Portugal’s legal environment encourages foreign investment as it has no foreign capital entry restrictions, and prohibits any discrimination between investments on the basis of nationality. Portuguese law does not impose any specific restrictions on foreign investment in corporate matters. When setting up a commercial structure in Portugal, there is no need to involve a national partner, and there are no specific obligations for foreign investors. Foreign companies are charged for the same taxes, and must satisfy social security payment deadlines. There are no exchange controls or currency regulations affecting inbound or outbound investment, the repatriation of income, capital or dividends, the holding of currency accounts or the settlement of currency trading transactions.
In Portugal, foreign investors normally choose structures that involve the incorporation or acquisition of a subsidiary or the establishment of a branch. That normally involves limited liability companies, as it limits the shareholders’ liability for the company’s obligations to the amount invested as share capital. Choosing a limited liability company depends on the simplicity of the corporate and management structure, the investment to be made as share capital and any confidentiality issues surrounding shareholdings in the company.
Incorporating a Company in Portugal can be set up by means of a private document signed by the shareholders whose signatures are certified by a notary or a lawyer, unless a more formal instrument is required to transfer the assets brought into the company (in which event a Notarial deed must be executed). Registration with the Commercial Registry takes only a few days. Any foreign corporation seeking to carry out activities in Portugal for a period longer than one year must arrange permanent representation in Portugal. If the activity has minimum material substance, that representation may be carried out through a branch. The branch is not deemed an autonomous legal entity and, consequently, the foreign company will be liable for all actions carried out by its local branch. The branch must have a representative with general managerial powers and be registered with the Commercial Registry.
Under Portuguese law, a tax identification number is mandatory for both natural and legal persons, whether domestic or foreign, who hold obligations or intend to exercise their rights in relation to the tax authorities. A tax identification number is obtained by filing specific documentation regarding residency in the country of origin with the tax authorities and, in certain cases, by appointing a representative. In particular, obtaining a Portuguese taxpayer number does not imply that the non-resident individual will be taxed in Portugal as a Portuguese resident taxpayer, or that the individuals will be subject to Portuguese income tax as a non-resident on income obtained abroad; they will only be taxed in Portugal on income considered to have been obtained in Portuguese territory, if and when applicable.