Starting a-business-in-portugal

UWU ACCOUNTING - STARTING A BUSINESS IN PORTUGAL 2


04 Our Company

06 Why portugal

08 Portugal Branch Office

11 Portuguese Company

14 Portuguese tax system at a

glance

INDEX

Our CompanyOur mission has always been to develop an effective improvement of the

competitive edge and efficiency of our clients, meeting all our clients’ demands

and anticipating their needs.

In all areas of activity, we work to a set of values, and which are:

. Honesty

. Competence

. Demand

. Efficiency and Effectiveness

. Guidance for the client

. Innovation

. Availability

. Cooperation

Our services

Tax Consulting

Given the increasing importance of taxes on business decisions, UWU Solutions

has been making an effort to bring the tax law closer to companies and investors,

making it more clear and accessible.

Our objective is to provide the most relevant information for all economic

agents to understand the basic concepts of the Portuguese tax system, helping

them to correctly understand and apply the majority of its rules.

UWU’s professionals are completely available to advice you and analyse each

situation on a case-by-case basis, always seeking the best solution.


The service we provide includes:

. Give you complete information about different types of Portuguese taxes

(Income Tax, Council Tax, VAT, Stamp Duty, etc.)

. Fill and submit all tax returns

. Fulfil all fiscal obligations

. Receive all fiscal correspondence and deal with fiscal matters

. “Fiscal Representative” in Portugal

. Advise you in both personal and company best tax solutions

Accounting/Bookkeeping and Business Consulting

In UWU Solutions we offer our clients a wide range of services which go far

beyond the fulfilment of the law obligations, because we consider the accounting

and financial information a very important tool for business management.

Our goal is to provide relevant information to our clients, in the right time, so

they can make the best decisions in their companies.

The service we provide includes:

. Finance Accounting

. Analytical Accounting

. Responsibility of certified accountants, enrolled in the “Portuguese

Chamber of Chartered Accountants”

. New companies start up

. Company’s financial performance analysis

Human Resources Management

. Employees’ salaries

. Personal Income Tax

. Social Security issues

. Advice on Portuguese labour legislation


Why Portugal?Despite the serious economic crisis, Portugal has proved to be a prime location

to invest, do business and live. Now, when the major economic indicators show

that Portugal is coming back to growth again, it seems the right time to look to

this country as a good place to invest.

The structure of Portuguese economy is based on the services industry. In

2008, this sector accounted for 73.6% of gross value-added (GVA) and employed

59.3% of the working population. Over the past years, Portuguese economy has

made a significant change in manufacturing moving from high dependence on

textiles, footwear and others to new sectors involving larger incorporation of

technology: motor vehicles and components, electronics, pharmaceuticals and

new technologies. Since 2007, Portugal has increased its exports and is exporting

more technology and innovative products such as pharmaceutical products.


Portugal is also a safe country with great logistic infrastructures, advanced

communication systems, and a friendly economic environment. These are some of

the reasons why many world leading companies are choosing Portugal to invest.

Renault-Nissan alliance is investing in a battery plant for electric cars. Danone is

planning to install the biggest European center of drinkable yoghurt. Pescanova

invested in the largest turbot production unit. Cisco is installing a “super” sales

and support center and Nokia Siemens Networks inaugurated recently a new

Global Networks Solutions Center. These are just a few examples.

Furthermore, Portugal is not only a good country to invest but also a most

desirable place to live. A place to visit and enjoy. You can find here a safe,

environmentally responsible, with privileged nature, rich leisure and culture

and with high quality healthcare facilities. Portugal is blessed by abundant

sunlight and warm temperatures that, certainly, makes you feel motivated and

productive.

For any investor or entrepreneur “time is money”. Due to the On the Spot

Companies innovative system, you are immediately saving money by opening a

company in Portugal. The incorporation procedure only takes, on average, 1 hour.

Far less than the average time required in the OECD countries. The procedures

to set up a company in Portugal are not only fast, but also getting less and less

expensive.

Regarding the fiscal matters, Portugal has nowadays a policy of income tax

reduction, with the intention of helping foreign companies and individuals to

have a better fiscal framework. h as pharmaceutical products.


We underline two important measures:

. Non Habitual Resident Special Tax Regime – can allow significant tax savings

in Personal Income Tax for people that change its residence to Portugal (Ex.:

Pensions can be totally exempt of taxation);

. Corporate Income Tax reduction - The standard rate will decrease from 25%

to 23% in 2014 (this rate will reduce to 17% until 2018). Furthermore, already in

2014 the first €15.000 of profit are taxed at 17% for any kind of company.

