Portugal

Portugal, a country of rich history and vibrant culture, is located on the Iberian Peninsula in southwestern Europe. It is bordered by Spain to the east and north and the Atlantic Ocean to the west and south, giving it a distinctive coastline known for its breathtaking beauty and maritime prowess. Portugal also includes the archipelagos of Madeira and the Azores in the Atlantic, which are integral parts of its territory and history.

Throughout its history, Portugal has seen a variety of cultural, political, and economic influences that have shaped its national identity. The Moorish occupation, which lasted until the 12th century, left a lasting impact on Portuguese architecture, language, and culture.

Modern Portugal is known for its high quality of life, with a rich cultural heritage that is celebrated through music, literature, and cuisine. Portuguese Fado music, a UNESCO Intangible Cultural Heritage, captures the country's soulful history and its connection to the sea. Portugal's contribution to literature, notably through the works of Fernando Pessoa and Luís de Camões, continues to influence the literary world.

Portugal's economy is diverse, with significant contributions from sectors such as tourism, technology, renewable energy, and agriculture. The country is a leader in renewable energy, particularly wind and solar power, reflecting its commitment to sustainability and innovation.

From its historical roots as a nation of explorers to its current status as a modern, dynamic member of the European Union, Portugal continues to be a country that looks outward to the world while cherishing its traditions and cultural heritage. Its scenic landscapes, warm climate, and hospitable people make it a beloved destination for visitors and a cherished home for those who live there.

General Information

• Full Name: Portuguese Republic
• Population: 10.40 million (World Bank 2022)
• Capital: Lisbon
• Primary Language: Portuguese
• Main Religion: Christianity
• Monetary Unit: Euro
• Main Exports: Textiles and clothing, wood products, electrical equipment
• GNI per Capital: US $41,290(World Bank, 2022)
• Internet Domain: .pt
• International Dialing Code: +351

How Do I Say in Portuguese?

• Hello: Ola
• Good morning: Bom dia
• Good evening: Bom noite
• Do you speak English?: Falas ingles?
• Good bye: Adeus
• Thank you: Obrigado
• See you later: Ate logo

Dates

Dates are usually written in the day, month and year sequence. For example, 1 July 2015 or 1/7/15. Numbers are written with a period to denote thousands and a comma to denote fractions. For example, 3.000,50€ (three thousand Euros and fifty centimos.

Expanding your business into Portugal presents a unique opportunity to tap into one of Europe's most dynamic and promising markets. With its strategic location, skilled workforce, and business-friendly environment, Portugal offers a wealth of advantages for companies looking to grow their operations internationally. 

Portugal's strategic position at the southwestern tip of Europe offers direct access to the Atlantic Ocean, making it an ideal gateway for businesses aiming to enter not only European markets but also Africa and the Americas. This geographical advantage is complemented by the country's modern infrastructure, including world-class ports and a comprehensive network of roads and airports, facilitating efficient logistics and distribution channels.

Portugal's economy is encompassed  by a diverse industrial base, with strong sectors in technology, renewable energy, automotive, aerospace, and tourism. The country has seen significant growth in technology and innovation, making it a hub for startups and companies focusing on digital transformation. Portugal's commitment to sustainability and renewable energy also offers lucrative opportunities for investment in green technologies and solutions.

Known for its business-friendly environment, Portugal is underscored by government initiatives aimed at encouraging foreign direct investment (FDI). The country offers a range of incentives for businesses, including tax benefits, financial grants, and competitive corporate tax rates. Portugal's membership in the European Union and adherence to EU regulations provide a stable and predictable legal framework for businesses operating in the country.

As a member of the European Union, Portugal offers seamless access to the EU's single market, allowing for the free movement of goods, services, and labor. The country's well-established trade relations and network of international agreements further facilitate access to global markets, providing businesses with a broad platform for growth and expansion.

In conclusion, doing business in Portugal represents a strategic investment in a country with a growing economy, a supportive business environment, and a wealth of opportunities across various sectors. Portugal's strategic location, combined with its skilled workforce and quality of life, makes it an ideal destination for businesses looking to expand their footprint in Europe and beyond. Whether you're a startup looking to tap into Portugal's innovative ecosystem or a multinational seeking to leverage the country's strategic location and market access, Portugal offers a conducive environment for achieving your business goals.

Investing in Portugal offers a compelling array of benefits for businesses and investors looking to tap into the European and global markets. With its strategic location, stable economy, and dynamic business environment, Portugal stands out as an attractive destination for foreign direct investment (FDI). 

Portugal's geographical position on the western edge of Europe provides a unique advantage as a gateway to the European Union, Africa, and the Americas. Its extensive coastline and deep-water ports, such as in Lisbon and Sines, facilitate global trade, making it an ideal location for businesses looking to expand their international footprint.

Portugal offers a competitive business environment, underscored by a range of government incentives aimed at attracting foreign investment. These incentives include reduced corporate tax rates, financial grants, and tax benefits for R&D activities. The "Golden Visa" program further encourages investment by offering residency to non-EU investors, promoting a diverse and vibrant business ecosystem.

The Portuguese economy is represented by its diversity, with strong sectors such as technology, renewable energy, tourism, textiles, and agribusiness. This economic diversity not only provides a stable foundation for growth but also opens up a multitude of investment opportunities across different industries.

Portugal has rapidly emerged as a hub for innovation and technology in Europe, boasting a thriving startup ecosystem, particularly in Lisbon and Porto. The government's commitment to digital transformation and support for entrepreneurship has fostered an environment conducive to innovation, making Portugal an attractive location for tech companies and startups.

