As there are no legal restrictions in Portugal on foreign investment and because a Portuguese company gives EU membership providing straightforward commercial access to other EU member states, these are becoming more popular for foreign investors. With 100% foreign ownership permitted, a Lda company can be incorporated which is wholly owned by corporate or individual non-residents.

To establish a new business, foreign investors must follow the same rules as domestic investors, including mandatory registration and compliance with regulatory obligations for specific activities. There are no nationality requirements and no limitations on the repatriation of profits or dividends.

As such at Sovereign we are finding more of our clients are opting to use a Portuguese company to hold large property portfolios, buy hotels, restaurants or for providing individual services to their clients in the EU region.

The most used business entities in Portugal are the Sociedade por Quotas (Lda), a private limited liability company, and the Sociedade Anónima (SA), a public limited company.

Sociedade por Quotas (Lda)

A Portuguese Private Limited Company – Sociedade por Quotas or its abbreviation ‘Lda’ – is generally the most popular corporate vehicle for residents or foreign investors wishing to do business in Portugal. It is a convenient form of organization for small and/or closely held enterprises, due to its simple administrative and supervisory structure.

Members of a Private Limited Company hold quotas, rather than shares, which are set out in the Articles of Association and can only be transferred by public deed. A Private Limited Company generally requires two members, however it is possible to incorporate with only a single quota holder, but in this case, the wording “Unipessoal, Lda” (sole trader) must be included.

The amount of the share capital is freely fixed in the articles of association, corresponding to the sum of the shares subscribed by the partners, but the share capital must be divided into ‘quotas’ of at least €1 each.

Sociedade Anónima (SA)

The second most popular legal entity is Sociedade Anónima (SA), which is a public limited company with a minimum share capital of at least €50,000, which will be divided into shares of equal par value, and at least 30% of which must be paid up on incorporation. Capital is represented by freely transferable shares and at least five shareholders are required to set up a SA. It is possible to form a public limited company with a single partner as long this partner is a company.

The liability of the partners, or shareholders, is limited to the value of the shares they subscribed.

Sovereign’s concierge service for incorporation of either a Lda or SA company can include the following services:

  • Registration of the shareholder(s) at the Portuguese Tax Department, provision of their fiscal numbers and fiscal representation.
  • Obtaining approval of the company name on behalf of the shareholder(s)
  • Registering and obtaining a fiscal number for the new company at the National Registry of Companies (Registo Nacional de Pessoas Colectivas) in Lisbon
  • Informing the Portuguese tax department of the commencement of business.
  • Opening of a company bank account.

The provision of a registered office, accounting services and payroll will be provided by a third party.

Shelley Wren, Head of Business Development at Sovereign explains “After almost two years of severe global travel restrictions, a number of non-EU clients we see are looking to make sure they have options with another jurisdiction, to live and provide the family the freedom of travel to Europe. Sovereign can assist with residency options through the Golden Visa (GV) or the D7 passive income visa to provide clients not just access to Portugal, but access to the whole of Europe. Assisting clients with establishing their business here is part of our full-service remit.”

Portugal offers real value in terms of both real estate and capital investments and has very good double taxation agreements with many countries. However, Portugal also has a highly embedded bureaucracy and foreigners generally need guidance in navigating the Portuguese market. As an international group, Sovereign has broad experience in managing complex structures involving assets and individuals across multiple jurisdictions.

The Sovereign Group has over 450 employees spanning Europe, Asia, the Middle East and Africa, offering services across market entry, trustee and director services, accounting, payroll, occupational and personal pension plans, employee benefit packages and incentive plans, local licenses and permits, company secretarial and company management.

Sovereign opened its office in Portugal in 1990 specifically to meet the growing demand for fiscal assistance from foreign investors, residents and retirees. With vast experience of dealing with the Portuguese authorities, Sovereign knows how to keep their clients safe and in full compliance by undertaking a comprehensive review of their tax planning. Sovereign offers continued support to clients that require ongoing fiscal representation, property taxation and rental income accounting services in Portugal.

Additional specialist services from the Sovereign Group include, residence and immigration (Golden Visa and D7 passive income visa), wealth management, trust management, structuring of corporate entities (CSP), foreign property ownership, pensions, bespoke corporate and private client insurance, as well as yacht and aircraft registration ownership and management.

The Sovereign Group is proud to have a global reach from a local point of delivery so talk to us today on serviceinfo@sovereigngroup.com

https://www.sovereigngroup.com/portugal/