FREQUENTLY . ASKED . QUESTIONS
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The NHR regime is a special taxation regime that provides a very beneficial tax treatment for the first 10 years of residence in Portugal.
Designed to promote the transfer of residence to Portugal of entrepreneurs, investors and specialised professionals, it places the country as a prime tax solution jurisdiction for individuals in receipt of qualifying foreign source income, including employment income, pensions, dividends and interest income. What are the competitive advantages?
Taxation, over a period of 10 years, at a fixed rate IRS of 20%, in certain circumstances, on labour income earned in Portugal
2. No double taxation for pension incomes or for employment and self-employment income obtained abroad
For additional details, click here
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The Portugal StartUP Visa is a residence visa for non-EU-Schengen entrepreneurs with a good idea who want to develop it further in Portugal.
International entrepreneurs are able to apply through an online platform and the incubators will receive the projects that are considered relevant in their evaluation and criteria. The procedure will be supervised by the IAPMEI – Institute to Support Small and Medium-sized Enterprises.
International entrepreneurs wishing to access the StartUP Visa and obtain a residence and work visa must fulfill the following criteria:
Intend to develop business activities to produce innovative goods and services;
Open or relocate companies and/or projects focused on technology and knowledge, with a perspective of developing innovative products;
Have the potential to create qualified employment;
Have the potential to attain, 5 years after the incubation period, a turnover over 325.000€ per year, and/or assets value over 325.000€ per year.
Applications can be done online at the following link: https://www.iapmei.pt/Paginas/StartUP-Visa-en.aspx
IAPMEI has also put together a quick guide to help entrepreneurs through the process:
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STEP 1 - REGISTRATION, RESIDENCE AND PERMITS
EU/EFTA National:
Apply for a Registration Certificate at the Local Council (Junta de Freguesia) of the specific area in the city you reside in. This document ensures your right of residence in Portugal, costs around 15€
Non-EU/EFTA National:
You will need to obtain a Portuguese Work Visa and Residence Permit . For entrepreneurs, investors and highly qualified individuals, there are special programs:
Startup Visa, which helps foreign entrepreneurs obtain a visa and residence permit but also to find a certified incubator to support their project.
Tech Visa, which is geared to highly skilled/qualified workers in the areas of technology and innovation.
Golden Visa for those wishing to invest in Portugal
Complete information on how to register as non-Portuguese citizen is available on SEF website (Official Portuguese Immigration Authority).
In both cases, you will then need to request a Tax Identification Number (NIF) to the Portuguese Tax Office followed by a Social Security Identification Number (NISS).
STEP 2 - DECIDE WHAT KIND OF COMPANY YOU WANT TO SET UP
Creating a company in Portugal means you are either building an independent business, or you are expanding your company to this new
location.
In the first case, you are opening a Portuguese company. Otherwise, you are opening a new office for a business that already exists in
another country. Being this the case, you need to understand whether you want to register a subsidiary of your mother company or a
branch office. The differences between these two legal forms lay mainly in taxes and liability
STEP 3 - SET THINGS IN MOTION WITH THE LOCAL BUREAUCRACY
Before registering a company it is necessary to agree on:
The shareholders of the company;
The managing directors of the company;
The social object of the company;
The articles of association that will be applicable to the new company (you can either draft the articles or use a local pre-approved
template).
Once you gathered the above information, these are the steps you need to take:
Choose a name: you can pick one from a list of pre-approved names or choose one outside of the list and request a name approval certificate before registering the company. A standard request takes up to 10 business days to get an answer and it costs 75€. For
urgent requests (answer in 1 business day) the cost is 150€.
Company office address: You will need to register a business address in Portugal. You can find many coworking spaces in Lisbon
and elsewhere in the country that will allow you to use their address as your business address.
Get a certified accountant: when registering your company, you will have to prove that you have a certified accountant (“TOC”) or
you can also choose one from a list made available at the registration desk. Also, if you decide to create a Public Limited Company,
you need to have an auditor - Revisor Oficial de Contas (ROC) - as well.
Get a lawyer: Although not absolutely mandatory, getting a law firm involved can be a good idea, especially if you have a complex
legal structure or require custom Articles of Association. Talk to us to know who the best lawyer for you is.
Decide on company legal structure.
Private Limited Company (“Sociedade por Quotas”)
Individual Stakeholder Company (“Sociedade Unipessoal por Quotas”)
Public Limited Company (“Sociedade anónima”)
Others (additional information here)
STEP 4 - REGISTER YOUR COMPANY
There are three possible ways to register your company in Portugal:
Setting up online takes less than an hour and the registration fee depends on the Articles of Association chosen: approximately 220€ for pre-approved articles and 360€ for articles established by founders. If you choose to register your company online, you and all the shareholders of the company to be established must hold a Portuguese Citizen Card with an activated digital signature or a Digital Mobile Key. Otherwise, we can help you to choose a registered lawyer, notary or solicitor who holds a digital certificate and can register the company on your behalf.
Setting up on the spot (service called “Empresa na hora”) allows you to register your business in person. All shareholders of the future company have to go to the Empresa na Hora desk to start the incorporation process. If any shareholder cannot attend, they
may be represented by another person who shall have power of attorney. For a standard registration, this service costs around 360€.
If the company’s share capital includes assets that are not money, this registration cost may vary. Also, when setting up on the spot, the Articles of Association must follow pre-approved templates.
Setting up through the traditional way implies going through several steps with different entities, at different times. You need to apply for the Certificate of Name approval, deposit the company's share capital, prepare the memorandum and articles of
association, submit the declaration of beginning of activity, register your business at the Commercial Registry Office, and register at the Social Security.
