Portugal has become an attractive destination for foreign entrepreneurs, investors, freelancers and international companies looking to establish a presence in Europe.
Company formation in Portugal requires choosing the right business structure, obtaining the necessary tax identification and completing the relevant registrations. Starting a business in Portugal as a foreigner also involves VAT registration, accounting and ongoing compliance.
This guide explains the main steps involved in setting up a business in Portugal, whether you are an individual entrepreneur, investor or foreign company planning to operate in the Portuguese market
1. Choose the right business structure
The first step is to decide which legal structure is most suitable for your activity.
The most common options are:
- Sole trader / independent professional
- Single-member limited liability company
- Limited liability company
- Branch of a foreign company
- Portuguese subsidiary
For many foreign entrepreneurs, a limited liability company is often the preferred option because it separates personal assets from business liabilities and gives the business a more professional structure.
However, the best option depends on your activity, expected turnover, tax situation, investment plans and whether you will have employees in Portugal.
2. Obtain a Portuguese tax number
Foreign individuals who intend to establish or operate a business in Portugal generally need a Portuguese tax identification number, known as a NIF.
The NIF is used for tax purposes and may also be required for company incorporation, banking, contracts and other administrative procedures in Portugal.
The requirements for non-residents depend on their country of residence and their tax situation. In certain circumstances, a non-resident may need to appoint a Portuguese tax representative or use an approved electronic notification channel.
3. Choose and register the company name
If you decide to incorporate a company, you need to choose a company name.
There are usually two options:
- choose a pre-approved company name;
- request approval for a specific company name.
The name should be appropriate for the activity and should not create confusion with an existing company or brand.
4. Incorporate the company
Companies in Portugal can be incorporated through online services or in person, depending on the situation and the type of company.
For many standard company formations, the process can be relatively fast if all documents are ready.
The incorporation process usually includes:
- choosing the company type;
- identifying shareholders and directors;
- defining the share capital;
- approving the articles of association;
- registering the company with the commercial registry.
After incorporation, the company receives a corporate tax number and becomes legally registered in Portugal.
5. Register the Company’s Tax Activity in Portugal
After incorporation, the company must complete its tax registration with the Portuguese Tax Authority before beginning its business activity.
The declaration of commencement of activity establishes important tax information, including:
- the company’s economic activity code or codes (CAE);
- the expected business activity;
- the applicable VAT regime;
- the corporate income tax framework;
- the company’s accounting arrangements;
- the Certified Accountant responsible for the company’s accounting, where required.
For companies required to maintain organised accounting, the declaration of commencement of activity is submitted by a Certified Accountant.
Correctly defining the company’s tax and VAT position from the beginning is important because errors at this stage can create invoicing, VAT and compliance problems later.
6. VAT registration in Portugal
Depending on the type of business, the company may need to be registered for VAT in Portugal.
VAT registration is particularly important for:
- local sales in Portugal;
- services supplied to Portuguese or EU clients;
- imports and exports;
- e-commerce businesses;
- B2B services;
- companies buying or selling within the European Union.
Portugal has specific VAT rules, and foreign-owned companies should confirm their VAT obligations before issuing invoices or starting commercial activity.
7. Appoint a certified accountant
Portuguese companies subject to organised accounting are required to maintain proper accounting records, normally under the responsibility of a Certified Accountant.
The certified accountant is responsible for several tax and accounting obligations, including:
- bookkeeping;
- VAT returns;
- corporate tax returns;
- payroll reporting;
- annual accounts;
- communication with the Portuguese Tax Authority.
For foreign entrepreneurs, having a local accountant is especially important because Portuguese compliance rules can be very different from those in other countries.
8. Open a Portuguese business bank account
After company incorporation, it is common to open a business bank account in Portugal.
Banks may request several documents, such as:
- company certificate;
- identification of shareholders and directors;
- proof of address;
- beneficial owner information;
- business activity details;
- tax identification documents.
