Company Formation in Portugal

You set up a company in Portugal by getting a Portuguese tax number (NIF) for each shareholder and manager, incorporating a private limited company (Lda) through the state's one-stop Empresa na Hora or online service, then registering for tax and opening a bank account. It suits businesses with real people or customers in Portugal or the EU, not paper entities.

Key points

• Most foreign-owned businesses use a sociedade por quotas (Lda), which needs only €1 of share capital per quota and can be registered in a day once every owner has a NIF.

• The mainland corporate income tax (IRC) rate is 19% for 2026, with 15% on the first €50,000 for SMEs, falling to 18% in 2027 and 17% from 2028, plus municipal and state surcharges.

• The Madeira International Business Centre offers a 5% rate within income ceilings, but only for licensed companies with real jobs and investment in Madeira.

• IFICI (often called NHR 2.0) replaced the non-habitual resident regime for new arrivals and is limited to research, innovation and certain qualified roles.

• Indian owners need an ODI or LRS route to fund the company, and the India–Portugal DTAA caps withholding on dividends, interest, royalties and technical fees.

Why do founders and groups set up a company in Portugal?

Founders and groups set up in Portugal for a cost-effective EU operating base: a skilled, English-speaking tech workforce in Lisbon and Porto, salaries below Western European levels and EU market access. Talent and residence routes matter more than the tax rate.

Typical cases: a UK or Indian software company hiring an engineering team in Lisbon, a founder relocating with their operating company, or a group serving Iberian, Lusophone African and Brazilian customers from one EU hub.

It is not a low-tax holding location, its administration is formal, and a company run from India, Dubai or London with no Portuguese staff gains little. For a wider shortlist across markets, see our guide to setting up in 24 jurisdictions.

If your plan is more about the large Spanish market or a Latin American bridge, compare it with our guide to company formation in Spain, Portugal's natural alternative.

Which type of company can you register in Portugal?

Most foreign founders and subsidiaries register a private limited company, the sociedade por quotas (Lda), or its single-owner version, the sociedade unipessoal por quotas. Larger or listed businesses use a sociedade anónima (SA), and some groups start with a branch.

In practice, many subsidiaries capitalise at €5,000 or more so banks and suppliers take them seriously.

What is the corporate tax rate in Portugal in 2026?

The mainland Portuguese corporate income tax (IRC) rate is 19% for 2026. Small and medium-sized companies, and small mid-caps, pay 15% on their first €50,000 of taxable profit. Under Law 64/2025, approved by the government as a staged cut, the standard rate falls to 18% in 2027 and 17% from 2028.

Municipalities can also levy a surcharge (derrama municipal) of up to 1.5% of taxable profit, and a state surcharge (derrama estadual) adds 3% on profit between €1.5 million and €7.5 million, 5% between €7.5 million and €35 million, and 9% above that, according to PwC's Portugal tax summary.

What is the Madeira IBC and who can use it?

The Madeira International Business Centre (also known as the Madeira Free Trade Zone or CINM) lets licensed companies pay IRC at 5% on qualifying profits, within taxable income ceilings that rise with the number of jobs created. Companies generally need at least one employee in Madeira within six months, and a minimum fixed-asset investment (€75,000 within two years) if they have fewer than six jobs.

The 2026 State Budget extended the regime: entities licensed by 31 December 2026 can apply the 5% rate until 31 December 2033. A licence with no staff or decision-making on the island tends to fail on substance and treaty access.

Does Portugal have a participation exemption?

Yes. A Portuguese company can generally exempt dividends and capital gains from subsidiaries in which it holds at least 10% for 12 months, provided the subsidiary is not in a blacklisted territory and is subject to tax at a rate not below 60% of the Portuguese rate. Outbound dividends to EU parents and treaty-country parents meeting the same holding test can also be exempt from withholding.

Our piece on holding versus operating companies explains why the two roles should usually sit in separate entities.

