Why Set Up a Joint Stock Company in Portugal


Portugal is a country located in Southwestern Europe, on the Iberian Peninsula. It shares its northern and eastern borders with Spain, it’s only bordering country, and is surrounded by the Atlantic Ocean to the west and the south. Today, Portugal consists of mainland Portugal, the Azores, and the Madeira Archipelago.

Portugal is a strategic location for foreign companies that want to establish their presence in Europe and for investors who are looking for market advantages and a favourable business climate. Portugal is a founding member of NATO and an EU member. It joined the European Economic Community (EEC), now the European Union (EU), in 1986. As a member of the Community, its standards and laws are aligned to those in the EU in terms of commercial, import/export, and business matters.

Foreign investors who want a medium or large sized company choose a joint stock company also known as a Sociedade anónima (SA). Public companies in Portugal require a minimum share capital of EUR 50,000 and at least five shareholders in order to be incorporated. An S.A. company can have its shares quoted in an organized Stock Exchange Market.

There are no restrictions in Portugal as to foreign investment. Portuguese law is based on a principle of non-discrimination based on the investor’s nationality. There are no requirements as to a mandatory Portuguese shareholder and no limitations on the repatriation of profits or dividends.

It is allowed to issue registered shares and bearer shares (in case of the issue of the latter, they have to be paid in full). Shares can be ordinary and privileged ones. The latter can:

  • not provide for the right to vote at general meetings, but give a guarantee of receiving dividends. There can be issued up to 50% of above;
  • be subsequently bought out by a company. This applies only to fully paid shares. The owner has the right to receive an amount equivalent to its price at the time of purchase, except for periodic dividends.

.Corporate income tax is levied on the taxable worldwide profits of Portuguese resident companies. The taxable profit up to 12.500,00 EURO will be taxed at a reduced rate of 12.5%; while the excess will be taxed at 25%. The general tax rate for companies incorporated in Madeira is 20%. Companies incorporated in the Azores are taxed at a general rate of 17.5%.

There are three rates of VAT in mainland Portugal; 5% generally applicable to various foodstuffs, public transport, medical products, and hotel accommodation services; 12 for flowers, certain foodstuffs and for
PKF – Doing Business in Portugal – 33 restaurant services; the standard rate of 20%. Insurance, education,
finance, and health services are all exempt from VAT.

The Portuguese government caps investment tax credits at between 10% and 20%. That’s a lot of deductions for small businesses. In total, Portugal has thus far signed 79 double-taxation agreements.

Portugal is a gateway to a market of 250 million people worldwide thanks to its ties with its former colonies. These Portuguese speaking markets, namely Brazil, Angola, and Mozambique are known as the Lusophone markets.