How to Set Up an Entity in Portugal

Setting up a legal entity in Portugal can be an appealing path for companies looking to access the EU market, benefit from a business-friendly environment, and tap into a growing, innovation-oriented economy. Portugal offers strategic location advantages—connecting Europe with Africa and the Americas—as well as a relatively streamlined incorporation process for foreign investors.

The process is increasingly straightforward thanks to online platforms and reduced formalities, particularly for small- and medium-sized enterprises (SMEs). However, businesses must still navigate registration steps, local banking requirements, employment compliance, and tax obligations. The benefits include limited liability, full ownership flexibility, and the ability to operate directly in the local market rather than via a third-party. On the other hand, challenges can include language and documentation issues, local banking KYC requirements, and ongoing compliance with Portuguese tax, social security, and corporate reporting regimes.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in Portugal?

In Portugal, “opening an entity” means registering a locally-incorporated company (or branch of a foreign company) with the national commercial registry, obtaining a tax identification number, appointing local directors or representatives, and registering for tax and social-security obligations so the company can legally operate in the country. It provides the business with full legal status, board and shareholder structure, and the local company becomes responsible for tax, employment, and regulatory obligations.

Entity overview in Portugal

Below is a summary of the key aspects of entity formation in Portugal.

Step-by-step guide: How to open an entity in Portugal

Step 1: Choose the right structure

The right structure in Portugal depends on who’s incorporating and how the business intends to operate. Portuguese citizens and residents can freely establish any company type, though most choose an Lda because it’s simple, inexpensive, and offers limited liability. It’s well-suited for small and medium-sized businesses, while those planning to raise capital or list shares often opt for an SA, which requires higher capitalization and offers greater transparency and investor credibility.

Foreign investors, including both EU/EEA residents and non-EU nationals, can own 100% of a Portuguese entity. EU/EEA investors can incorporate directly without a local partner, while non-EU founders must appoint a fiscal representative and obtain a Portuguese tax identification number (NIF). For most international companies, the Lda remains the preferred choice thanks to its low cost, flexible management, and full ownership rights. Larger multinationals entering the market or operating temporarily may instead register a branch, which avoids creating a new legal entity but subjects the parent company to Portuguese tax and reporting obligations.

Step 2: Verify business name availability

Once you have chosen your structure, you must select a company name and check availability with the commercial registry. The process can be done online via the government portal. The name must be unique, not misleading, and for an Lda must include “Lda” or “Limitada” in its designation. You can reserve a name via the portal of the commercial registry or through the Empresa Online service.

Step 3: Prepare incorporation documents

You will typically need the following documents:

• The articles of association (or memorandum and articles), setting out shareholders, quotas, management structure, and business purpose
• Declaration of acceptance from the manager(s)/director(s)
• Identification documents for shareholder(s) and manager(s) (passport or ID)
• Proof of corporate address in Portugal
• For foreign nationals: tax identification (NIF) for shareholders and possibly a fiscal representative if no Portuguese address, bank confirmation of deposit of share capital (for bank-account opening purposes), or evidence of shareholder contributions

Step 4: Register with the commercial registry

You file the incorporation documents with the commercial registry (through the relevant local office or online via the portal). Using the online system (Empresa Online 2.0), you can typically complete registration within 1–2 days. Once registration is approved, you receive the company registration certificate, the unique tax identification number (NIPC), and are formally recorded in the public registry.

Step 5: Register for tax and social security

After registration, you must notify the Autoridade Tributária e Aduaneira (AT) of the commencement of activity within 15 days if registered in the commercial register. You will obtain a tax number (NIPC) for the company and register for corporate income tax (IRC). You also register as an employer with the Instituto da Segurança Social to enable social-security contributions for staff.

Step 6: Open a corporate bank account

You must open a corporate bank account in Portugal. Banks typically require the company registration certificate, articles of association, NIFs of shareholders, passports/ID of directors, proof of address, and evidence of business purpose. Some banks may require the local physical presence of directors. Account opening may take a few weeks. Having a bank account allows you to deposit share capital if required and manage business flows.

Step 7: Set up payroll and employment compliance

If you intend to hire employees, you must register as an employer, comply with Portuguese labor law, and social security contributions. Employment contracts must adhere to legal minimums for working hours, holidays, termination rules, benefits, and insurance. Employer reporting, payroll monthly filings, and contributions to Social Security are obligatory. Ensure you comply with data-protection obligations and employment regulations.

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Post-registration obligations

After incorporation, companies in Portugal must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: File annual corporate income tax return (Modelo 22) by 31 May of the year following the tax year, with payments of advance installments in July, September, and December.
• Corporate registers: Maintain up-to-date records of directors, shareholders, beneficial owners, and report any changes to the commercial registry or tax authority within applicable deadlines.
• Compliance tracking: Monitor all tax, licensing, and corporate filing deadlines via a compliance calendar or automated reminder system to avoid late penalties.
• Licenses and renewals: Renew applicable trade licenses, sector-specific permits, or municipal approvals based on renewal cycles (yearly or on expiry).
• Recordkeeping: Retain accounting, payroll, HR, and transaction records for a minimum of 10 years in many cases.
• Employment law compliance: Adhere to labor, benefits, social security, and data-protection regulations, including compliant employment contracts, payroll reporting, contributions, and insurance coverage at the intervals required by the labor authority.

Taxes and financial considerations

Here are the key tax and financial obligations for companies in Portugal:

• Corporate income tax: The standard rate in mainland Portugal is 21% of taxable profits. For small and medium-sized enterprises (SMEs), a reduced rate of 17% applies to the first €25,000 of taxable profit, with the standard rate applied to the remainder.
• VAT: The standard VAT rate is 23% in mainland Portugal. Reduced rates apply: 13 % and 6 % depending on goods/services.
• Payroll/social contributions: Employers must register for social security and contribute at the rates required under Portuguese law (varying by employee type and salary).
• Accounting standards: Companies must prepare financial statements under Portuguese GAAP (or IFRS if applicable) and file required reports with the commercial registrar or tax authority as required by size thresholds.

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into Portugal—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Portugal?
Typically 2–4 weeks, though online formation services can complete the registration in 1–2 days for the company registration portion. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
For a typical Lda (private limited liability company), the minimum share capital is €1 (≈ $1.10 USD).

Can foreign companies own 100% of an entity in Portugal?
Yes, foreigners can own 100 % of the company (such as an Lda) and no Portuguese citizen or local shareholder is required.

Do I need a local director or representative?
While Portuguese law does not always require a local-resident director for an Lda, practical requirements (such as bank account opening) may make it advisable. Some non-resident companies must appoint a tax representative.

How much does it cost to register an entity?
Online registration costs are approximately €220 for a company with a pre-approved memorandum, or €360 if the articles of association are drafted during registration. Find out the setup cost with our Entity Setup Calculator

Can I hire employees before the entity is fully registered?
Typically, no—hiring employees requires the entity to be registered, employer-registered with social security, and payroll infrastructure in place. However, you can engage talent via Deel’s Employer of Record (EOR) service while your entity setup is in progress.

Can Deel help me open an entity in Portugal?
Yes. Deel Entity Setup manages the end-to-end process—from registration to payroll compliance—in Portugal. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.