Starting a business in Portugal: step by step

Starting a business in Portugal: step by step

Anyone can start a business in Portugal, irrespective of the nationality or residency, providing you have a good idea and the capital required to make it work. Getting the proper tax advice will help you identify tax breaks that you are eligible for, and it also makes going through the bureaucratic process much simpler. Although many expats do feel that the process is bureaucratic and confusing we will try to help you navigate the system. Here are five things you should know when starting your business in Portugal.

Business environment in Portugal

According to the World Bank’s Doing Business 2020 report, Portugal figures at number 39 in the ‘Ease of doing business’ ranking. This report evaluated 190 developed countries based on the ease of starting a company, funding it and carrying on business. 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 continues to be a tough task.

Please note that if your business is owned by one individual, you can choose to register as a sole trader. This is normally the most adequate way to start. However, you will find that the social security contributions and the tax, are based on your income, rather than in a company, where these amounts are a fixed percentage.

Step 1: choose a name for your company

Any proposed name can be checked against a computer database. If the name has not already been taken that name can be registered via a Validation Certificate (Certificado de Admissibilidade) issued by the National Registry of Companies. This certificate can be issued in a week and it’s normally valid for 3 months.

Step 2:  the business structure

You can structure your business in many ways, these are the most common. You can decide to be the sole proprietorship, so using a Sole Shareholder Private Limited Liability Company (Sociedade Unipessoal por Quotas). If you choose to run the business with other individuals, other options available are Private Limited Liability Company (Sociedade por Quotas) or Public Limited Liability Company (Sociedade Anónima).

Step 3: setting up the company

With the name and structure chosen, it’s time to sign the deed of incorporation at a notary. This can be done electronically and allows the creation of a company almost immediately. The company will be given a tax number (NIF) and a social security number. The deeds will also include: the identification of the partners/shareholders; Name and type of company (Limitada, etc); Activities of the company; Head office of the company; Share capital of the company; Each shareholder’s/partner’s capital share in the company; All assets that form the share capital in kind and cash

Step 4: starting the activity

Once you sign the deeds, you need a bank account for the company. Only with the IBAN information, your accountant can register the activity of your new business at the tax office.

After Registration

Once the company is registered your accountant will normally take care of the following additional tasks:

  • Register the directors and employees with the Social Security
  • Create the Shareholders Meeting Book (Company Minutes) which all pages need to be signed by the shareholders
  • Make the initial minutes, indicating the salary of the director and other relevant business information

Companies have also an obligation to ensure health, hygiene and safety at work for employees. This needs to be certified by an independent company.

Don’t forget to take out compulsory employees’ accident insurance at a private insurer. This covers all salaried workers and managers.

Last but not least, you need to have an official complaints book, which will hopefully never be used by your clients.


There are different taxes paid by companies in Portugal, here are the most common.

Corporate tax is 17% for first 25,000€ of profit and 21% thereafter.

Social Security is 23.75% of the gross salaries.

Municipal business tax can be up to 1.5% and are determined by each municipality, as a matter of interest companies with head office in Tavira are exempt.

Please feel free to visit us for a friendly chat and ask us how we can help you to turn your business idea into reality.