What withholding taxes and treaties apply?

Domestic withholding on dividends, interest and royalties paid to non-residents is generally 25% (35% for blacklisted jurisdictions), reduced by EU directives or treaties. Portugal has a broad treaty network, including:

• India: the India–Portugal DTAA (in force since 2000, amended by a 2017 protocol) generally limits dividends to 10% or 15%, and interest, royalties and fees for technical services to 10%.

• UK: the UK–Portugal convention dates from 1968 and generally limits dividends to 10% or 15%, interest to 10% and royalties to 5%.

Portugal has applied the OECD Multilateral Instrument since 2020, so most of its treaties now carry a principal purpose test. Treaty relief is denied where obtaining it was one of the main purposes of an arrangement, which we cover in our note on the principal purpose test.

Does the 15% global minimum tax apply?

Only to groups with consolidated revenue of €750 million or more, which face a 15% minimum effective rate in Portugal, including on Madeira profits. Our page on GloBE (Pillar Two) and the end of arbitrage at scale covers how top-up tax works, and the OECD's global minimum tax page has the model rules.

How do you register a company in Portugal step by step?

You can register a Portuguese Lda in a day once the paperwork is ready; the preparation is what takes time. A realistic timeline for a foreign-owned company is three to six weeks from first instruction to an operational bank account.

1. Get a NIF for every shareholder and manager, usually through a local representative. Non-EU residents generally need a tax representative or electronic tax notifications.

2. Choose a name and articles. Empresa na Hora offers pre-approved names and standard articles; a bespoke name needs a registry certificate.

3. Incorporate. Through Empresa na Hora, the company is registered and receives its tax and social security numbers in one sitting, or remotely through Empresa Online.

4. Register beneficial owners. File the ultimate beneficial owners in the RCBE register within 30 days.

5. Start of activity. Your certified accountant (contabilista certificado, which every company must appoint) files the declaration of start of activity and VAT registration.

6. Bank account and capital. Open the account and pay in the share capital.

7. Employer registration. Register with social security and arrange workplace accident insurance before hiring.

How much does company formation in Portugal cost?

The government fee for Empresa na Hora is €360, plus extra fees if you register a trade mark at the same time or contribute assets other than cash. Professional costs are larger.

These figures are indicative only, based on what we typically see for small foreign-owned companies, and vary with transaction volume, payroll and the provider.

How do you open a business bank account in Portugal?

Portuguese banks will open accounts for foreign-owned companies, but they expect to understand the owners, the source of funds and the business model before they do. Expect requests for the NIF of every owner and manager, certified group charts, proof of address, CVs of the managers, a business plan and evidence of the first contracts.

Pain points for non-resident owners are in-person identification and slow review of multi-layer ownership. A clean chart and a manager who can attend help most. We explain the pattern in why banks challenge group structures before tax authorities do.

What substance does a Portuguese company need?

A Portuguese company is taxed in Portugal if its registered office or place of effective management is there, but treaty partners and your home country look at where it is actually run. Substance means local people doing the core work, decisions taken in Portugal, and real premises, especially for Madeira companies and any company claiming treaty relief.

The bigger risk usually sits at home. If an Indian founder runs a Portuguese company day to day from Pune, India can treat it as Indian resident under its place of effective management (POEM) rules.

A UK parent must consider UK CFC rules that re-attribute offshore income, though a genuinely staffed Portuguese trading company usually falls within an exemption. Our guide to economic substance after 2022 sets out what tax authorities now expect.

Can you get residency in Portugal through your company?

Owning a Portuguese company does not by itself give you residence, but several visas link to business or work. The main routes for non-EU founders and staff in 2026 are:

• D2 entrepreneur visa: for people investing in or starting a business in Portugal, assessed on the business plan and means.

• D8 digital nomad visa: for remote workers employed or contracted by non-Portuguese clients, with income of at least four times the minimum wage, which is €3,680 a month in 2026 based on a €920 minimum wage. Details are on the Portuguese visa portal.

