Portuguese Legislation Related to Foreign Investments
Portugal is one of the most peaceful countries in the world with a high quality of life for its residents. It also has one of the youngest workforces in the world and, in terms of business, operating a company in Portugal does not cost you a ton of money. Investing in Portugal can be one of the best business decisions you will make. Its economy is moving upward with an annual growth rate of approximately 0.8 percent. Company formation in Portugal is also easy. Let one of our company formation agents in Portugal help you decide on why you should invest in Portugal. Before you decide to open a company in Portugal, it would be wise to take a look at some of the important factors that can stand at the base of your investments in Portugal.
Investing in real estate sector
The Golden Visa scheme is perhaps one of the most attractive reasons why you should invest in Portugal. It is a scheme wherein you can acquire residency when you purchase a property in Portugal. This means that company incorporation in Portugal could result to businessmen gaining residency once there is an investment in property, with minimal legal requirements and maximum benefits. With a minimum investment of €250,000.00 on property, you can already reap the benefits of this scheme.
Being part of the European Union
Portugal’s membership with the European Union is another important factor to consider if you want to set up a company in Portugal. Membership of the European Union means common currency and free movement and trade within all member states. Portugal is one of the leading members in the European Union in terms of providing services, biotechnology and information technology.
Foreign investment incentives
Foreign investments are one of Portugal’s top priorities. The government considers them as one of the most important factors in bringing about economic growth. This is the reason why its government has imposed lesser restrictions on its foreign investments as compared to other countries. It allows foreign investments in all activities under the private sector. If you plan to engage in governmental activities, all you have to do is to secure an approval from the government. This is just another reason why you should invest in Portugal.
Knowledgeable workforce
In Portugal you will find a workforce that is young, brilliant and energetic. The Portuguese universities have seen the highest enrollment rate in recent years and they are expected to produce qualified graduates in upcoming years. Its universities have also partnered with schools like MIT in order to boost student knowledge in science and technology. Once you open a company in Portugal, you can be assured to have quality employees at your disposal.
Is it hard to open a company in Portugal?
No, the lack of complexities in terms of company formation in Portugal is appealing to international investors of any kind. They can easily set up limited liability companies, joint-stock companies, private and public partnerships or sole proprietorships in Portugal. The private LDA is the private limited liability company, the most common and used business structure in Portugal, and the main choice of foreign investors who are interested in a fast and reliable start on the market. The registration of a Portuguese LDA is not complicated, but it is important to pay attention to the conditions involved, like depositing the minimum share capital of EUR 5,000 in a local bank account or submitting the Articles of Incorporation with information about the owners, their nationality, the business activities, the representatives, the general rules, etc. The support of our company formation agents in Portugal will prove extremely helpful to foreign investors found for the first time with business intentions in Portugal.
Legislation related to foreign investments in Portugal
The foreign investments made in Portugal are overseen by the Agency for Foreign Investment and Commerce in Portugal, an important institution that activates under the rules of the Investment Law. The legislation related to foreign investments in Portugal clearly states that both local and foreign entrepreneurs have equal rights on the business market, without any restrictions, except the state-owned affairs in the country. If an investment of at least 10% in a Portuguese company is made, this means that the entrepreneur is considered a foreign direct investor who can enjoy the benefits that come with this status. It is important to know that there is no need for a foreign entrepreneur to have a local partner to open a company in Portugal, as he or she can enjoy complete ownership in the firm, with no restrictions imposed. The legislation related to foreign investments in Portugal also mentions the taxation regime applicable in the same way to local and foreign entrepreneurs in matters of corporate tax, VAT, social contributions, etc. The support of the double taxation treaties signed by Portugal acts in a fair manner with the purpose of avoiding any possible financial risks or fiscal evasion. Being part of the European Union, Portugal aligns with the business conditions and directives imposed for all EU countries with no exception. For a better understanding of the legislation related to foreign investments in Portugal and its applicability, we kindly invite you to talk to one of our company formation agents or lawyers in Portugal.
Interesting business fields for foreign investors
Opening an agricultural business or setting up a construction company can be in the attention of entrepreneurs from abroad in Portugal. Also, investors can decide on opening IT companies, financial firms, casinos, trust companies, publishing businesses, restaurants, travel agencies and other types of businesses that can enjoy success in a proper environment and sustained by the Portuguese government in terms of incentives and encouragements.
Holding companies might be appealing businesses for international investors looking to enlarge their portfolios and generate extra profits. Such companies benefit from varied tax exemptions that can be extremely attractive to foreigners. If you want to start a company in Portugal and need guidance throughout the entire registration process, you should address your inquiries to our company incorporation agents in Portugal.
Portugal in numbers
According to Trading Economics that gathers all the rating information about countries worldwide, Portugal’s credit rating established by Standard & Poor’s is BBB with a positive outlook. Moody’s set the same rating last year in August, believing that Portugal is on the right path when it comes to economic stability. The following numbers, facts and statistics can give confidence to international investors wanting to start a business in Portugal:
- • Portugal ranks 34th out of 190 economies in the world, as stated by the 2019 Doing Business report;
- • Portugal is considered the second-largest power plant in the world;
- • the total FDI stock recorded in 2018 in Portugal was USD 135,777 million;
- • non-EU investors can obtain Portuguese citizenship for investments of around EUR 250,000 in companies that need to be strengthened.
Portugal is for sure a great business destination for foreign investors, and those interested in this direction can benefit from complete facilities and tailored services from our team of consultants.
