Starting a Business in Portugal as a Foreigner | US Guide

Portugal is an attractive destination for entrepreneurs worldwide. Navigating the Portuguese business landscape requires an understanding of how to start a business, legal structures and visa requirements.

Let’s look at the most pressing questions about starting a business in Portugal as a foreigner, including the steps involved in company registration, the costs and nuances.

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How to Start a Business in Portugal as a Foreigner: First Steps

Portugal is one of the easier countries in Europe to do business in, making it a prime destination for entrepreneurs. The World Bank's ease of starting a business ranked Portugal at 63 out of 190 economies, which is better than most European countries.¹

Before jumping into how to start your Portugal venture, it’s important to figure out if you can do business as a foreigner.

Can I Start a Business in Portugal as a Foreigner?

Yes, foreigners can start businesses in Portugal. The process may be slightly more complex than for European Union citizens due to additional documentation, but it's certainly achievable. Portugal welcomes foreign entrepreneurs and offers various visa options to facilitate business endeavors.

What Steps will be involved in starting a business in Portugal for foreigners?

The process is relatively straightforward, but the requirements vary depending on your nationality and the type of business you want to start. The steps for starting a business in Portugal include:

1. Get the necessary visa: The first step is getting the appropriate visa.
2. Apply for a NIF (tax identification number): This is essential for conducting business.
3. Choose a legal structure: Decide whether you'll be a sole proprietor or establish a partnership or corporation.
4. Open a business bank account and deposit initial capital: The amount varies depending on your chosen legal structure.
5. Draft your Articles of Association: These outline the rules and regulations of your company.
6. Register for Social Security: This is crucial for both you and any employees you hire.

For registering your business, freelancers and independent contractors can register via the Portal das Finanças or at their local finance office.

For other business structures, Empresa Online offers online registration, while Empresa na Hora provides in-person registration at designated locations across the country.²

How Much Money Do You Need to Start a Business in Portugal?

While the exact amount can vary, expect to spend a minimum of €400 to cover basic registration fees. However, it's not uncommon for costs to quickly escalate to €1,000 or more as you factor in legal fees and licenses or permits.

The cost of setting up a company in Portugal can vary significantly depending on several factors, including:

• Business structure: The legal form you choose for your business will influence registration fees and ongoing costs.
• Activities and services: The nature of your business will determine the specific business licenses you need, which come with their fees.
• Location: Operating in major cities like Lisbon or Porto might incur higher costs for rent, office space, and professional services compared to smaller towns or rural areas.
• Legal and accounting support: Seeking professional guidance for company registration, legal compliance, and accounting can add to your initial expenses.

Carefully plan and manage your finances to successfully navigate your Portuguese business ventures. Preparation is the key to minimizing financial surprises and maximizing your chances of success.

Legal Requirements for Starting a Business in Portugal as a Foreigner

Like businesses everywhere, navigating the legal requirements is important for a successful venture. Here are some of the key legalities you’ll need to navigate when getting started:

• For short-term business activities (under 90 days), a Portugal Business Visa, a type of Schengen Visa, is required. This can be single or multiple entries, depending on your travel frequency.³
• For those intending to stay and work in Portugal for longer periods, a residence permit or visa is mandatory. Foreigners will need to apply for a Portuguese Work Visa and Residence Permit.
• Company registration can be done online via the Empresa Online service or in person at an Empresa na Hora counter. The process involves choosing a legal structure like a limited liability company (LLC) and obtaining a tax identification number (NIF), and a Social Security identification number.

Additional requirements may apply depending on your nationality and the specific visa you're seeking.

Choose a Legal Structure in Portugal as a Foreigner

Portugal offers a range of legal structures suitable for foreign entrepreneurs. Your choice will depend on various factors, including the size of your business, the number of owners, and your desired liability. Here are the key legal structures you can choose from:⁴

1. Individual Entrepreneur (Empresário em Nome Individual): Ideal for sole proprietors and doesn't require a minimum capital investment but comes with unlimited liability.
2. Individual Limited Liability Establishment (Estabelecimento Individual de Responsabilidade Limitada): Offers limited liability, but requires a minimum share capital of €5,000.
3. Sole proprietorship by Shares (Sociedade Unipessoal por Quotas): A single shareholder owns the entire capital, offering more flexibility but requires opening a separate bank account and hiring an accountant is necessary.
4. General partnership (Sociedade em Nome Coletivo): No minimum share capital is required, but each partner is unlimitedly liable for the company’s social obligations.
5. Private limited company (Sociedade por Quotas): Popular choice for small and medium-sized businesses and requires a minimum of two partners and a €5,000 investment, offering limited liability to its partners.
6. Public Limited Company (Sociedade Anónima): Geared towards larger enterprises, this involves more regulations and a minimum of five partners, with a minimum capital of €50,000.

