10 Reasons Why You Should Setup a Business in Portugal

Want to set up a business in a different location? Here are ten reasons why you should choose Portugal over any other country!

After the COVID-19 pandemic, entrepreneurs have grown interested in establishing new businesses in regions offering a more favorable climate. Therefore, Portugal has emerged as an appealing destination for global investors. 

Situated on the Western coast of Europe, Portugal’s strategic advantages make it an attractive proposition, including its strong ties with the European Union (EU) and its central location as a gateway connecting the EU with key markets in North and South America. Notably, Portugal ranks among the top ten countries for easy starting a business; starting a business here is a breeze – you can get it going in just three days. 

In this article, we’ll show you ten fantastic reasons Portugal should be your next business destination.

Strategic Location

Portugal’s strategic business location is simply fantastic. It’s like the perfect crossroads for companies aiming to go global. With connections to Europe, North America, and South America, it’s a dream spot for expanding businesses. This opens up a world of opportunities and markets to explore.

Imagine flying out of Lisbon International Airport to over a hundred destinations across Europe, America, Africa, and beyond. And if you prefer the land route, Portugal has high-speed trains connecting major cities, with plans to link up with Spain and the rest of Europe. Portugal’s coastal areas also host vital subsea Internet cables, making it a global telecommunications hub.

What’s more, Portugal is incredibly welcoming to foreign direct investment. It’s like a magnet for business owners, international players, entrepreneurs, and investors. Not to mention, it’s three deep-water ports that keep resources and goods flowing around the world. Portugal is where business dreams take flight.

Stable Economy

Portugal has emerged as a beacon of economic opportunity in recent years, boasting a robust GDP and a favorable business environment. The nation’s economic transformation, often called the “Portuguese Miracle,” has been characterized by impressive growth and stability. In 2022, Portugal’s GDP stood at approximately $252.38 billion, with a steady upward trajectory.

One key factor in Portugal’s economic success is its strategic location and strong trade links within the European Union. The nation is a gateway to Europe and benefits from a competitive edge in exporting goods and services. Portugal’s exports have steadily increased, reaching nearly $82.38 billion in 2022.

Part of the European Union

Portugal joined the European Union in 1986, and this membership brings significant benefits for businesses looking to grow in Europe. The EU is a massive market with more than 500 million potential customers, making it one of the world’s largest markets. Despite representing just 7.3 percent of the world’s population, the EU contributes 14.85% to the global GDP.

One of the key perks of being part of the EU is the European Single Market. It allows the seamless movement of goods, services, money, and people within the EU. For Portuguese companies, this means they can quickly sell their products and services to customers across the entire EU without worrying about tariffs or trade barriers. It’s like having access to a vast, tariff-free marketplace right on their doorstep.

Commonly Spoken Language

Portuguese is a commonly spoken language with a rich history and widespread usage in Portugal and several other countries. It is the official language in Portugal, Brazil, Mozambique, Angola, Guinea-Bissau, East Timor, Equatorial Guinea, and Cape Verde. With over 260 million native speakers, Portuguese is one of the most widely spoken languages globally, making it a valuable asset for communication, culture, and business.

One noteworthy aspect of the Portuguese-speaking world is the proficiency of its people in English. Portugal, in particular, has witnessed a remarkable increase in English language skills in recent years. According to the EF English Proficiency Index, Portugal consistently ranks seventh among Europe’s top non-native English-speaking countries. The Portuguese government has actively promoted English language education, making it a mandatory subject in schools and offering language learning programs.

Favorable Tax System

Portugal’s tax environment is a major draw for businesses. With a stable social and business climate, your investments are secure here. The corporate income tax (CIT) rate is a flat 21%, plus a municipal tax ranging from 1.5% to 7% for companies exceeding specific income thresholds. Lower tax rates are available in different regions.

If you’re engaged in “high value-added activities,” Portugal offers a 20% tax rate on employment and self-employment income. The country boasts double taxation treaties with more than 80 nations, making it globally connected.

Portugal provides various tax benefits for foreign residents, making it an attractive European base. If high taxes burden you in your current location, consider the “non-habitual resident” status, where a 20% tax rate applies to earnings. This applies to diverse professions, including artists, actors, architects, dentists, doctors, and engineers, and can be maintained for up to 10 years.