Credit rating for Portugal
There are a lot of entities that give sovereign credit ratings that are the credit ratings given to countries and that reflect their political and economic environment. A lot of companies treat these credit ratings as something very significant before deciding to engage in company formation in Portugal. The top three entities that give sovereign credit ratings are: Moody’s, Standard & Poor’s and Fitch. They have given their credit rating for Portugal.
1. Moody’s
They play an important role in the world market. This company has numerous experts and methods at its disposal in order to determine the transparence and integration of the financial market. For Portugal, Moody’s has given a credit rating of Ba1. This means that Portugal has a stable economy and it is not very vulnerable as compared to those with lower credit ratings.
2. Standard & Poor’s
This company has been engaged in business for 150 years and has made it that far because of the quality of service it provides to its clients and the amount of effort, expertise, and accuracy it puts in its ratings. For Portugal, Standard & Poor’s gave a credit rating of BB+, from a previous rating of BB. For businessmen who plan to open a company in Portugal, this means that they can expect a stable economy and economic growth to look forward to in the years to come.
3. Fitch Ratings Inc.
It is one of the few rating companies that has been acknowledged by the United States Securities and Exchange Commission, the entity that has supervision and control over all corporations in the country. It has conducted market research and other financial studies that are very valuable to an investor. Fitch Ratings gave a credit rating for Portugal of BB+.
This means that, despite a few risks, Portugal’s economy is relatively stable with a high chance of improving in the coming years.
Requirements for overseas investors in Portugal
Investors from abroad are invited to discover the numerous possibilities offered by important industries in Portugal, where sectors like energy, IT, communication, agriculture or automotive are among fields where foreign investments are expected. It is good to know that an entrepreneur from abroad can set up a company in Portugal of any kind, without any restrictions in this matter and the same conditions are also applied for local businessmen. The government in Portugal is aware of the importance of the foreign investments in the country, therefore, the legislation is permissive and there are numerous incentives offered in varied areas of interest.
One should know that The Agency for Foreign Investments and Commerce in Portugal is entitled to verify investors with small and medium companies and to guide them for venture capital support and technology transfer to the Institute of Support to Small and Medium Enterprises and Innovation in Portugal. Once you have decided to open a company in Portugal and to start your activities, we suggest you to talk to one of our company formation specialists in Portugal for comprehensive guidance and support.
Regulations regarding the FDI in Portugal
Overseas businessmen who invest at least 10% in a company in Portugal are considered foreign direct investors and are entitled to make business decisions in that enterprise without any restrictions. We remind that local investors or those from abroad are treated equally regarding foreign direct investment matters and are invited to search the market and to discover the main industries with full potential in Portugal. One should know that special sectors like public telecommunications, water management, maritime and air transport, or defense need particular endorsements from the government regarding the foreign direct investments.
Requirements for financial businesses in Portugal
The National Bank of Portugal oversees the financial activity in the country and issues authorizations for investors wanting to open financial companies. A particular fact to consider is related to the non-EU investors wanting to open financial firms or to establish a subsidiary in Portugal, where the local Ministry of Finance needs to analyze the impact of such businesses, their efficiency and if they are suitable for the country’s economy among many other aspects.
Conditions for foreign investors in Portugal
Portugal’s economy is mainly service-based. Key sectors include the technology sector, the information, and technology communication sector, the automotive sector, the energy, and biotechnology sectors.
Foreign investors have the same rights to carry our business and economic activities as local investors. Foreigners can open any type of company in Portugal, however, special authorizations are needed in several sectors. These include the transportation sector, the water management sector or telecommunications. Credit institutions or finance companies in Portugal are subject to authorization from the Bank of Portugal or the Ministry of Finance.
Our lawyers in Portugal can give you complete details about the laws for foreign investment and the protection of investments. The country has signed a number of double tax treaties and other bilateral agreements. They can also help you register the company for VAT and also obtain the EORI number.
Investment aid in Portugal
The economic environment in Portugal is investor friendly and a series of incentives welcome and encourage entrepreneurs. The national investment authority offers several fiscal measures to encourage investments and employment in areas that are considered economically disadvantaged. Portugal has a foreign free trade zone in Madeira. Tax reductions, tax investment credits, and EU aid funds are available under certain conditions. One of our lawyers in Portugal can give you complete details about the types of investment aid and how you can access them if you want to open a company in Portugal.
Reasons to choose Portugal
A good position in Europe and proximity to some of the most important markets in the EU is Portugal’s first advantage for investors. The country has good trade relations not only with EU countries but also with the United States, Brazil or countries in Africa.
The workforce in Portugal is highly skilled and the costs for hiring employees are lower compared to other countries. This can be an important advantage to those investors interested in opening a start-up in Portugal. The country has a talented pool of young workers in fields like engineering or business. The country also has a well-developed transport infrastructure and ICT network
The business environment in Portugal is attractive for entrepreneurs in all business fields, and an important advantage is openness towards foreign investors and foreign employees. Moreover, Portugal has a high quality of life and many investors and expats enjoy living in this climate. The advantageous tax structure in Portugal is another reason for foreign investors to choose Portugal for business. You might want to ask for support for VAT registration and for obtaining the EORI number in Portugal.
Attractive investment fields in Portugal
Portugal has many investment opportunities for those who want to start a company. Among those with the highest potential for receiving FDI, we can list the following: tourism, biotechnology, the electric and electronics sectors, the new information and technology sectors, parts of the chemical manufacturing sector and the shared services centers (such as call centers).
Companies that operate in some of these sectors need special permits and licenses. One of our attorneys in Portugal can help you apply for these and handle any other issues that may arise during the company formation process.
If you need more reasons to invest in Portugal, we have plenty of specialists in incorporating a company in Portugal. We are more than willing to cater to your needs, so all you have to do is to contact us.
