Change the Company Type in Portugal

Changing the company structure intervenes when a business expands, and the owners decide this is the best solution. For example, a sole trader can think of converting the business into a limited liability company in Portugal. Changing the company type is the best solution for small businesses in Portugal, and if you would like to know how the procedure is completed, we kindly invite you to get in touch and address your inquiries to our team of company formation specialists in Portugal.

Company types in Portugal

The private limited liability company, or LDA as it is known, can be established in Portugal by foreign investors who need to deposit the minimum share capital of EUR 5,000. At least two shareholders can set up an LDA in Portugal. As for a public limited liability company in Portugal, this can be incorporated under certain conditions among which, the minimum share capital of EUR 50,000 and at least 5 shareholders. Investors can also decide on a limited partnership from a single shareholder or EIRL. The partnership can be formed by at least two members without having to consider the minimum share capital, as such a condition is not imposed. Partnerships in Portugal can be general or limited, depending on the liabilities and obligations in the company.

How can I change an EIRL into a partnership in Portugal?

If you have decided it is time to change the business direction and convert the EIRL into a partnership, the first thing to do is to register the new structure to the Commercial Registry in Portugal. Even though there are simple formalities involved, it is best to observe the following matters in order to have an idea about how you can change the sole proprietorship into a partnership in Portugal:

• • at least two members can form a partnership in Portugal who need to decide on the new business name and make a reservation in this sense;
• • there is no need for a minimum share capital, however, the members need to decide if the partnership is general or limited, in order to set up the liabilities;
• • there are different taxes imposed on partnerships, therefore, it is best to observe the rules in this matter;
• • a partnership can be established once an agreement is settled, comprising information about the activities of the business and the responsibilities of members.

Converting the company type solicits complete attention of the entrepreneurs, and instead of dealing with problems in matters of bureaucracy, we suggest you talk to our experts in company formation in Portugal and ask for comprehensive support.

Changing a sole proprietorship into an LDA

As a sole proprietorship, you represent the business in Portugal. In the case you wish to change the structure into a limited liability company, you should know that you will be the stockholder while the business will be a separate legal entity. This is often the reason why sole proprietors in Portugal decide at a certain point to change the business structure and to continue with the developments. The conversion from an EIRL to an LDA is subject to a new registration with the entitled authorities, meaning that the owners will have to consider the minimum share capital, a new name (or keep the old one), and other tax liabilities. Also, an LDA will have to appoint the company secretary, the board of managers, submit the annual financial statements and hire an accounting firm to properly deal with the daily financial matters the new company will have. It is essential to observe and respect the changes in the company, a few of them related to the tax liabilities. For instance, the company will have to pay the corporate income tax and bear in mind that the profits will belong to the firm, not to you personally as it was in a sole proprietorship.

How long does it take to change the business structure in Portugal?

There is no need to worry about the time the company structure is changed because this is a straightforward process with fewer bureaucracies. It is good to know that all the taxes need to be paid before the company structure is converted, in order to cut the time for changing the business type. As soon as the new documents are provided to the authorities and if they are properly drafted, the business conversion may commence. As an advice, it is recommended to inform your insurance company about the changes made, in order to receive a new insurance contract and coverage. Also, your business partners will have to be announced by the changes made in your firm in Portugal.

We kindly invite you to contact our team of company incorporation specialists in Portugal and ask for assistance if you want to change the company type.