Setting up a Subsidiary in Portugal  – 2024 Guide

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Portugal is among the most attractive European nations for investors worldwide. In the last few years, the country’s government has taken several steps to attract foreign investment, including reducing taxes and creating more favourable conditions for businesses. 

As of 2020, Portugal was ranked 39th in terms of ease of doing business. In 2021, it was ranked 36th with regards to economic competitiveness. Portugal is also recognised for having an easy process for company registration. 

If you are looking to expand your brand, opening a subsidiary in Portugal could be the right move. In this article, we have explained the steps involved in setting up a subsidiary in Portugal and answered some frequently asked questions (FAQs) about expanding a business in the country. 

How to Set Up a Subsidiary in Portugal

Portugal normally welcomes foreign investors, and setting up a company is identical to setting up a domestic business. You will have to examine many business aspects that might affect your decision when you consider moving to Portugal, including your industry, business type, the nationality of your headquarters, and more.

Two important things to consider are location and language. Prices and availability may vary between various cities and regions. Speaking with legal counsel or other business specialists in Portugal is a good idea if you are unfamiliar with the region. Remember that regional variations in language exist. Although some regions of Portugal have various languages, the majority of employees there speak English, French, and Spanish.

The next step is choosing the type of business you want to incorporate. Depending on the kind of subsidiary you decide to run, Portugal subsidiaries have several procedures. Limited liability corporations, partnerships, and branches/representative offices are the three primary categories of subsidiaries. 

Process of Creating a Subsidiary in Portugal 

Once you have chosen the type of business you want to create, the next steps you will need to follow are listed below: 

  • You will have to register a unique company name with the Institute of Registries and Notary (IRN)
  • Next, obtain the certificate of admissibility. It will be provided by the IRN
  • Draft the company’s Articles of Association
  • Open a bank account in Portugal to deposit capital 
  • Register the company with the Commercial Registry and the tax authorities.
  • Register all employees 
  • The subsidiary must also register with social security (Segurança Social) to comply with Portugal’s employment laws.

Bank Account for Your Subsidiary in Portugal 

Without a local bank account, no firm established in Portugal can begin operations. The minimal share capital of the company can be deposited into a provisional bank account, which can later be converted into a permanent account linked to all of the company’s financial transactions. 

The Portuguese banking system consists of domestic and international banks and other financial organisations that may choose to establish subsidiaries there. 

Accounting Standards for Subsidiaries in Portugal 

In addition to the state laws, the International Financial and Reporting Standards (IFRS) apply to all companies in Portugal. In terms of accounting reports, a balance sheet, a profit and loss account, and an annual financial report make up a company’s financial statements. 

In Portugal, statutory auditors are often responsible for certifying and auditing businesses, and their work is regulated by a number of government agencies. All declarations and accounts in Portugal must be presented in the Simplified Business Information system (IES). 

Frequently Asked Questions (FAQs) 

What are the Benefits of Opening a Subsidiary in Portugal? 

  • Favourable Tax Structure

The 2008 financial crisis has increased the importance of tax incentives for investment in the nation. The primary goal of several incentives is to encourage foreign investment to support sustainable growth, firm investment, and job creation. 

Portugal has focused on promoting legislative measures to prevent foreign double taxation and offering favourable nominal rates.

In fact, some of the tax advantages are included in the different tax laws as exemptions, rate reductions (like a lower VAT rate), deductions to the collection, deductions from taxable income, and expedited depreciation and reintegration.

Under the participation exemption approach, corporate tax is levied at a rate of 21% on a company’s earnings. However, some exceptions may apply to passive income.

  • Cost Effective 

Portugal is one of the few countries in Europe where you can be certain to obtain the greatest value for money alternatives for your company from qualified labour to central office locations. The labour force is substantially more educated, skilled, and affordable than in the majority of western European nations. 

Did you know that Portugal is the only Latin-speaking nation in Europe to rank higher than 12th in the 2019 English Proficiency Index? That is another thing to consider. Most Portuguese cities will never have a communication problem.

According to Numbeo (the largest cost of living database in the world), Lisbon is still more affordable to rent than London, despite the fact that demand has driven up rent costs in recent years. 

Portugal’s cost structure is competitive compared to other European countries. Salaries and office rents are lower, and living costs are also more affordable.

What are Some Important Portugal Subsidiary Laws? 

The most common form of subsidiary structure for smaller businesses with modest initial capital expenditures and operating costs is a private limited liability company (LDA). A minimum of two founders and €5,000 in share capital are required for an LDA. Based on their investment, each shareholder has a limited liability.

A single director, who serves as the ultimate decision-maker in the Portuguese LDA and is chosen by the shareholders’ general meeting, is also necessary for an LDA. With this arrangement, if an incorporated LDA company has complied with two of the three standards over the previous two years, they are exempt from the necessity to conduct an annual audit.

What is the Best Way to Set up a Subsidiary in Portugal? 

There are two ways to create a subsidiary in Portugal – online or in-person. 


This method of incorporation is the most useful. A lawyer uploads all of the paperwork to the Commercial Registry Portal. The Commercial Registry will then have ten working days to respond to the application after the documents are submitted.

The government will mail the commercial registry certificate, business card, and payment receipts to the company’s registered address after confirming incorporation.


If speed is important, physically visiting the office is the quickest approach to open a subsidiary in Portugal. 

Most of the time, the procedure is the same as doing it online, but there is one significant difference – it calls for pre-approved Articles of Organization, but these can always be altered afterwards.

Upon submission, the applicant receives a three-month online access ticket to the company’s business register. In addition, they will get a paper certificate.

What are Some Other Important Things to Consider When Opening a Subsidiary in Portugal?

Portugal’s subsidiary procedure is generally quick, but any errors could incur fines, penalties, or longer establishment times. In addition, you’ll need to free up time in your parent company’s schedule to allow for frequent trips to Portugal.

Remember that someone in your organisation will need to become familiar with Portugal’s subsidiary laws. As an alternative, you’ll need to bring on a new employee or advisor who is well-versed in these rules.

What is the Difference Between a Branch and a Subsidiary in Portugal? 

When selecting whether to establish a branch or a subsidiary in Portugal, the degree of independence is essential. This highlights the major distinction between the two organisations, emphasising that subsidiaries are independent legal entities that are free to operate independently of the parent company even when similar operations are established. 

The case with branches is different. The foreign firm is solely responsible for the obligations and liabilities of the branch that was founded in Portugal. Subsidiaries are treated differently than branches in terms of taxation, as they are subject to tax on both their worldwide profits and their revenue from Portugal. 

Final Thoughts 

Setting up a subsidiary in Portugal involves different steps, as we’ve outlined above. The process isn’t too complicated, but it can take some time to get the paperwork done and register your company with the authorities in the country. If you don’t want to handle the stress, let the experts at Start Company Formations take care of everything. 

We specialise in setting up businesses in foreign countries and can help you open a subsidiary in Portugal. Our team of accountants, lawyers, and counsellors will manage everything on your behalf. They will apply for your company name, register the business, draft Articles of Association, open your company’s bank account, register with social security, and address all other requirements. 

By working with us, you will have peace of mind knowing that there won’t be any problems in the process, and you will quickly be able to establish a subsidiary in Portugal. Get in touch with us if you have any questions or want to hire us to set up your business in Portugal. 

Read more about Advantages of Setting up a Branch in Spain and Portugal