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Articles
Types of Companies in Portugal
Updated on Saturday 19th November 2022 Rate this article
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based on 7 reviews
The business opportunities in Portugal are for those who want to take advantage of a proper and respected climate and who want to generate money in an appreciated financial market. Entrepreneurs from abroad can easily set up varied types of companies, with complete assistance offered by our team of company formation specialists in Portugal. When a foreign investor decides to set up a company in Portugal, he/she must decide from the beginning upon the type of company he wants to establish. The Company Law in Portugal sets several types of structures from which a foreigner can choose.
How can I open a private limited company (sociedade por quotas - LDA)?
This type of company is the most common in Portugal. It is usually chosen by foreign investors who want to set up a small business in Portugal. At least two shareholders can establish a private limited company in Portugal, only if they provide a minimum share capital of EUR 5,000. Liability of the founders for company’s obligations only extends to their own contributions to the initial capital.
Can I set up a public company (sociedade anónima - SA)?
Foreign investors who want a medium or large sized company choose this type of structure. Public companies in Portugal require a minimum share capital of EUR 50,000 and at least five shareholders in order to be incorporated. Still, the founders are liable for the company’s obligations only to the extent of their contributions.
Do you need a team of accountants in Portugal? We advise you to contact our local specialists and discover the services offered by them. Payroll, bookkeeping, tax returns, and preparation of annual financial statements are among the necessary services for a company. We also remind you that the provisions of Portuguese Accounting Standards, and International Financial Reporting Standards are respected.
What is a limited partnership (sociedade em comandita - SC)?
Partnerships in Portugal are only formed between at least two partners. In order to set up a limited partnership in Portugal, no minimum capital is required. Its particularity is that one partner has to be general and have full liability for the company’s obligations (socios comanditarias), while the other one must have limited liability (socios comanditados).
General partnership (sociedade em nome collectivo - SNC) in Portugal
Just like the limited partnerships, general partnerships also need at least two partners to incorporate them. No minimum capital is required here either. As opposed to the limited partnerships, all the members in a general partnership in Portugal are fully responsible for the company’s obligations and they are able to make decisions on behalf of the company and manage the company. Please feel free to get in touch with our advisors if you want to register a company in Portugal. In case you need immigration services in Portugal, we can put you in contact with our partners from Immigrate-Portugal.com.
What is a single shareholder (EIRL) entity in Portugal?
When only one founder decides to set up a company in Portugal, the only type he can incorporate is a company with a single shareholder. This type of structure is quite simple to set up, but it is rather rarely formed. The founder is liable only for the company’s assets.
Requirements for opening an LDA in Portugal
Entrepreneurs interested in opening a private limited liability company in Portugal need to bear in mind a few of the important conditions, such as:
- • the private limited liability company can be registered with at least 2 stockholders and a minimum share capital of EUR 5,000;
- • the Articles of Association stand at the base of LDA formation in Portugal;
- • the capital contribution of the LDA is usually stipulated in the Articles of Association and it is represented by shares;
- • there is no obligation for appointing a board of managers for your LDA in Portugal, but a director can run the business.
One should know that the name of the private limited liability company in Portugal needs to contain the letters LDA or the world “limitada” at the end of it.
Establishing a subsidiary in Portugal
A subsidiary is a legal entity that can run under the rules of an LDA if it is a small or medium business or as a joint stock if it is a large company. In any case, a subsidiary is an independent entity from the parent company, it can have the same name or another one as long as it operates with the same activities as the company from abroad. Just like for all companies, a subsidiary must have a representative agent who needs to have residency in Portugal.
As for the registration of a subsidiary in Portugal, this starts with the Commercial Registry and the conditions in this matter, like submitting the Articles of Association with information about the owners, and the decision of opening the subsidiary issued by the parent company. We invite you to talk to our advisors and find out how we can help when establishing a subsidiary in Portugal. They can also help you register the subsidiary with the tax authorities in Portugal.