For foreign shareholders, the bank onboarding process can take longer, especially when the ownership structure includes foreign companies.
9. Register the beneficial owner
Portuguese companies must identify their beneficial owners through the Central Register of Beneficial Owners.
The initial beneficial ownership declaration generally must be submitted within 30 days following the company’s incorporation. The information must also be updated whenever relevant changes occur.
This is an important compliance obligation and should not be ignored.
The beneficial owner is usually the individual who ultimately owns or controls the company.
10. Understand ongoing tax and accounting obligations
Starting the company is only the first step. After the business is active, there are ongoing obligations to manage.
These may include:
- monthly or quarterly VAT returns;
- corporate income tax payments;
- payroll reporting;
- annual financial statements;
- annual corporate tax return;
- invoicing through certified software;
- social security obligations;
- SAF-T reporting;
- communication of invoices to the Portuguese Tax Authority.
The exact obligations depend on the company’s activity, turnover, employees, VAT status and tax regime.
11. Payroll and hiring employees in Portugal
If the company hires employees in Portugal, it must comply with Portuguese labour, tax and social security rules.
This usually includes:
- employment contracts;
- monthly payroll processing;
- social security contributions;
- wage tax withholding;
- work accident insurance;
- annual employment reporting obligations.
Foreign companies and entrepreneurs should plan payroll costs carefully before hiring staff in Portugal.
12. Common mistakes foreign entrepreneurs should avoid
Foreign entrepreneurs often make mistakes when starting a business in Portugal.
Some of the most common are:
- starting activity before understanding VAT obligations;
- issuing invoices incorrectly;
- not appointing a certified accountant in time;
- using the wrong activity codes;
- ignoring payroll and social security rules;
- delaying beneficial owner registration;
- mixing personal and business expenses;
- assuming Portuguese rules are the same as in their home country.
Good planning at the beginning can avoid expensive corrections later.
13. How JNB Consulting can help
JNB Consulting supports foreign entrepreneurs, investors and international companies starting or expanding their business in Portugal.
We can assist with:
- company incorporation support;
- Portuguese tax registration;
- VAT registration and compliance;
- accounting services;
- payroll;
- corporate tax compliance;
- invoice and reporting obligations;
- ongoing business advisory.
If you are planning to start a business in Portugal, professional support can help you avoid delays, tax issues and compliance mistakes.
Conclusion
Starting a business in Portugal as a foreigner is possible and can be a very good opportunity, but it requires careful preparation.
Before starting, you should understand the right legal structure, tax registration, VAT obligations, accounting requirements and ongoing compliance duties.
With the right support, foreign entrepreneurs can set up their business in Portugal more efficiently and focus on growing their activity.
Need help starting a business in Portugal?
JNB Consulting provides accounting, tax and VAT support for foreign entrepreneurs and companies in Portugal.
Contact us to discuss your business project and understand the next steps.
Frequently Asked Questions
Can a foreigner start a business in Portugal?
Yes. Foreigners can start a business in Portugal, either as independent professionals or through a Portuguese company. The correct structure depends on the activity, tax situation and business plan.
Do I need a NIF to start a business in Portugal?
In most cases, yes. A Portuguese tax number is usually required for company incorporation, tax registration, contracts, banking and invoicing.
Do I need an accountant in Portugal?
Most Portuguese companies require a certified accountant. The accountant is responsible for bookkeeping, tax returns, VAT compliance and several reporting obligations.
Does a Portuguese company need VAT registration?
It depends on the activity. Many companies carrying out taxable transactions in Portugal or within the EU need VAT registration. The VAT position should be reviewed before invoicing clients.
How long does it take to create a company in Portugal?
The timing depends on the company structure, documentation, shareholders and banking process. A simple company can often be incorporated relatively quickly, but foreign ownership structures may take longer.
Can JNB Consulting help foreign companies in Portugal?
Yes. JNB Consulting supports foreign entrepreneurs and companies with accounting, VAT, tax registration, payroll and ongoing compliance in Portugal.