Foreign Investments
In Portugal there are no entry restrictions for foreign capital. In fact, the guiding principle of the Portuguese legal framework is to prohibit discrimination of the investment on the grounds of nationality. Likewise, it is not required to have a national partner and there are no specific obligations for foreign investors. There are also no restrictions on the profits and/or dividends repatriation.
As Portugal is a member state of the European Union, an entrepreneur planning to invest in the country will neither have to submit to different rules from those governing domestic investment followed entrepreneurs, nor will the need for any special registration or statement of foreign investment be imposed. Therefore, there is no differential treatment between foreign and domestic investment in Portugal.
Foreign companies, apart from enjoying the same conditions and rights as domestic firms, are also liable for taxes and other tariffs, including Income Tax (“IRC”), Value Added Tax (“IVA”), Vehicle Tax, Property Tax (“IMI”), among others.
Companies must also respect deadlines regarding social security payments, as well as payments payable by its employees. Portugal tries to encourage investments from foreign investors. The following are among the reasons that foreign investors are attracted to Portugal:
As Portugal is a member state of the European Union, an entrepreneur planning to invest in the country will neither have to submit to different rules from those governing domestic investment followed entrepreneurs, nor will the need for any special registration or statement of foreign investment be imposed. Therefore, there is no differential treatment between foreign and domestic investment in Portugal.
Foreign companies, apart from enjoying the same conditions and rights as domestic firms, are also liable for taxes and other tariffs, including Income Tax (“IRC”), Value Added Tax (“IVA”), Vehicle Tax, Property Tax (“IMI”), among others.
Companies must also respect deadlines regarding social security payments, as well as payments payable by its employees. Portugal tries to encourage investments from foreign investors. The following are among the reasons that foreign investors are attracted to Portugal:
- A democratic form of government that encourages overseas investments and allows investments and profits to be withdrawn by foreign residents.
- A technically competent and skilled labor force with low labor costs.
- Similarly the population is among the youngest in Europe.
- Massive infrastructure developments particularly in rural areas, thanks to the huge EU budget, some Euro 23 Billion between the years 2000- 2006.
- Good command of English as a second language in the business world and in industry. (Over 25%)
- Friendly population, pleasant climatic conditions and crime rates that are among the lowest in Europe.
Restrictions on Foreign Ownership in Portugal
- As a general rule, there is no discrimination in Portugal between overseas investors and local investors. Foreign investors in Portugal itself are bound to report to the investment authorities, the ICEP, within 30 days of the date of the investment. As regards an investment in Madeira or the Azores, a foreign investor must register with the Planning and Finances Ministry.
- Investments that are connected with security or public health matters must obtain prior approval.
- Investments of overseas residents that are not EU residents in an aviation company are limited to 49%. A foreign investment in television services is limited to 15% for an individual investor who is not an EU resident.
- Investments of foreign residents in the banking and insurance sector must be approved by the central bank for EU residents or by the Ministry of Finance for investors who are not EU residents.
Portugal Investment Incentives
- Portugal grants investors, including foreign investors, an incentive.
- The type and amount of the incentive is influenced by factors such as the size of the investment, the contribution of the investment to development areas, creation of jobs, training for employees, etc.
- For investment creating employment of young employess, aged under 30 years, there is an increased salary tax deduction for corporate tax purpose of 50% of the actual salay expense.
- For companies resident in areas eligible for benefits, the corporate tax is reduced to 15%. When establishing new entities the corporate tax rate for the first 5 years is 10%.
- Companies creating permanent jobs in such areas can deduct additional 50% of social security payments.
- Contracts for NATO infrastructure are exempt from corporate tax.
Portugal Free Trade Zones (FTZ)
- Portugal has 2 free trade zones in Madeira and the Azores.
- The activity permitted in these areas includes industrial and commercial activity, including setting up trust companies.
Portugal R&D Incentives
- Expenses of R&D and start ups can be depreciated over 3 years.
- There is a 20% tax credit for fixed assets purchased.
- Companies can also deduct 50% of their additional R&D investments for investments exceeding the average investment in the previous 2 years, up to EUR 750.000.
Euronext Lisbon
Euronext Lisbon is a stock exchange in Lisbon, Portugal. It belongs to the NYSE Euronext group, the first global stock exchange. Euronext Lisbon trades equities, public and private bonds, participation bonds, warrants, corporate warrants, investment trust units, and exchange traded funds. The BVL General index is the exchanges official index, and includes all listed shares on the official market. Derivatives include long-term interest rate futures, three month Libor futures, stock index futures and options on the PSI-20 Stock index, and Portuguese stock futures. Trading hours are 9 a.m. to 5:30 p.m. (CET), Monday through Friday.