STEP 5: THE AFTERMATH. WHAT TO DO AFTER YOU HAVE REGISTERED YOUR COMPANY
Congrats, your operations are almost up and running! What you need now is to set up a company’s bank account, submit the declaration of beginning of activity to the Portuguese Tax Office, register your company and its initial employees at the Social Security, register the Beneficial Owner , get an invoicing software and get labor insurance cover for your employees.
Tax-wise, to run a business in Portugal you will have to pay a Corporate Income Tax - Companies pay a flat rate of 21% on taxable income.SMEs pay a reduced tax of 17% on the first €25k of taxable income. In Azores and Madeira IRC rates are lower.
Portuguese Corporate Tax is quite reasonable when comparing with other Western Countries.
For complete information on all the steps you need to take to create a legal entity in Portugal, what are the government grants &
incentives, as well as information on taxes, download our guide or schedule a call with us
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FRAMEWORK
The majority of Portuguese companies do not offer stock options plans to their employees. Exceptions include global consulting companies (i.e. Big Four accounting firms) and Law Firms that convert cash bonuses into stock when their employees reach to key positions (i.e. C-level or equivalent) within the Organization. Even in those cases the amount of stock given is residual and rarely represents an actual partnership, having in mind the foundation of stock options plans in the US.
Furthermore, share savings or pension plans and related benefits are equally rare.
LANDSCAPE
There are several arrangements when incorporating in Portugal. The main company types operating in the market are Private Limited Company or “PLC” (“Sociedade por Quotas” or Lda, in Portuguese), and Publicly-Traded Company or Incorporated or “PTC” (“Sociedade Anónima” or simply S.A.), being the PLC the most common form of incorporating due to lighter requirements across the board.
STOCK OPTIONS AND SHARE PLANS
There are no general rules restraining the operation of stock options and share plans, it comes down to the type of company setting out these programs, its by-laws and the shareholders’ agreement in place.
It is allowed to have different plans upon justification and according to the underlying objectives tied to each role as long as the aforementioned differences are proportionate.
There is flexibility around the setup of such plans and they can be directly related to performance criteria, have different vesting schedules, among other parameters the company might find suitable.
TAXATIONS
Operating share plans and giving out stock options per se is not taxable. Taxation comes into play further along in the process if these
plans are exercised by their employees, being the basis for taxation the difference on the assets’ fair value and the exercised price. There
is no fair value for shares of non-listed companies, the general principle and benchmark is the agreed price between two knowledgeable,
independent parties. This amount will be added to the employees’ income tax in that fiscal year. These transactions are exempt from
Social Security tax.
Furthermore, capital gains are subject to a 28% flat rate, alternatively, they can be added to the employees’ income tax as mentioned
above. Exemption on Social Security tax holds in this case too.
LOCAL REQUIREMENTS & ADDITIONAL INFORMATIONAL
Operating a stock option plan requires the purchase of treasury stock (applicable to non-listed companies). Equal treatment amongst
shareholders is mandatory;
This plan has to be GDPR compliant. Be aware of the National Commission for Data Protection (“CNPD”) as there are mandatory
notifications in some cases;
No securities law requirements unless the plan is or can be qualified as a Public Offer;
Companies located overseas can grant stock options and/or share plans to their employees in Portugal through its subsidiary. No restrictions applicable.
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Important note: Golden Visa, the program that grants residence permits in Portugal to investors in the country, will change the rules from January 2022.
Currently, the program authorizes residence for investment activities pending the fulfilment of one of the eight criteria, ranging from transfer of capital, from € 250.000 to 1M €, to the purchase of a property in the country. Golden Visas in Portugal are granted for a period of one year and are renewed for two successive two-year periods. The investment in the country must be maintained for five years, considering the date of the residence permit. Under family reunification, you may extend the Golden Visa to the rest of your family members.
Eligibility - Who can apply for the Portuguese Golden Visa
Any non-EU/EEA/Swiss national who is above 18 and has a clean criminal record can apply for the Portugal Golden Visa. The funds for the investment should arrive from outside of Portugal. Portuguese, EU and EEA nationals are not eligible for the ARI / Golden Visa scheme.
In order to qualify for the program, an investment has to be made; this includes real estate, venture capital funds, transfer of capital, company formation, and donations.
Current Rules and Changes to the Golden Visas program in 2022:
Capital transfer: equal or above 1M € (from January 2022 - 1,5M €)
The creation of, at least, 10 job positions
Real Estate: purchase of property with a value equal to or greater than 500.000 € (from 2022 - real estate investment to only cover property investments made in low-density areas within Portugal. This means that buying real estate in Lisbon or Porto will no longer qualify for the Golden Visa program).
Capital transfer for investing in research activities conducted by public or private scientific research institutions: equal to or greater than 350.000 € (from 2022 - the minimum investment will increase to 500.000 €)
Capital transfer to support artistic production, recovery or maintenance of the national cultural heritage: equal to or above 250.000 €
Acquisition of participation units in investment funds, funds of funds or venture capital funds dedicated to the capitalization of companies, which are established under Portuguese law. Minimum capital transfer: 350.000 € (from 2022: 500.000 €)
Capital transfer of the amount of minimum 350.000 €, for the constitution of a commercial society with head office in the national territory, combined with the creation of five permanent jobs, or for the reinforcement of the share capital of a commercial society with head office in national territory, already existing, with the creation or the safeguard of a minimum of five permanent jobs, and for a minimum period of three years. (From 2022 - the minimum investment will increase to 500.000 €).
Where can I apply for the Portuguese Golden Visa?
Please refer to the official government website: http://ari.sef.pt
Is it free to apply for the Portuguese Golden Visa?
No. There are several costs associated with the Golden Visa application: government fees, legal fees (depending on the law firm you choose to work with), and costs related to your investment.
Please contact us for further information on the costs to apply for the Portuguese Golden Visa.