Foreigners and nationals can start a business in Portugal as long as they have the required work permits and minimum capital investment. But many expats do feel that the bureaucratic process can be confusing and having a trusted local to help you navigate the system is an advantage. Here are five things you should know when starting your small business in Portugal.
Business environment in Portugal
According to the World Bank’s Doing Business 2014 report, Portugal figures at number 31.The report evaluated 189 developed countries based on the ease of starting a company, funding it and carrying on business. Portugal fell seven places within just a year. The report maintains that it is quicker and easier to start a business in Portugal as compared to neighboring countries like Spain, but obtaining business credit is a tough task. The Portuguese government has taken steps to improve the speed and simplify the process of opening a business, but once you pass this stage you may face other obstacles such as inflexible banks and obstructive local regulations.
To set up a business you are required to have a residency card issued by the Portuguese Immigration Service and a social security number, for which you need to register at the Social Security Office (Repartição de Segurança Social). Foreign nationals who plan to stay and work in the country beyond 180 days have to pay social security. You also need a tax number (Numero Fiscal de Contribuinte) as those who intend to work in Portugal must be registered for tax purposes, even if the actual process of setting up the business has not yet begun.
You can structure your business as any of the following:
• Sole proprietorship, wherein you will be personally responsible for business debts
• Single shareholder limited liability company
• Individual limited liability establishment
If you choose to run the business with other individuals, the following options are available:
• Partnership, where the partners are each personally responsible for business debts
• Limited partnership
• Limited company
• Public limited company
• A cooperative
How to set up your business
It may be helpful to employ a business broker who is well versed with the Portuguese administrative procedure. You may also require a chartered accountant and a lawyer or solicitor. Getting the proper legal advice will help you identify tax breaks that you are eligible for, and it also makes going through the bureaucratic process much simpler. Your business requires a bank account, which indicates clearly who can sign and issue cheques.
Once you choose a name for your company, check it at the National Registry of Collective Entities (Registro National de Pessoas Colectivis or RNPC), either at the nearest office or online to see if the name is available. Once the company name is approved, the RNPC will issue a certificate of approval and a provisional taxpayer card.
The procedure for starting a business has been simplified and there are different ways in which to proceed. Using the Empresa Online service, you can set up a company over the Internet while the Empresa na Hora service enables you to set up a company within an hour by delivering the necessary documents to one of the special offices. One can also go to the business formality centers (Lojas de Empresa) or commercial company registers (Conservatórias de Registo Comercial) for setting up a business.
In some regions of the country and for certain types of companies, the conventional methods may have to be used. This involves applying for an eligibility certificate and the respective legal entity provisional identification card; depositing the share capital in the business bank account, obtaining a public deed if necessary, declaring that activity has commenced at the local tax office, registering the company at the Conservatóriasde Registo Comercial and enrolling as a tax payer.
Social security & insurance
Register your employees at the Business Formality Center (Centros de Formalidades das Empresas) within ten days of registering the business and before your employees commence work. This enables them to receive social security insurance.
The workers’ compensation insurance covers all managers and employees that are receiving a salary. You can register for this with a private insure once your company commences business activities. Keep in mind that social security insurance does not cover occupational injuries or accidents.