How to start a business in Portugal as a foreigner

Written by Sílvia Biscaia

Portugal is increasingly recognized as a gateway to the European market for investors, entrepreneurs, and remote business owners. Whether you are establishing a local company or expanding internationally, understanding the legal steps to open a business in Portugal is essential.

This guide provides a practical overview for foreign individuals who want to launch operations in Portugal safely and strategically.

Can Foreigners Open a Business in Portugal?

Yes — Portugal actively welcomes foreign investment. Any individual or legal entity can set up a company, regardless of nationality, provided they:

  • Obtain a Portuguese tax number (NIF)
  • Designate a registered address in Portugal
  • Submit the required documents and complete the registration procedures

Choosing the Right Legal Structure

The most common business structures in Portugal include:

  • Sole Proprietor (ENI): for freelancers; full personal liability
  • Unipessoal Lda: limited liability with a single owner
  • Sociedade por Quotas (Lda): limited liability company with multiple partners
  • Branch Office (Sucursal): an extension of a foreign company

Each structure has different implications for taxation, liability, and operational flexibility.

Steps to Incorporate a Company

  1. Obtain a NIF for all shareholders and managers
  2. Reserve the company name (if applicable)
  3. Draft and notarize the Articles of Association
  4. Deposit the share capital in a Portuguese bank
  5. Register the company with the Commercial Registry
  6. Declare the start of activity to the Tax Authority
  7. Register with Social Security

With proper legal assistance, the process can usually be completed within 1–2 weeks.

Tax and Accounting Obligations

All companies must comply with the following requirements:

  • Corporate Income Tax (IRC): 20% plus applicable municipal surcharges
  • VAT (IVA): standard rate of 23%
  • Social Security contributions: applicable to employees and managing partners
  • Certified accounting and annual filings

Note: even companies with no revenue are still required to submit reports.

Hiring Employees or Freelancers

Employers in Portugal must:

  • Register all workers at Social Security
  • Comply with labor laws (contracts, holidays, minimum wage, etc.)
  • Pay social contributions and withhold personal income tax (IRS)
  • Provide work accident insurance

Portugal has strong labor protections, and compliance is strictly enforced.

Investment Incentives

Portugal offers several advantages for investors, including:

  • Startup and Tech Visa programs
  • Tax benefits for R&D and innovation
  • EU-funded subsidies (depending on sector and location)
  • A stable and investor-friendly legal environment

Common Obstacles to Avoid

  • Choosing the wrong company structure
  • Delayed or incomplete registration
  • Non-compliance with labor or VAT rules
  • Failure to align business setup with immigration or residency requirements

Legal Support at Every Stage

At BVA – Advogados, we assist foreign founders and investors with:

  • Structuring the business legally and strategically
  • Complete company setup
  • Tax and accounting compliance
  • Visa and residency support linked to business activity