As an investment destination, its success is based on the country’s positive

approach towards business development and attracting foreign investment.

This approach has ensured a favourable business environment, making us an

excellent location within the west coast of Europe: we have strategic access to

markets, competitive operational costs, pro-active reforms, a network of modern

infrastructure, a commitment to education and science, and flexible, dedicated

and competent human resources.

These factors have contributed to a steady flow of new investment in

manufacturing, tourism, commerce and services, as evidenced by the significant

number of companies who have chosen to invest in Portugal recently.

Come and visit us!

h as pharmaceutical products.



Portugal Branch OfficeA branch is one way for a company to set up a business in Portugal. This is

usually an adequate vehicle for low cost projects. However, it is not the ideal

choice for substantial or long term projects because the parent company and

branch offices activities are not differentiated. The parent company is fully liable

for the branches liabilities.

The branch must have the same name as the parent company. A branch of a non-

resident company must appoint a resident individual or a company to represent

it in its dealings with the tax authorities. The representatives may be held jointly

and severally liable for the tax debts of the permanent establishments of non-

resident entities, which they represent.

To register a branch, evidence has to be provided of the existence of the

parent, certified copies of the Articles or Statues, the names of the directors, the

share capital, the registered office, and the names of the representatives who

will act for you.

Various documents will need to be translated:

. Document proving the company’s legal existence in the country of origin;

. Complete and updated text of the memorandum or a rticles of association

of the mother;

. Documents proving the identity and legitimacy of stakeholders in order to

create the permanent representation;

. Corporate resolutions approving the creation of the Permanent

Representation and designation of the representative.

After your branch is registered, all stationery, order forms and similar

documents used by your branch are required to show:

. The place of registration of the parent;

. The number with which it is registered;

. The legal classification of the company;

. The address of its registered office;

. The place of registration of the branch, and its registration number. Also the

following particulars must be shown at the branch office:

. The company name;

. The name of the country in which the company is incorporated;

. The parent of the branch has limited liability. The registration of a branch

can be done in just one office and the cost will be 200 euros.

From a tax point of view, branches are permanent establishments of non-

resident companies and a Portugal branch is not a separate legal company from

its parent. A branch is taxed in Portugal on the profit obtained from the activity

done here, with the general rules for IRC (Corporate Income Tax) – see below in

this document.



Portuguese CompanyInstead of a branch, you can create a Portuguese company. This company will

have an independent legal personality, and so will be exclusively liable for its

liabilities. This company can have you as private shareholder, or be owned by a

foreign company.

In Portugal it is possible to create a company in just one day, at just one office.

During the incorporation procedure, the definitive legal person identification card

will be handed over, the Social Security number will be given, and the

company will immediately receive its memorandum and articles of association

and an extract of the entry in the Commercial Register.

As said, the Portuguese company incorporation procedure can be used by

corporate persons or private persons.

As far as foreign legal/corporate persons are concerned, the following

documents, duly translated, are required:

. Document proving the company’s legal existence in the country of origin;

. Memorandum and articles of association of the company;

. Minute of the decision that the company may be involved in the incorporation

of another;

. Identification of the legal representatives of the company;

. A legal/corporate person number will also have to be applied for in advance

from the National Registry of Companies - RNPC - identifying the company in

Portugal.

Re foreign citizens participating in the setting up of companies in Portugal,

there is one prerequisite, which is the legal requirement to be in possession of a

Portuguese tax identification number at the time the company is incorporated. It

is sometimes necessary for foreign residents in Portugal to seek advice from the

Border and Foreigners Control Service (SEF) with a view to removing any obstacle

to their participation as members of the company that is to be created.

The incorporation procedure cost for a Portuguese company is 360 euros

(there is a reduction of 60€ if the main activity of the company is classed

as an informatics or related activity, or if it is concerned with research and

development).

Some other useful information about creating a Portuguese company:

Directors

. Directors may be of any nationality and may reside anywhere;

. Only one director is required;

. There is no requirement to appoint a local resident director;

. Names of directors do appear in public records;

Shareholders

. Shareholders may be of any nationality and may reside anywhere;

. Only one shareholder is required; This can be the same person as the

director;

. No upper limit to the number of shareholders;

. The shareholder can be a person or a corporation.



Share Capital

For private limited companies, the minimum share capital is €1 for each

shareholder. Separate classes of shares with different rights to dividends are

permitted, subject to any restrictions in the company’s Articles of Association.

