Setting up a company in Portugal is creating a company in one of the oldest countries in the world. With the maritime explorations of the 15th and 16th centuries, the Portuguese were precursors of globalization and international trade.

Currently, Portugal is the gateway to Europe and one of the best international destinations to set up a company or relocate an existing one.

What are the advantages when you set up a company in Portugal?

The decision to set up a company in Portugal is an excellent option for all investors who want to take advantage of a dynamic and advantageous business environment.

Very Advantageous Tax Framework

Portugal benefits from a thriving business environment and a very competitive tax framework. The corporate income tax rate is 21% (it is even lower in Madeira at 14.7%). 
Other advantages when you set up a company in Portugal include a participation exemption regime applicable to dividends and capital gains, exemption from withholding tax when paying dividends, royalties and interest to non-residents, and a tax credit to avoid double taxation, etc.

Gateway to the European Union

Portugal is an OECD and European Union member, which guarantees the application of EU directives and principles, and ensures a modern legal, fiscal, and financial framework. 
Because Portugal is part of the Eurozone, free movement of capital and elimination of foreign exchange risk is guaranteed.

Qualified and Productive Human Resources

In the current business landscape, it is essential to have excellent human resources.
Portugal has some of the best universities in Europe, where outstanding young professionals are being trained every year in all areas of education.
English is taught from an early age in schools, which means that a large part of the workforce speaks it fluently.

Good Infrastructure and Roads

Portugal has an excellent infrastructure network, including roads and ports. There are several international airports with daily flights to cities around the world.
Portugal also offers a solid telecommunications network, good internet speeds, and excellent fiber optic and 5G coverage.

Innovative and Technological Business Sector

The Portuguese business sector is made up mostly of small and medium-sized companies. Its growing commitment to the digital/technological transition puts Portugal in the top 10 of the most attractive countries for foreign direct investment (FDI). 
Portugal is one of the main centers for technological and business innovation in Europe. Lisbon, Porto, and Funchal are but a few of the Portuguese cities that support the creation of start-ups through financial incentives and incubator networks.

Security and Unrivaled Quality of Life

Security and stability are two of the most important factors for an international company. An unstable environment is any investor's worst nightmare.
Portugal is one of the safest countries in the world (Global Peace Index) and is constantly ranked as one of the best countries to live and work in. A good quality of life, a Mediterranean climate, delicious cuisine, and an affordable cost of living are what Portugal has to offer.

Set up a Company in Portugal – What are the Advantages for Shareholders and Investors?

In Portugal, shareholders and investors can benefit from a number of advantages when certain requirements are met.

For corporate shareholders:

  • Exemption from capital gains tax on the sale of Portuguese companies;
  • Tax exemption on the distribution of profits and dividends.

For shareholders who are private individuals:

  • Exemption from withholding tax, or withholding tax at a reduced rate, on the distribution of dividends to shareholders who are not resident in Portugal;
  • Diverse residence permits for investment, entrepreneurship, or skilled employment, which allow you to live and work in Portugal and travel throughout the Schengen Area

Setting up a Company in Portugal – Advantages of Madeira

Madeira is an autonomous region of Portugal located in the Atlantic Ocean. A world-famous tourist destination, Madeira offers excellent conditions for setting up companies through its International Business Centre:

  • 5% income tax rate;
  • Exemptions on the distribution of dividends to shareholders; on royalties, services, and interest to third parties; and on payment of interest and other forms of remuneration to shareholders;
  • Reductions in stamp duty, real estate taxes (IMI and IMT), autonomous taxation, and other duties. 

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