You’ll want to carefully weigh your options and consult with legal and financial professionals to determine the most suitable legal structure for your venture.

Obtain Licenses and Permits for Your Business

Many businesses will need licenses and permits from the Directorate-General for Economic Activities (DGAE). Whether you’re running a larger company or a self-employed international business, you’ll want to ensure you comply with all relevant laws and regulations to avoid any legal complications.⁵

For example, general licenses and permits you’ll need include:

• NIF (Número de Identificação Fiscal): This is your Portuguese tax identification number, essential for all businesses.
• Social Security registration: Register your business and employees with the Portuguese Social Security system.
• Business license (Alvará): This general license is required for most businesses, issued by your local Câmara Municipal (city council).

Meanwhile, you might also need industry-specific licenses and permits like:

• Food and beverage
• Construction and trades
• Tourism
• Health and wellness
• Transportation
• Environmental
• Zoning and land use

Depending on your business's sector, you may need to obtain specific licenses and permits. The Directorate-General for Economic Activities (DGAE) handles the process of getting specific licenses and permits, and you can submit your application at the Balcão do Empreendedor (BDE).

How to Get a Business Visa in Portugal

If you're planning to conduct business in Portugal, you'll need a business visa. There are two key types of Portuguese business visas:

1. D2 Visa: This visa is tailor-made for entrepreneurs and requires a solid business plan, demonstrating the economic viability and relevance of your business idea to Portugal.⁶
2. StartUP Visa: If you're in the early stages of your entrepreneurial journey, this visa connects you with a start-up incubator, providing the support and resources needed to navigate the Portuguese market.⁷

It's important to note that the visa isn't guaranteed simply by starting a business—you'll need a solid business plan, proof of your business's viability, and relevant experience.

To get a visa, regardless of the type, you’ll typically need:

• A completed visa application form
• Passport-sized photo
• Valid passport
• Travel itinerary and accommodation proof
• Proof of financial means
• Letter detailing your business purpose

Tips for Opening a Business Account in Portugal as a Foreigner

If you're a non-EU citizen, you’ll need a visa before you can open a business account. Some other tips and things you’ll need to open your business bank account include:

• Choose a bank that fits your needs: Research different banks to find one that aligns with your business needs and offers services tailored to international clients.
• Gather your documents: The specific documents required may vary depending on the bank and your business type. Generally, you can expect to provide your passport, proof of address, business registration documents, business plan and tax identification number.
• Understand the process: Be ready to answer questions about your business, its activities, and your financial projections. And be patient, as opening a business bank account can take time, especially as a foreigner.

Note that while many bank representatives in Portugal speak English, knowing some basic Portuguese phrases can be helpful and show your commitment to doing business in the country.

Discover Wise Business: The Easy Business Account for Foreign Business Owners

Opening a business in Portugal is possible. However, navigating the financial aspects can be complex, especially for those new to the country. That's where Wise Business can help. Its international business account simplifies cross-border transactions, saving you time and money.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to 160+ countries.

With Wise Business, you can:

• Hold and manage funds in multiple currencies
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• Easily send batch payments with no monthly fees

Whether you're a seasoned entrepreneur or just starting, Wise Business provides the financial tools you need to succeed in Portugal's vibrant business environment.

Read the guide on how to open a Wise Business account

Helpful Links for Starting a Business in Portugal as a Foreigner

Here are some useful resources for further reading before embarking on your new business in Portugal:

• Empresa na Hora: The official Portuguese government portal for starting a business. It provides information on the different types of companies you can create, the necessary steps to take, and the required documents.
• Autoridade Tributária e Aduaneira (AT): The official website of the Portuguese Tax and Customs Authority.
• Segurança Social: The official website of the Portuguese Social Security.
• IAPMEI: The Portuguese Agency for Competitiveness and Innovation, provides support and resources for SMEs.
• Portuguese Chamber of Commerce: Offers information and support for businesses looking to operate in Portugal.

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Sources:

1. World Bank Group - Ease of Doing Business rankings
2. ePortugal.gov.pt - Services at the Tax Office
3. Embassy of Portugal to the United States of America - Schengen Visa
4. Deliotte - Doing business in Portugal A comparative guide
5. ePortugal.gov.pt - Licences, permits and authorisations for businesses
6. Belion Partners - Portugal D2 Entrepreneur Visa
7. Belion Partners - Portugal Startup Visa

All sources checked August 2024.