Company Registration in Portugal

Director

Director is mandatory for all types of companies. There are no residency requirements. A citizen of any country who has reached the age of 16 and is not included in the sanctions lists can be appointed as a director.

Shareholder

The number of shareholders for different types of companies may vary. For example, LDA has at least 2 shareholders. A minimum of 5 founders is required to open an SA company in Portugal. The shareholders must be at least 18 years old and not be on sanctions lists.

Address

The company must be located in Portugal. If the organization is established in the free economic zones in Madeira or the Azores, it must have a registered office in these zones.

Name

The name must be unique. There is an ending requirement. In particular, Limited Liability Company always ends with LDA, Limited Partnerships end with SA, and General Partnerships end with SNC.

Authorized Capital

The minimum authorized capital for LDAs is not stipulated by law. However, the value of each share cannot be less than 1 EUR. The minimum authorized capital for SA companies is 50,000 EUR. It may vary depending on the area in which the company operates. The authorized capital can be paid in installments. When registering a company in Portugal, at least 30% of the amount must be paid. The remaining 70% can be paid in installments over 5 years.

Local Account

It is not necessary for companies that operate in Portugal to have a local bank account. It is possible to open an account in any other EU country.

Registration Agent

Under Portuguese law, a company is not required to have a registration agent.

Reporting

All companies are required to prepare and file accounts within a specified period.

Before starting a business in Portugal, you must familiarize yourself with the peculiarities of taxation in the jurisdiction. Portugal has a global principle of taxation: the profit of resident companies is taxed on the global income regardless of the place of provision of services, counterparties, and company structure. Taxes in Portugal are as follows:

Income Tax

Companies incorporated in Portugal are liable to income tax at the rate of 21%.

Value Added Tax

VAT rates vary depending on whether the company is registered in Portugal or free economic zones. On the mainland, a basic rate of 23% applies. The reduced rate is 13% or 6%. Madeira’s basic rate is 22%, and the reduced rates are 12% or 5%. In the Azores, the prime rate is 18%, and the reduced rates are 9% or 4%.

Tax on Dividends

Companies in Portugal pay tax on dividends, interest, and royalties. The rate is 25%.

When starting a business in Portugal, you should also familiarize yourself with the reporting requirements. All companies are required to prepare and file reports with the tax office according to Portuguese law.

Annual Report

The company’s reporting period is 12 months and must coincide with the calendar year. The report must be filed with the relevant authority by May 31 of each year following the reporting year. The reporting can be filed online.

The tax is paid in installments: the first installment is paid in July, the second installment is scheduled for September, and the third installment must be paid by December 15 of the year in which the taxable income arises.

Annual Audit

In Portugal, companies that meet three conditions are subject to an annual audit. The accounts must be audited if:

• The company’s turnover reached 3 million euros.
• The number of employees has reached 50 people.
• The total value of the company’s assets is 1.5 million euros.

VAT Reporting

Every company is required to get into VAT registration before starting the company’s business. In the case of late filing, the company will be penalized.

VAT report is filed quarterly by the 15th day of the month following the last month in the reporting quarter. If the company’s turnover exceeds €650.000, the report must be filed monthly by the 10th of the following month after the reporting quarter.