• D7 passive income visa, Tech Visa and Startup Visa: for passive-income residents, qualified hires of certified companies, and founders in certified incubators.

• Golden visa: since October 2023 property purchases no longer qualify. Remaining routes include €500,000 in qualifying investment funds, €500,000 of company capital plus five jobs, or creating ten jobs.

Portugal also approved a stricter nationality law in 2026 that lengthens the residence period for naturalisation, generally to ten years for non-EU and non-Lusophone nationals. Golden visa residence rights themselves were not changed.

What is IFICI (NHR 2.0)?

IFICI, the tax incentive for scientific research and innovation, replaced the non-habitual resident (NHR) regime for people who became resident from 2024. Eligible new residents pay a flat 20% on Portuguese employment and business income from qualifying activities for ten years, and most foreign-source income is exempt, except pensions and income from blacklisted territories.

Eligibility is much narrower than NHR: research and higher education, qualified jobs in certified startups or companies with contractual tax incentives, and certain highly qualified professions. You must not have been resident in the previous five years, and must register by 15 January of the year after arrival.

A founder's personal move needs the same care as the company, as we explain in how founder behaviour quietly shifts tax residency.

How can an Indian resident set up a company in Portugal?

An Indian company invests in a Portuguese subsidiary under the overseas direct investment (ODI) rules through its authorised dealer bank, while an Indian resident individual can invest under the Liberalised Remittance Scheme (LRS) within the USD 250,000 annual limit, subject to the Overseas Investment Rules. Our guide on how an Indian founder can fund an overseas company through ODI or LRS compares the two, and our explainer on ODI rules covers filings and limits.

Dividends from Portugal can suffer Portuguese withholding at the DTAA rate. In India they are taxed at normal rates (slab rates for individuals, normal corporate rates for companies, since the old 15% concessional rate for dividends from foreign subsidiaries no longer applies), with credit for Portuguese tax. Royalties and fees for services paid from Portugal to India are capped at 10% under the treaty.

For UK owners, a UK parent generally receives Portuguese dividends exempt from UK tax, subject to CFC rules, and a founder moving to Portugal must first break UK residence under the statutory residence test.

What are the ongoing compliance requirements in Portugal?

Every Portuguese company must keep accounts under the Portuguese accounting standards (SNC), through a certified accountant. The main annual obligations are:

• approving the annual accounts within three months of the year end;

• filing the corporate tax return (Modelo 22) by the end of May for calendar-year companies;

• filing the simplified business information return (IES), which also deposits the accounts, by mid-July;

• VAT returns, SAF-T files, payroll filings and IRC payments on account;

• keeping the RCBE beneficial ownership register up to date;

• a statutory audit for an Lda that exceeds two of the three size thresholds for two consecutive years.

Portugal vs Spain vs Cyprus: which suits your company?

Our clients most often compare Portugal with Spain and Cyprus.

Cyprus figures reflect its 2026 tax reform, in force from 1 January 2026.

The Greenwolf view

Portugal works when your business genuinely runs there: a Lisbon engineering team, an Iberian sales office or a founder who has actually moved. Then a falling IRC rate, skilled people and practical visas make it a strong EU base.

It works badly as a postcode. A Madeira licence with no staff, or an Lda managed from Mumbai, invites challenge from tax authorities and banks alike. And IFICI is not NHR, so test the personal case individually.

Our order of questions: what will the company do, who will do it and where, how will it be funded, and only then which regime applies.

Setting up in Portugal with Greenwolf

If you are planning a Portuguese subsidiary, a Lisbon team or a founder relocation, Greenwolf Advisors can map the commercial role, structure the ODI or UK funding, model the Portuguese and home-country tax, and incorporate and maintain the company. Speak with a Greenwolf strategist before you commit to a structure.

This article is general information, not advice for a specific case.