Companies looking to grow in Portugal will need to first establish a subsidiary in the country. However, the process can be complex and potentially take months before you are able to legally hire employees in Portugal.

While establishing a Portugal subsidiary on your own can take months, G-P has an alternative solution. With our agentic Global Employment Platform, you can onboard new team members in minutes — without setting up an entity.

Nonetheless, if you are considering establishing a Portugal subsidiary, here are a few things to keep in mind.

How to establish a Portugal subsidiary

Portugal is generally welcoming towards international investors, and the incorporation process is similar to the process of incorporating a local business. As you consider a move to Portugal, you should examine several business factors that could impact your decision, such as your type of business, industry, and more.

Location and language are 2 other crucial factors to consider. Separate cities and regions may have different costs and availabilities. So, if you do not know the region, it is a good idea to talk to legal advisors or other business professionals in the area. Keep in mind that the language may also vary based on the location. In addition to Portuguese, many people in Portugal speak English, French, or Spanish, but some areas have other dialects.

Next, you’ll need to decide what type of company you want to incorporate. The Portugal subsidiary setup process varies based on the type of subsidiary you choose to operate. The 3 main types of subsidiaries are limited liability companies, partnerships, and branches or representative offices.

Most subsidiaries incorporate as either private or public limited liability companies. The steps for incorporation include:

  • Register the company name at the National Registry of Collective Entities.
  • Open a bank account in Portugal.
  • Obtain a Certificate of Registration.
  • Register employees.
  • Notify the Labor Inspectorate.
  • Register for insurance.

Portugal subsidiary laws

Smaller companies that have a low initial capital investment and expenses typically incorporate as a private limited liability company (Lda.) — the most popular type of subsidiary structure. A standard Lda. needs at least two shareholders and has no fixed statutory minimum share capital. Each quota must be at least EUR 1. Each shareholder has limited liability based on what they contribute.

An LDA also requires a single director who is appointed through the general meeting of shareholders and is the supreme authority in the LDA in Portugal. With this setup, An incorporated Lda. company doesn't require an annual statutory audit unless it exceeds at least two thresholds for two consecutive financial years. The thresholds are a EUR 1.5M balance-sheet total, EUR 3M in net sales and other income, and 50 average employees.

Portugal subsidiary laws state that an Lda. must also have:

  • Balance-sheet total of no more than EUR 1.5M. At least two of the three audit thresholds must also remain unexceeded for two consecutive financial years.
  • Total net sales and other income of EUR 3M, along with meeting at least one of the other statutory thresholds, over two consecutive years.
  • Fewer than 50 employees.

Benefits of establishing a Portugal subsidiary

Once you establish a subsidiary, you can then set up your payroll, hire employees, and create a Portugal benefits management plan. You’ll discover numerous benefits as a limited liability company. This type of subsidiary has limited liability for the parent company, which is beneficial for both parties. The limited liability protects the parent company from any losses or litigation, and the subsidiary can operate under its own management structure.

Other important considerations

If you decide to incorporate by yourself instead of choosing a subsidiary alternative, you will need a good deal of time and money. Although Portugal’s subsidiary process is relatively fast, any missteps could result in fines, penalties, or increased setup time. You will also need to clear your schedule at your parent company to accommodate potential travel to Portugal.

Keep in mind that someone in your company will also need to learn Portugal’s subsidiary laws. Alternatively, you’ll need to hire an advisor or a new team member who has a thorough understanding of these regulations to ensure compliance.

Enter new markets with G-P EOR — no new entities required

Beat the competition and enter new markets in minutes, not months, with G-P’s agentic Global Employment Platform. G-P acts as the legal employer on your behalf, removing the cost, risk, and complexity of company registration.

Test new markets, hire the right people, and move at the speed of opportunity — without the up-front commitment of building an entity first. Request a proposal.