Benefits of founding in Portugal:
- Increase in quality of life
- Market Stability
- Tax benefit for new residents (10 years)
- Afterwards tax flat rate of 20 percent
- Access to the European market
- Financial assistance for innovative businesses
Taxation: What is a NIF and why do I need it?
The Número de Identificação Fiscal (NIF) is the Portuguese tax number. You will need it to take on any legal activities in Portugal. When starting an IT, media or consulting company in Portugal, the first thing you should do is apply for a NIF. Then you must choose a legal form for your business and name the company. You can pick from a list of pre-approved names. However, if you prefer a unique name, you need to request a Denomination Approval Certificate.
The best protection for your new business in Portugal
How to get your NIF
How to get your NIF in person:
To get your NIF number, go to your closest Finanças (Portuguese tax office) and apply for it in person. There are no obstacles for EU Residents. Application for the NIF in Portugal is free. However, if you want to purchase a taxpayer card that displays your NIF, this costs around 7 Euros.
How to get your NIF online:
Unfortunately, Finanças is known for its lenghthy queues. In addition, you might want to apply for your NIF while staying abroad. There are online services, which spare you the queuing at Finanças, e.g. via e-residence.com. However, the online service start at around 99 Euros. However, he NIF in itself does not make you a tax resident in Portugal, as long as you use a non-Portuguese address during the process.
What information do Portuguese Tax Authorities keep on me?
Data protection is now as important as never before. The more information is kept on individuals, the more likely they are to fall victim to phishing or identity theft. Government institutions are not exempt from this rule of thumb. More often than not their systems are outdated and vulnerable. Therefore it is important to know what information institutions keep on you. Here is a list of the data that Portuguese tax institutions collect when you apply for your NIF.
- Full name
- Gender
- Picture
- Signature
- Biometric information
- Date of birth
- Height
- Social security number
Find out how to protect your business here:
Legal structures for businesses in Portugal
Portugal offers a variety of legal forms (forma legal) for companies. When choosing a legal form, you should first consider whether you want to run your business alone or as a partnership. It is often easier to incorporate as an individual, as there are fewer financial requirements. Below is a brief explanation of each legal form.
Individual companies
If you register your business as individual company, the NIF is sufficient for the taxation of your business. However, Limited companies and other business forms that exist as separate legal entities require their own NIF. This number for companies is called NIPC (Número de Identificação de Pessoa Colectiva). The NIPC also serves as a VAT number for taxation and consists of "PT" followed by nine digits.
Individual Entrepreneur (Empresário em Nome Individual)
An individual entrepreneur can sell both services and products. They can start working immediately and without minimum capital. In this case, there is no separation between private and business assets. Therefore, you must have unlimited liability.
Individual Limited Liability Establishment (Estabelecimento Individual de Responsabilidade Limitada)
For this category, you must have a share capital of at least 5.000 Euros. Furthermore, there is a separation between private and business assets. In this sense, only the assets associated with your economic activity are liable for any debts.
Sole Proprietorship by Shares (Sociedade Unipessoal por Quotas)
A single shareholder is the owner of the entire capital. You can determine the initial capital yourself, but the minimum investment is 1 euro or 2 euros, depending on whether there are one or two partners. You also need to set up a separate bank account for your company.
General Partnership (Sociedade em Nome Coletivo)
In a general partnership, there is no minimum amount for the share capital. Each partner has unlimited liability for the social obligations of the company. Its main advantages are a simple creation procedure and a small number of administrative duties to perform each year.
Private Limited Company (Sociedade por Quotas)
For the creation of this type of company, you need at least two partners who share the quotas. The minimum investment is 5.000 Euros. In this case, the liability of each partner is limited to the joint capital. Therefore, in case of debt, only the assets of your company are liable to creditors.
Public Limited Company (Sociedade Anónima)
A public limited company is one of the most complex options since it includes more regulations and legal requirements. There must be at least five shareholders, and each will own company stock. To apply for this option, you will need a minimum capital of 50.000 Euros.
Limited Partnership (Sociedade em Comandita)
This type of company also requires a minimum investment of 50.000 Euros. It includes two types of shareholders: some who manage the company and have unlimited liability, and others who have limited liability. This allows you to bring on investors without ceding control of your business.
Indemnity Insurance Seal for your Principals
- Individual and comprehensive insurance protection
- High coverage sums for financial losses
- No-claims evidence going back five years
Find out how to protect your business here:
Registering your Business in Portugal
There are two main ways to register your business in Portugal: online or in person. IT, media and consulting Freelancers can do this through the Portal das Finanças or at their local tax office.
Sole proprietorships by shares and public limited companies should apply through the Empresa Online service. You will need a citizen card first to do this. Alternatively, you can apply in person at Empresa na Hora. This service is available nationwide and you can make an appointment in advance.
Steps to registering your company
- 1. Open a bank account and deposit the initial capital
- 2. Draft the Articles of Association
- 3. Acquire the Commercial Registration
- 4. Declare the start of activity with the tax authorities
- 5. Register for social security
You should also present an identification card, passport or residence permit (apply at Immigration and Borders Service SEF). The whole process costs around 360 Euros. However, if your business includes property, this fee may increase.
After establishing your business, you are legally obliged to hire a certified accountant. Additionally, you should register the beneficial owner (owner who receives money from the company, most likely yourself) at the Registo Central de Beneficário Efetivo within 30 days.
Starting up Online in Portugal
If you are opening your IT, media or consulting business online, you should follow the regular registration process. That said, there are a few additional requirements specific to online businesses. Firstly, you should ensure the company complies with Portuguese and European laws, especially Price Law, the Consumer Law, the Data Protection Law, the Copyright Law, and the Publicity Law. Non compliance can become expensive and even endanger your business.
Tip: To stay up to date with current rulings, regulations and relevant business risks follow exalis News and Stories.
Managing your Risk in IT, Media and Consulting with exali
Freelancers and the self-employed must expect high claims for compensation from customers or principals in the event of professional mistakes and mishaps. In order to not endanger your private assets or the liquidity of the company through these claims, it is essential to take out professional indemnity insurance, or professional indemnity for short. It covers financial loss, property damage and personal injuries as well as possible consequential damages such as loss of turnover of your customers. Furthermore, General Liability Insurance (seguro de acidentes de trabalho) is mandatory for all businesses in Portugal. Professional Indemnity Insurance for Digital Professions via exali covers both these risks and offers expert help on damage regulation or simply on finding comprehensive insurance for your business.
Benefits of Professional Indemnity for Digital Professions via exali:
- Comprehensive protection against damage claims
- All-risk coverage for the IT, media and consulting sector
- Worldwide insurance coverage
- Third-party cyber damage is covered
- Personal support without call center
- Start up discount
- VAT – varies between 6%, 13%, and 23% depending on the service (paid monthly or quarterly)
- IRC (corporate income tax) – 21% tax (paid annually)
- Derrama municipal – a tax on profits, set by the council where the company is established, a maximum of 1.5% paid annually
- Companies also have to submit a monthly renumeration statement ( declaração mensal de renumerações ). Public inspection measures vary for each business. You can find the specifics for your sector on this list of public inspection templates issued by the Portuguese government.
The best protection for your new business in Portugal