Starting a Business in Portugal: Simplified

Portugal is becoming a special place for entrepreneurs and businesses to establish themselves. US entrepreneurs are no exception. Starting a Business in Portugal can be a challenge, especially when you don’t know the basics, including Portuguese Business structures, how to register your company and where to look for relevant information.

In this article we explore important tips for US entrepreneurs and foreigners looking to start a business in Portugal.

Why Starting a Business in Portugal makes sense

The first reason is that Portugal has a large expat community, including retirees with passive income and digital nomads. Additionally, Portugal is a major hub for startups, especially in Lisbon and Porto. In these big cities, you have a nice environment for networking and forming partnerships.

If cost of living is your worry, then you’ll be happy to know it is more affordable than in the U.S. However, prices have risen in recent years due to the country’s growing popularity, which has contributed to higher housing costs. Nevertheless, other costs such as groceries, education, transportation and healthcare are still cheaper in comparison to the US and some European countries.

Apart from the tips we will be listing today, there’s something you need to consider. The budget. The amount of money you are willing to invest for starting a business in Portugal will define the big choices. For example, it will influence the legal form of your business (some need a bigger investment than others), the location/place of your business, what features you’re able to include in your product/service, the pricing you define for your clients, the money spent in marketing, and much more.

Therefore, let’s start with the basics, so we can simplify the process of Starting a Business in Portugal.

Tips for Starting a Business in Portugal

Tip 1- Explore all the Portuguese Business Structures / Legal Forms

Before starting a business in Portugal, you should look into which type of business structure and legal framework best suit your goals and activities. There are 10 main Legal Forms you can choose from for your new business. 

Note: The original Portuguese name of each type of society is mentioned in parentheses. We have translated the name to English, but there may be legal differences between your version of said company type in the US or UK and the company type in Portugal. Always consult with a lawyer. 

• Individual Entrepreneur (Empresário em Nome Individual)

One person owns the company and the entrepreneur is liable for the debts incurred in the course of the activity. The commercial name of the company should be the full or abbreviated civil name of the individual entrepreneur, and can include an expression related to the business.

• Individual Limited Liability Establishment (Estabelecimento Individual de Responsabilidade Limitada)

A single individual owns a company and the designation must mention the entrepreneur’s civil name, in full or abbreviated. The share capital should be at least €5000. Also, there is a separation between the entrepreneur’s personal assets and the assets allocated to the undertaking.

• Sole proprietorship by shares (Sociedade Unipessoal por Quotas)

A single shareholder owns all of the capital, and the quantity of share capital is freely fixed in the contract, corresponding to the total of subscribed shares (“quotas”). Also, the corporate name of the company should include the expression “Sociedade Unipessoal” or “Unipessoal” , followed by “Limitada” or “Lda”.

• Quota Company or Private Limited Company (Sociedade por Quotas) 

We are talking about a company with a minimum of 2 shareholders, with responsibility limited to the subscribed shares (called ‘quotas’ in this case). Like the company above, the name must contain the expression “Limitada” in full or abbreviated as “Lda.”

• General Partnership (Sociedade em Nome Coletivo)

The partners in this type of company have unlimited and subsidiary liability in relation to the company and jointly and severally with each other. Also, there is no minimum amount for the share capital. The designation should have the name of all, some or at least one of the partners and the words ‘e Companhia’(or other options). 

• Limited Partnership (Sociedade em Comandita)

If it’s just ‘Sociedade em Comandita simples’, then there is no share capital.

If it is called ‘Sociedade em Comandita por ações’, then there is share capital. Here some partners (‘sócios comanditários’) have limited liability, meaning that they are only liable for their capital contribution. Other partners, called the general partners (or ‘sócios comanditados’), have unlimited liability. 

• Public Limited Company (Sociedade Anónima)

In this case, there is a minimum of five partners or shareholders and €50 000 for the share capital. The shares have the same nominal value. This type of structure is usually used for big companies.