Establishing a branch in Portugal
Setting up a branch in Portugal is subject to an easy incorporation and the whole process can be supervised by our team of consultants. A branch is dependent on the parent company in a foreign country. As for the documents which need to be prepared for establishing a branch in Portugal, we mention the Articles of Association and the decision of opening a branch made by the company from abroad. A branch can run the activities as a limited liability company, it has to be registered with the tax authorities in Portugal and with the Social Security Regional Center. We remind that foreign branches in Portugal are protected from paying the taxes twice (in Portugal and abroad) by the numerous double taxation agreements signed by Portugal with countries worldwide. You can address your inquiries to our company formation specialists in Portugal if you are interested in establishing a branch in Portugal.
Shelf companies in Portugal
Shelf companies are ready-made companies already registered and at the disposal of local and foreign entrepreneurs. This kind of company runs as a limited liability company and can be purchased by investors who do not want to start a business from scratch and deal with the formalities of such incorporation. A shelf company is mentioned by the Portuguese Company Act and presents a series of advantages among which, the possibility of starting the activities right away. There are no financial activities linked to a shelf company, and therefore, no liabilities. This is another solid benefit of a shelf company that is known by international entrepreneurs.
A ready-made company is often the solution of both domestic and local investors looking for a fast start on the market instead of dealing with the bureaucracies of registering a company from zero. Still, there are other things to consider, like the ownership transfer and the registration for taxation of shelf companies in Portugal. Our company formation agents in Portugal receive all requests related to vintage companies in Portugal and can discuss foreign businessmen interested in this business form. Choosing the type of company in Portugal is essential for future activities in this country.
Starting a small company in Portugal – a few steps
With the support of our company formation specialists in Portugal, international entrepreneurs can start a small business in Portugal. There are several steps to pay attention to at the time a company is incorporated in Portugal:
- A company is based on a solid business plan that must be initially created.
- One must choose the business form under which the activities will undertake.
- The business name must be verified before the registration of a company in Portugal, followed by the reservation of the chosen name.
- A local bank account must be opened to serve for depositing the minimum share capital of a company.
- If the future activities ask for, the licenses and permits must be obtained.
- The registration for taxation and social contributions is a crucial step in company formation in Portugal.
- The Portuguese Trade Register accepts the documents for company registration.
- A local representative of the company needs to be appointed.
- Once the Certificate of incorporation is issued, the business will have a company seal.
- A dedicated team of company formation agents in Portugal should be hired for the registration procedures of a firm in this country.
Future business owners can appoint us with a power of attorney if they want a representative for their companies in Portugal. We can assist in all company formation steps. Mentioning that we can provide information about the types of companies in Portugal.
Is a liaison office an option in Portugal?
Yes, foreign companies can decide on establishing a liaison office in Portugal if interested in the business presence on the Portuguese market. A liaison office presents the same attributes as the representative office. This means that a liaison office cannot perform financial transactions and conclude contracts. The main activities of a liaison office relate to the marketing and promotion operations in Portugal, with the scope of capturing the attention of potential customers in this country. A liaison office can have an office and also a representative who can be local or foreign. Just like any other type of company in Portugal, a liaison office must be registered with the entitled authorities, if information about the foreign company, type of business, address, and name of the representative is provided to the Portuguese Commercial Registry. Those interested in more details about a liaison office in Portugal are invited to get in touch with our specialists. Portugal is open to business and foreign investments, and the following facts and figures highlight an important part of the economy and business direction of this country:
- Around USD 161 billion was the total FDI stock for Portugal in 2019.
- Spain, the Netherlands, UK, and Luxembourg are the main investors of Portugal.
- Portugal ranks 39th out of 190 economies in the world, according to the 2020 Doing Business report issued by the World Bank.
- Citizenship by Investment is available in Portugal, for a minimum investment of EUR 350,000.
- Around USD 3.4 billion was the total value of the greenfield investments in Portugal in 2019.
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 invite you to contact our company incorporation agents in Portugal for more details on any type of structure. We can handle the registration process of your firm, in agreement with your needs.
Meet us in Lisbon
Call us now at +351 21 020 0969 to set up an appointment with Federico Richardson, the head of Lexidy Law Boutique SLP. Alternatively you can incorporate your company without traveling to Portugal. As our client, you will beneficiate from the joint expertize of local lawyers and international consultants. Furthermore we offer you the following:
- cost-efficiency: competitive company formation prices;
- prompt response to your inquiry (maxim 24 hours);
- free and complete legal information featured on our site, at your disposal.
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