Registered Office

All Portuguese businesses need a registered office where the authorities

can send official letters and claims, as well as where control of the tax forms

is executed. All financial and fiscal documents, registers, company papers

etc. must be kept at the registered office of the business. UWU Solutions can

provide a registered office, if you have no physical presence in Portugal.


Portuguese tax system at a glanceThe Portuguese tax system is based mainly on the following taxes:

. Personal Income Tax (IRS)

. Corporate Income Tax (IRC)

. Municipal Property Tax (IMI)

. Municipal Property Transfer Tax (IMT)

. Value Added Tax (IVA)

Personal Income Tax (IRS)

Resident individuals are liable to IRS on their worldwide income. A person shall

be considered resident in Portugal if, in the year to which the income relates, the

person:

. stays there more than 183 days, with or without interruption;

. having stayed there for less than 183 days, has at their own disposal on 31

December of that year a dwelling place in such condition that it may be inferred

that there is the intention to keep and occupy it as an habitual abode;

. on 31 December, is a crew member of a ship or aircraft operated by a resident

individual or corporate person;

. is a member of a Portuguese diplomatic or consular mission abroad;

. the spouse is a Portuguese tax resident according to the rules referred to

above;

. has Portuguese nationality and moves their residence to a listed tax haven (in

which case they are considered a resident of Portugal in the year of removal and

for the following four years), unless they prove that the removal is for a valid

reason, such as carrying out a temporary activity for a Portuguese entity.


Furthermore, if the head of a household is a resident of Portugal, all other

members of the household are also regarded as residents. However, a spouse can

be considered non-resident in Portugal if they stay less than 183 days in Portugal

and prove there is no significant connection between the majority of their

economic activities and the Portuguese territory. In this case, the spouse is liable

to tax as a non-resident in respect of income deemed to be obtained by them

within the Portuguese territory.

IRS is levied on residents at progressive rates, which may vary from 14.5

per cent up to 48 per cent, according to the bracket of taxable income (ie,

the sum of the various categories of income subject to taxation net from the

corresponding deductions).

Non-resident individuals are liable to IRS only on income derived within Portugal

(eg, income from real estate situated therein, including capital gains from the

transfer thereof). IRS is usually levied on non-residents at final withholding taxes,

which may vary from 25 per cent up to 28 per cent, according to the nature of

the income.

Nowadays there is a new special regime for non-habitual tax resident

individuals, which may potentially means a significant tax saving. The tax regime

for non-habitual residents is part of the Investment Tax Code and is intended to

attract to Portugal certain qualified individuals and investments. Please check our

brochure specifically about this matter.

Corporate Income Tax (IRC)

Resident entities are liable to IRC on the worldwide income. An entity is


regarded as resident in Portugal if its head office or effective management is

located therein.

Non-resident entities are liable to tax only on income of Portuguese source (ie,

attributable to a permanent

establishment located in Portugal or, if that is not the case, due by a resident

entity).

The standard rate for IRC decreased from 25% to 23% in 2014. This measure is

part of a government program that will reduce the tax rate to 17% until 2018.

Furthermore, already in 2014 the first €15.000 of profit are taxed at 17% for any

kind of company.

Non-resident entities without a permanent establishment in Portugal are subject

to tax at a 25 per cent rate or to final withholding tax rates varying from zero per

cent to 35 per cent, depending on the nature of the income.

Municipal Property Tax (IMI)

IMI is levied over the fiscal value of real estate located in Portugal. It is due

by the legal owner/user of the real estate on 31 December and assessed on an

annual basis.

MPT rates are 0.8 per cent for rural property and 0.4 per cent to 0.7 per cent

for urban property. If the value of the urban property is assessed in accordance

with the MPT Code, rates are between 0.2 per cent and 0.4 per cent.

Municipal Property Transfer Tax (IMT)

IMT is levied on the transfer of property rights over real estate located in

Portugal, or other acts which provide similar economic results and computed over

the price effectively agreed on the transaction or the fiscal value of the property,

if higher.

IMT is assessed (i) at marginal rates up to eight per cent (acquisitions of urban

property exclusively intended for dwelling purposes), (ii) at a 6.5 per cent rate

(acquisitions of other urban property) and (iii) at a five per cent rate (acquisition

of rural property).

Value Added Tax (IVA)

IVA is levied over three main groups of transactions – supply of goods and render

of services in the Portuguese territory, import of goods and intra-community

operations performed in the Portuguese territory.

IVA rates applicable in the mainland are 23 per cent (standard), 13 per cent

(intermediate) and 6 per cent (reduced).
