focus all your attention on your core business. We highly recommend InvoiceXpress.

##4. What to expect when hiring Portuguese tech talent

If you’ve reached here, it means you’ve completed steps 1 through 4 and are now ready to start hiring your dream tech team. First and foremost you should make sure you have the right IT recruitment partner by your side. Then, double check for cultural Professional IT Services terms, to make sure you and your recruitment partner are sharing the same vocabulary. Then, you’re ready to start sketching out an idea of what you’d like your team to look like. Think tech stack, roles, experience and location. Maybe try our tech team simulator, a visual tool to help you understand what sort of investment you could expect for the tech team you’re dreaming up. If you’re wondering about salary cost structure, you can expect to pay a 23,75% Social Security tax, plus a work accident insurance for about 13€/month per employee.

Second Home Lisbon Portugal

Second Home, Lisbon, Portugal. By @secondhome_io

🎮 Portuguese tech talent is used to having a couple of benefits such as health insurance, expenses and meal allowance. Holidays period lasts for 22 days that can be distributed in weeks or single days. Popular office perks include leisure corners for gaming, ping-pong or foosball, coffee and fruit or even a light office breakfast. If you need help setting up your office in Portugal, KWAN can help you find a prime location for your offices or co-work in one of the tech neighbourhoods, for example. We can also host your remote team at our Lisbon or Porto offices.

💻 Considering office and coworking rentals, despite Lisbon’s booming home rental market (thanks, Airbnb!), the city centre is still quite affordable when compared to other European cities.

For office rental costs, here’s an estimate (plus 23% tax):

  • Lisbon – Center = 21 € to 23€/m2;

- Lisbon – Outskirts = 13€ to 20€/m2;
- Porto – Center = 10€ to 21€/m2;
- Porto – Outskirts = 8€ to 15€/m2.

For **coworking rental**, you could be looking at these figures (plus 23% tax):
- Lisbon = 200€ to 400€/Month/Person;
- Porto = 162€ to 270€/Month/Person.

💸 For accountancy services, you can also expect a 23% tax both for payroll and accounting.

Payroll services will vary according to the number of employees:

  • Up to 10 employees: 150€ to 250€;

- From 10 to 50 employees: 250€ to 850€.

**Accounting services** will vary according to business volume, documentation volume, and type of activity, here’s what to expect:
- Business set up and beginning: 350€ to 1.000€;
- Up to 1M of business volume: 450€/month;
- Between 1M and 3M of business volume: 750€/month.

Keep in mind that these values may change substantially from provider to provider, since each accountancy company may use different criteria for their pricing. Your partner will analyse how much work is necessary and how long this will take for their budget. We would also advise you to have a lawyer monitor this entire process to monitor any legal issue that may escape the tax sphere and that is not guaranteed by the Certified Accountant.

💪 If you’re setting up your company in Portugal and want to focus on your core business, our team of KWAN Ambassadors can help scout, recruit, hire and care for your tech team on a IT Staff Outsourcing model, or even on an RPO model.

👀 If you’re still struggling to understand all the bureaucracy, many Portuguese municipalities also have their own startup hubs to help kick off new company ideas and aid with all the paperwork necessary to start a new business. Look up initiatives such as StartUp Portugal, where you can find even more information to help you set up your operation in Portugal; the Startup Guide to launch a company in Lisbon.

If you need help opening your tech company in Portugal, or scouting and hiring your tech team in order to focus on your core business area, KWAN will be your ideal partner.

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