Also, ‘Sociedade Anónima’ or ‘S.A’ is obligatory in the name of the company.

• Cooperative (Cooperativa)

In this type of business, the capital is variable and the objective is usually to get certain goods at lower prices than the market, for the interest of their members, or to sell their products, eliminating intermediaries in the market. The number of these members is variable and unlimited, with some other rules. The liability is limited to the amount of capital subscribed by the member.

• Association (Associação)

A group of people who have common objectives and interests decide to meet. This type of organization is developed on a non-profit basis. The members can be part of one of 3 bodies: the general assembly, the board or the audit committee. 

• Setting up a European Company (SE) 

If you want to expand to another European Country, like Portugal, this type of company can be an option. It is a type of public limited liability company and you can run your business in different European countries by following a set of rules.

For more information about each business structure (including about registering your company), check this article.

Tip 2 – Get the ideal Visa for you before starting a business in Portugal

If you plan on living in Portugal or staying for a while to help establish your business, then you must look into Visas. There are many visas in Portugal, but choosing the right one is important. The D2 Visa, also known as the Entrepreneur Visa or independent work activity, is the most common if you plan to start a business in Portugal. Here you can find the documentation required for a residency visa for independent work or for migrant entrepreneurs.

However, another visa may be better for your particular situation. This website has other visas you can look into.

Tip 3 – Start looking for a place for your business

Before starting a business in Portugal, you need to see if you need a physical space for your company. If the answer is yes, then start looking now.

It is important to do an extensive research of potential business spaces, offices or terrains to build your company. There are many factors to take into account: the actual space cost, the water and electricity costs, employees’ work space, staff room, fire safety, licensing, and so on. 

Also, are you planning to buy or lease the space? Each option comes with its advantages and disadvantages. Buying can offer long-term stability, potential equity growth, and greater control over the property, but it also requires a larger upfront investment and ongoing responsibility for maintenance. Leasing, on the other hand, provides flexibility, lower initial costs, and the ability to scale more easily as needs change, though it may come with less control and rising costs over time. If you rent a space, check what costs are included in the contract and what conditions you need to follow.

By the way, you may need to come to Portugal to evaluate the properties/offices, and surrounding area. See here how easy it is getting to Portugal. Also, learn how to travel around Portugal.

Tip 4 – Register your company

Starting a Business in Portugal can involve some bureaucracy and take weeks for standard registration, while licensing can take a bit longer.

Empresa Online (Online Company) allows you to set up your company via the internet. You can do it through the official portal. Another way is through Empresa na hora (company on the spot). Now, please note that not all types of companies are registered through empresa online or empresa na hora, some need you to go to certain service desks. Check the link in tip 1 to see where you need to go depending on your company’s legal form.

Tip 5 – Get copies, physical and digital, of your documents

You can start by creating a checklist of all the documents, certificates and papers you need to establish your company in Portugal. It can help you keep everything organized.

Make sure you have copies of contracts and important documents that may need to be shown or delivered to the appropriate authorities.

Tip 6 – Talk to people who know 

Talk to your local Portuguese lawyer and other foreign citizens that have already established their business in Portugal. The best advice someone can give you, usually comes from people who have experienced all the procedures and difficulties of starting a business in Portugal.

Again, for legal advice, get a local lawyer or licensed agency that speaks English and has experience with these types of procedures in Portugal.

The Portuguese government presents information about starting a business in Portugal, industrial licensing and other relevant guides in this website.

We wish you good luck and a smooth transition with your business in Portugal!

Disclaimer: This blog post is intended for general informational purposes only and does not constitute legal, financial, immigration, or business advice. While we strive to ensure the accuracy of the information provided, laws and regulations may change, and individual circumstances vary. Readers are strongly encouraged to consult with qualified legal, financial, and immigration professionals before making any decisions related to starting a business in Portugal.