Startups, Portugal: business types
There are a number of different legal structures for businesses in Portugal, ranging from individual sole traders to large incorporated companies with many employees. The Portuguese Companies Code regulates businesses in Portugal and defines the different legal forms. Here’s a brief overview:
Businesses owned by one individual
- Sole Trader – see section below on freelancers and self-employed for details
- Single-Member Limited Company – see below section for details
- Individual Limited Liability Establishment – see below section for details
Businesses owned by more than one person
- Private Limited Company (Sociedade por Quotas)
Portuguese company with a minimum of two partners and minimum capital investment of EUR5000. Shareholders pay a minimum of EUR100 per share and are jointly responsible for everything agreed in the Articles of Association. Shareholders are liable for debts up to the amounts covered by business assets.
Public Limited Company (Sociedade Anomina)
- Portuguese company that requires at least 5 shareholders and a minimum capital investment of EUR50,000. Liability of debts is limited to business assets and shareholders are liable for amounts up to their share value.
Partnership (Sociedade em Nome Colectivo)
- Portuguese company with a minimum of two partners whose liability extends to personal assets that can be used to cover debts.
Limited Liability partnership (Sociedade em Comandita)
- Portuguese company with a minimum of two partners who are a mix of general partners who run the business and have unlimited liability (including personal assets) and sleeping partners who provide capital and whose liability is limited to the amount invested.
- Non-profit organisations run through cooperative principles and mutual assistance of members. They are freely established legal entities whose capital and composition may vary. Portuguese cooperatives are regulated by the Antonio Sergio Cooperative Sector Institute (CASES).
Individuals wanting to start up businesses in Lisbon or another of the Portuguese cities on their own can choose from the following:
Sole Trader (Empresario em Nome Individual)
- This is a basic form of self-employment in Portugal where individuals (sole traders) trade as a business, are free to do what they want with profits once taxes have been paid and have unlimited liability for business debts. There is no minimum capital requirement to start up and no requirement for any formal constitution or articles of association.
Single-Member Limited Company (Sociedade Unipessoal por Quotas)
- One person runs the Portuguese business but debt liability is limited to business assets. There must be a minimum capital investment of EUR5000.
Individual Limited Liability Establishment (Estabelecimento Individual de Responsabilidade Limitada)
- Similar to the Single-Member Limited Company but the initial capital investment of EUR5000 must consist of at least two-thirds cash. Up to a third can consist of collateral that can be used as security.
- Freelancers in Portugal can operate in exactly the same way as Sole Traders. If you’re supplying a trade rather than operating as a business from a fixed premises (e.g. journalist, hairdresser, electrician), you can work as a freelancer in Portugal as long as you have a residence permit, tax number and social security number. You will be responsible for making your own income tax payments and social security contributions.