7 Good reasons to start a business in Portugal in 2026

Portugal is the ideal country to set up a business in 2026. With the new IFICI tax regime coming into force, Lisbon’s consolidation as a European technology hub, and a rapidly growing start-up ecosystem, the conditions for setting up a business in Portugal are now more competitive than ever.

Here are seven reasons why you should consider Portugal when setting up your business.

1. Portugal has a favourable tax regime

Portugal benefits from a very attractive tax framework. The social and business environment is stable, which guarantees the security of your investments.  

Portuguese companies are subject to a corporate income tax rate of 20%, with annual reductions of 1 percentage point expected. 

Companies based in the Autonomous Region of Madeira benefit from even lower tax rates – 14% under the general regime, or 5% for companies registered with the Madeira International Business Centre.

Another major tax advantage in Portugal is the participation exemption scheme, which allows dividends paid to companies by their subsidiaries to be exempt from taxation. Furthermore, any capital gains resulting from the sale of shares in subsidiary companies are also exempt from taxation.

2. Portugal offers tax incentives for entrepreneurs and professionals

In 2025, the IFICI scheme (Tax Incentive for Scientific Research and Innovation) came into force, replacing the previous RNH scheme.

This scheme offers a reduced personal income tax (IRS) rate of 20% on employment income and exemptions on foreign-source income for qualified professionals and startup founders who become tax residents in Portugal.

For foreign entrepreneurs, this scheme represents a significant opportunity worth considering.

3. Portugal is an EU member state and VAT registration is automatic

Portugal has been a member of the European Union since 1986, which offers many advantages for companies planning to expand into the European market. The European Union has a single market with over 500 million consumers. The European Single Market allows the free movement of goods, services, capital and people, which means that Portuguese companies can sell their products and services throughout the EU without having to deal with tariffs or trade barriers.

Another advantage of setting up a business in Portugal is that registration for VAT purposes is automatic upon commencement of trading. Unlike in other European countries, Portuguese companies do not need to go through a lengthy VAT registration process to obtain a valid VAT number for intra-Community transactions.

4. Portugal has an innovative and technology-driven business environment

Portugal is currently one of the main hubs for entrepreneurs looking to set up a business and for innovative start-ups in areas such as artificial intelligence, blockchain and the Internet of Things, developing new products and services that transform industries and disrupt traditional business models.

For start-ups established in Portugal, the country offers a vast network of incubators, tax incentives and funding opportunities, including grants, loans and venture capital.

5. Portugal offers various types of residence permits to entrepreneurs

If you are a non-EU citizen and plan to set up a business in Portugal, one of the first things to consider is obtaining a residence permit.

The good news is that Portugal offers residence permits specifically designed for entrepreneurs and investors, making it relatively easy to obtain the necessary permits to live and work in the country.

The Start-up Visa is a residence permit designed to attract international entrepreneurs and investors to Portugal. There are other options available for entrepreneurs wishing to set up a business in Portugal or for remote workers moving to Portugal.

By taking advantage of these programmes, you can enjoy everything Portugal has to offer as a destination for entrepreneurship and innovation.

6. Portugal has a skilled and experienced workforce

One of the key factors making Portugal an excellent country in which to set up a business is the quality and availability of its workforce. Portuguese universities regularly feature in international rankings. The University of Lisbon and the University of Porto are among the top 300 in the world according to the QS World University Rankings. Portugal has one of the highest percentages of engineering and science graduates per capita in Europe.

The Portuguese workforce is productive, skilled and, for the most part, fluent in English — particularly in the fields of technology, finance and management. Labour costs are competitive compared to the Western European average, without compromising the quality and productivity of employees.

7. Portugal offers safety, stability and quality of life

Portugal is one of the safest countries in the world. In the 2024 Global Peace Index, published by the Institute for Economics and Peace, Portugal ranks 7th worldwide. Crime rates are low, and the Portuguese people are renowned for their hospitality and openness towards international communities.

In terms of quality of life for expats, Portugal ranked among the top five countries in the world in the 2024 InterNations Expat Insider Report, standing out particularly in the categories of safety, ease of integration and cost of living. The mild Mediterranean climate, the cuisine and the diversity of landscapes — from the Algarve to the Douro, from Lisbon to Madeira — complete a quality of life package that is hard to match in Europe.

Investing in a new country is always a challenge, requiring local knowledge, experience and close, detailed support.

NEWCO provides a comprehensive service, from the moment you express an interest in investing in Portugal through to your full integration into your new business environment.

This is the best way to focus on your business without having to worry about administrative, tax or legal matters.

We have 35 years of experience and the necessary expertise to ensure the success of your investments in Portugal.