Starting A Business In Portugal: Everything You Need To Know

Starting a business in Portugal can be an exciting experience. It’s a country well known for its beautiful landscapes, friendly locals and relatively affordable cost of living.

But before you decide to open a business in Portugal, it’s first important to consider a few things like the economic landscape, cultural customs and how business is conducted.

Here, we take you through everything you need to know. From the documents you’ll need to the taxes you have to pay. Let’s get into it…

 

Things To Consider Before Opening A Business In Portugal

 

1. Understanding The Portuguese Economy

Portugal has a growing economy, albeit not as strong as some of its European neighbours.

According to the European Union, the country is expected to see economic growth of 1.7% in 2024 and 1.9% in 2025, making it a slow, but definitely growing economy.

When it comes to the country’s startup ecosystem, StartupBlink ranked Portugal 15th in Western Europe and 29th globally – making it a growing hub.

 

2. Language and Communication

While English is spoken in major cities across Portugal, and regularly amongst business professionals, learning Portuguese can help build relationships.

Not only that, but knowing the language can also help navigate any tricky government terms, helping to prevent any misunderstandings.

Most importantly though, if your business relies on customers, being able to communicate in Portuguese is a massive bonus and a great way to build a loyal customer base.

 

3. Cultural Tips For Businesses In Portugal

Whilst Portuguese culture follows a lot of other European cities, it does also have its unique characteristics. Generally, the Portuguese prefer a formal approach in business settings, so use formal titles to avoid offending.

When it comes to timekeeping, while punctuality is always appreciated, the Portuguese tend to have a more relaxed approach to time. It’s not unusual for meetings to start slightly later than scheduled.

 

4. Cost of Living and Business 

According to a report publicised on International Living, Portugal offers the lowest cost of living in Western Europe.

This makes it an attractive place for expats looking to build a comfortable life. Like with anywhere, cities like Lisbon and Porto tend to be more expensive than rural areas, but they are also more desirable when it comes to business.

Costs for running a business, like office rent, salaries and utilities tend to be lower than other European countries to align with the cost of living.

 

 

Navigating The Process Of Starting A Business In Portugal

 

Starting a business in Portugal can be exciting. But before you start, it’s worth getting to know the basics.

Here, we take you through the process step-by-step to help you have the knowledge you need to succeed.

 

Step 1: Understand Visa and Residency Requirements

Before you can start a business in Portugal, you have to make sure you tick all the legal boxes. This process differs based on the passport that you have.

EU/EEA/Portugal Citizens: You do not need a visa to start a business in Portugal and have a legal right to live in the country for 90 days. However, you will need to apply for a Registration Certificate (Certificado de Registo) from your local town hall (Câmara Municipal) within 90 days of your arrival. This certificate will be valid for 5 years.

To qualify for a Registration Certificate, you will need to have:

• A valid EU/EEA/Swiss passport or ID;
• A fiscal number (NIF) (see step 3 in our guide below)
• Proof of accommodation
• Proof of earnings to support yourself and your family.

Once issued, The Registration Certificate must be taken to your local tax office within 60 days to become a tax resident in Portugal and allow you to work.

Non-EU Citizens: You will need a visa to live and work in Portugal.

These are split into short-stay visas (90 days), temporary stay visas (1 year) and long-stay visas (1 year +).

The most relevant visas for entrepreneurs are:

• D2 Visa: Aimed at letting foreigners who have invested in a business or want to start their own business in Portugal. Normally, applicants are asked to share a solid business plan to show how they will contribute to economic growth.
• StartUP Visa: For entrepreneurs who want to start businesses in Portugal. The visa allows them to find a local incubator to help them thrive in the country
• Job Seeker Visa: A temporary visa that allows you to enter Portugal only for the purpose of looking for a job, with the possibility of applying for a residence permit later.

 

Step 2: Choose The Right Legal Structure For Your Business

The next step is to decide on the legal structure for your business.

This decision will affect how you register the company, what your tax obligations will be and any conditions you will need to follow.

You will need to think about whether you want to start a public or private limited company, how much capital you will have to put into the business and who your investors are to make this decision.

Once that is made, make sure you are up to date with all the conditions of opening that kind of business.

 

Step 3: Apply For A Portuguese Tax Identification Number (NIF)

The Número de Identificação Fiscal (NIF), or tax identification number, is a 9 digit number that is assigned to both people and companies.

This number is used for a number of things including filing taxes, opening a bank account, signing agreements and any other type of business in Portugal.

Many expats will need an NIF when applying for residency, so it’s a good idea to get one early. This can be done through the Portuguese tax authority’s website.

 

Step 4: Register Your Business

Registering your business can be done either online or in person and typically costs around €360. You must also pay €75 for the Certificado de Admissibilidade – a Validation Certificate used to register the name of your business.

Typically, this process takes between a few days and a few weeks but make sure you have all the necessary documents to avoid delays.

 

Step 5: Draft The Articles Of Association

The Articles of Association are a set of documents that clearly lay out your company’s rules and regulations. These will include things like company structure, shareholder rights and how much capital it has.

You will need this document when registering your company. So make sure you do it early in the process.

 

Step 6: Open A Business Bank Account

Once your business is registered, the next step is to open a business bank account in Portugal.

First, choose a bank. Then, simply gather the relevant documents. You will probably need:

• An NIF
• Proof of address
• Business registration documents
• Passport or valid ID

Depending on the structure of your business, you might also need to deposit some money.

If you will be looking to make a lot of international transfers, look for a bank that allows you to do this without crazy fees.

 

Step 7: Register For Social Security

After registering your business, you must then register with the Portuguese Social Security system.

This is relevant for both employers and employees. It’s worth noting that employers contribute around 22.3–34.75%.  of each employee’s gross salary for social security – so make sure you factor this cost into the business plan.

 

Step 8: Scope Out Any Permits You May Need

Depending on what your business does, you might need licences or permits to operate. For example, if you are working in food and drink or agriculture, you might need to get extra permits.

These can generally be applied for online and are relatively quick to be approved.

 

Step 9: Hire Employees (If Needed)

So you have your business registered, now you need people to run it! But before you do, it’s important to be aware of Portuguese working laws, including working conditions, minimum pay and legal hours.

Workers can be on permanent, fixed-term or temporary contracts, however it’s important to consult an employment lawyer to understand the obligations to each.

Note: The current minimum wage in Portugal is €820.00 per month.

 

Step 10: Get To Know Your Taxes

Businesses in Portugal are subject to a number of taxes:

Corporate Income Tax (IRC): A flat rate of 21% on taxable profits. Small and medium-sized businesses (SMEs) pay a lower tax rate of 17% on their first €50,000 of taxable profit.

Value Added Tax (IVA): The equivalent of VAT. The rate sits at 23% but can be slightly lower in certain regions.

Municipal Surcharge (Derrama Municipal): Local taxes. These can be up to 1.5% of profits, depending on the council. However, this only applies to companies making a certain level of profit.

In any case, hiring a local tax lawyer will help you better understand and keep to the obligations.

 

Step 11: Get Business Insurance

In Portugal, Employer’s Liability Insurance (seguro de acidentes de trabalho) is required for all businesses with employees.

This covers employees in case of work-related accidents or illnesses bought on by employment.

Other types of business insurance are optional but may provide peace of mind.

 

Should You Start A Business In Portugal?

 

So there you have it. A step by step guide to starting a business in Portugal.

Remember, it’s important to go through the process carefully, speak to experts and ensure that all your business plans and documents are in check. Once you do that, you can get started planning your Portuguese business adventure. Boa sorte!