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 Global Growth 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. An LDA needs at least 2 founders with a minimum of EUR 5,000 of share capital. 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 does not need to undergo an annual audit if they have met 2 out of 3 requirements during the 2 preceding years.
Portugal subsidiary laws state that an LDA must also have:
- Combined assets of less than EUR 1.5 million.
- Total revenue of less than EUR 3 million.
- 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 — no new entities required.
Beat the competition and enter new markets in minutes, not months, with G-P. We’ve paired our industry-leading team of in-region HR and legal experts with our #1 Global Growth Platform™ to help you hire compliantly in 180+ countries, eliminating the need to set up local entities or subsidiaries.
Get in touch today to learn more about how we can streamline the global growth process.