Portugal’s participation exemption regime is another significant perk. Dividends received from subsidiary companies are tax-exempt if specific criteria are met, and capital gains from selling shareholdings in subsidiaries are tax-free. Portugal offers a tax-friendly environment worth exploring for your business endeavors.

Different Residence Permits

If you’re a non-EU citizen looking to kickstart your business journey in Portugal, securing a residence permit is a vital first step. The good news is that Portugal has streamlined the process for entrepreneurs and investors, making it relatively hassle-free. One option is the Start-up Visa, tailor-made for international entrepreneurs and investors. To qualify, you’ll need to showcase an innovative business idea with the potential to boost job creation and contribute to Portugal’s economy.

But that’s not all – there are other avenues for aspiring entrepreneurs and remote workers. Enter the Golden Visa, officially known as the Residence Authorization for Conducting an Investment Active Regimen. This program allows non-EU citizens to secure residency by making significant investments, including capital transfers, job creation, real estate investments, scientific research, cultural endeavors, or launching a small to medium-sized business.

Here’s the kicker: Golden Visa holders must only reside in Portugal for seven days in their first year and 14 days each year after that. Plus, they enjoy the perks of EU citizenship without giving up their original passport. If desired, they can even apply for Portuguese citizenship after six years.

Skilled and talented workforce

Portugal boasts a competitive advantage when it comes to its workforce. The country is home to several world-class universities offering diverse technical and business courses. This results in a highly skilled and educated workforce, making Portugal an appealing destination for businesses seeking top-tier talent. There are 1.65 million graduates annually from prestigious universities with strong technical and soft skills.

Portuguese employees are renowned for their adaptability and strong work ethic. They exhibit a keen interest in embracing new technologies and modern practices. Business owners can recruit the best and brightest minds to foster business growth. Moreover, Portuguese professionals excel in foreign languages, mathematics, management, and science, offering a vast talent pool for businesses to tap into.

Hiring English-speaking employees is a breeze for expats considering establishing a business in Portugal. A significant 61% of Portuguese citizens speak at least one foreign language, and English often serves as the additional language, thanks to its mandatory inclusion in elementary school curricula. This language proficiency simplifies communication and collaboration, making Portugal an even more attractive destination for business endeavors.

Work for Friendly Government

Portugal is a fantastic place for start-ups! It’s like a big, friendly playground for new businesses. The Portuguese government has also played a significant role in fostering this culture, offering tax incentives and grants to start-ups. The StartUP Voucher program, for instance, provides financial support and mentorship to young entrepreneurs.

Portugal’s labor laws balance worker protection and business flexibility fairly. Employees here enjoy 22 days of paid leave each year and a minimum wage. For businesses, the ease of hiring and letting go of employees is a significant advantage. This flexibility allows companies to adapt their workforce quickly, especially when dealing with fluctuating demand or changing business dynamics. It’s a win-win situation for workers and businesses alike.

Diverse Industries

In recent years, Portugal has transformed a more diverse economic landscape. The country now boasts a thriving start-up culture, making it an ideal place for entrepreneurs to explore their innovative ideas.

Furthermore, Portugal has emerged as a critical player in renewable energy, capitalizing on its abundant sunshine and strong coastal winds. The energy sector is actively expanding its solar and wind power capacities. This economic diversity ensures businesses from various industries can find their niche and thrive in this dynamic environment. Whether you’re in tech, tourism, or green energy, Portugal offers opportunities for growth and success.

Great Quality of Life

Portugal boasts a remarkable quality of life and life expectancy, creating an environment conducive to business success. With a life expectancy of around 82 years, Portugal ranks above the global average, ensuring a healthy and productive workforce. The country offers excellent healthcare services, including a universal healthcare system, making it an attractive destination for expatriates and investors. 

Furthermore, Portugal’s stunning natural landscapes, mild climate, and rich cultural heritage enhance the overall quality of life. The cost of living is relatively affordable compared to many Western European nations, with competitive corporate tax rates and incentives, making it an ideal destination for businesses seeking a high standard of living and a favorable business environment.

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