Investors in Portugal benefit from access to a highly educated, skilled, and multilingual workforce. The country's focus on education and training has resulted in a talent pool adept in technology, engineering, and services, with widespread proficiency in English and other languages, facilitating global business operations.

Portugal is renowned for its high quality of life, offering a warm climate, rich cultural heritage, and excellent healthcare and education systems. This not only makes Portugal an appealing destination for international talent but also contributes to a positive and productive working environment.

Foreign Direct Investment (FDI) in Portugal is a cornerstone of the country's economic strategy, attracting investors worldwide with its dynamic sectors, compelling incentives, and dedicated government support. 

Key Sectors for Foreign Direct Investment (FDI) in Portugal

Portugal's diverse economy offers numerous opportunities for foreign investors across various sectors:

• Technology and Innovation: Portugal's burgeoning tech scene, especially in areas like software development, artificial intelligence, and blockchain, is ripe for investment.
• Renewable Energy: With a strong commitment to sustainability, Portugal is a leader in renewable energy, particularly in wind, solar, and hydroelectric power.
• Tourism and Hospitality: Portugal's rich cultural heritage and stunning landscapes make it a perennial favorite for tourism-related investments.
• Real Estate: The real estate market, including residential, commercial, and tourism properties, offers attractive opportunities, buoyed by the country's Golden Visa program.
• Automotive and Aerospace: Portugal's skilled workforce and strategic location make it a competitive destination for the automotive and aerospace industries.
• Agribusiness: The country's agricultural sector, known for its high-quality produce and wine, presents opportunities for investment in food processing and distribution.

FDI Incentives Available in Portugal

Portugal provides a range of incentives to attract and support foreign investment:

• Tax Benefits: Competitive corporate tax rates, reduced VAT rates for certain sectors, and exemptions for R&D activities.
• Financial Grants and Subsidies: Direct subsidies for specific projects, particularly those promoting innovation, job creation, and regional development.
• Golden Visa Program: Offers residency permits to non-EU investors who meet certain investment thresholds, facilitating easier access to the EU market.
• R&D Support: Financial incentives for companies engaging in research and development, aiming to boost innovation.

This information is currently being updated for 2024.

It is mandatory to make payments to the authorities from an in-country bank account.

Banks are generally open to the public from 0830 to 1500 hours, and closed on Saturdays and Sundays.

This information is currently being updated for 2024.

If a company wants to set up a legal entity in Portugal and the legal representatives of the company are in Portugal, this is a process that can be done within one to two business days. If the legal representatives cannot be in Portugal, the process will take longer, between 15 and 30 days and this process will require a POA.

The setup of the legal entity includes the registration with the tax authority and the social security.

There is also the option of non-resident companies, which does not require any legal entity establishment; however, there can be no commercial activity from this entity. This is for employment purposes only. This process will require POA, and a set of documentation that needs to be checked on a case by case basis

The tax year runs from 1st January to 31st December.

This information is currently being updated for 2024.

A company is required to have a legal entity established in order to process a payroll. If the legal representatives of the company are in Portugal, this is a process that can be done within one business day.

If the legal representatives cannot be in Portugal, the process will take longer, between 15 and 30 days. This process will require a POA.

The setup of the legal entity includes the registration on the tax authority and the social security.

Below are links to relevant departmental websites:

• Tax Department
• Social Security

Income Tax in Portugal

Monthly income tax contributions are to be submitted by the 10th and to be paid until the 20th of the following month.

A More Favorable Tax Regime for Returnees

Regarding taxation/tax benefits, the Law on the Taxation of State Budget for 2019 (Articles 258 and 259) approved the "regime applicable to former residents'. This is a temporary tax regime that covers both Portuguese and non-Portuguese residents who want to return to the country, either foreign nationals who have lived in Portugal and who want to return to live in the country, which, having fulfilled certain legal requirements, will pay IRS only on 50% of the income from employment, business and professional activities.

In order to benefit from this scheme, the applicant must, in addition to other requirements (cumulative), have been a resident in Portugal before 31st December 2015. This scheme is aimed at candidates who have not resided in Portugal in the last three previous years (e.g. for those who returned in 2019, these years will be 2016, 2017 and 2018). The resident then has until December 2020 to resume residence under this regime.

This information is currently being updated for 2024.

Monthly social security contributions are to be submitted by the 10th and are to be paid until 20th of the following month.

Tax year end is on 15th April.

• Submit annual declaration of income and deductions to employers by 20th January (art. 119 CIRS)
• Submit statistical report “Relatório Unico” by 15th April (deadline may vary)
• Publish Holiday Report by 15th April (art. 241, nr. 9 CT)

This information is currently being updated for 2024.

When an employee is hired, social security must be informed within 24 hours of the employee starting work.

If the new starter is a European Union citizen, they will be required to provide the following:

• A copy of the working contract
• Passport
• A legal document from their country (DNI, Citizen Card, etc.)

If the new start is a citizen from any other country outside the EU, the request for the working permit must be done in their own country in the Portuguese Embassy or Consulate.

The authorities will require an original of the working contract and the company will have to provide accommodation for the first 30 days. Usually, the initial work permit is for 6 months and any subsequent permits will be 12 months. The employee can only start working in Portugal after having obtained the working visa permit.

This information is currently being updated for 2024.

All payments due to the leaver should be done on the last working day. It is a practice for some companies to pay on the last business day of the last working month.

Notification must be made to the social security until the 10th of the following month. If the employee has any judicial payment being retained from their salary it is required to communicate also to the court or to the tax authority.

This information is currently being updated for 2024.

The working week in Portugal is Monday to Friday.

The working hours for commercial offices is typically from 0900 to 1800 hours.

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.