How to establish a Czech company or a branch in Portugal

Basic Decision: Establish a New Company or Register a Branch?

A Portuguese company (Sociedade por Quotas – Lda.) is the most common choice for small and medium-sized enterprises. It is a separate legal entity with its own legal personality, which is a tax resident of Portugal and subject to local corporate income tax. 

The main advantage is the separation of liability – the company is liable only with its own assets, while your Czech parent company remains protected. A branch office, on the other hand, is not a separate entity, but an extension of the Czech company in Portuguese territory. 

The Czech parent company is fully liable for all obligations and receivables of the branch with all of its assets. The branch must be registered with the Portuguese commercial register and obtain a tax identification number, but it cannot act in its own name without the involvement of the parent company.

How to Choose the Right Legal Form of Company in Portugal?

If you have decided to establish an independent company, another important step awaits you – choosing the specific legal form.

Sociedade por Quotas (Lda.) is the Portuguese equivalent of a Czech s.r.o. (limited liability company) and the most popular form for foreign investors. It requires at least two partners (or one in the case of Sociedade Unipessoal por Quotas), with the liability of each partner limited to the amount of their contribution. 

The minimum share capital is just 1 euro per partner, making this form very accessible.

Sociedade Anónima (SA) is a joint-stock company suitable for larger enterprises. It requires at least five shareholders and a minimum share capital of 50,000 euros, of which 30% must be paid up upon incorporation. 

This form is particularly suitable for companies planning to raise external investment or enter capital markets.

For specific projects, a holding company structure (SGPS) may also be advantageous, as it benefits from special tax advantages in Portugal.

The ARROWS law firm has more than 150 joint-stock companies and 250 limited liability companies in its portfolio, and regularly provides legal advice on establishing companies abroad through the ARROWS International network. 

Thanks to our long-term experience, we can quickly assess which legal form best suits your needs and prepare all documentation while minimizing risks. For an immediate solution to your situation, write to us at consultation@arws.cz.

What Documents and Information Will You Need?

Establishing a company in Portugal requires a number of formal documents that must be properly prepared, translated, and certified.

Basic documents include:

• A valid passport of all founders and directors.

• A Portuguese tax identification number (NIF) for all founders and directors – this number must be obtained before the actual registration of the company.

• A Certificate of Approval of the business name (Certificado de Admissibilidade) from the National Registry of Legal Entities (RNPC).

• Incorporation documents, including the company's articles of association.

• A declaration of beneficial ownership for anti-money laundering (AML) compliance purposes.

• Proof of the company's registered office address in Portugal.

• Declaration of acceptance of office by the directors.

For a branch of a Czech company, the following are also required:

• A Certificate of Good Standing of the parent company.

• A certificate of registration of the parent company in the commercial register.

• The articles of association of the parent company.

• Minutes of the general meeting with the decision to establish a branch in Portugal.

• A power of attorney for the branch representative.

All documents must be officially certified and translated into Portuguese by a certified translator.

Preparing this documentation can take weeks, especially if it involves requesting official documents from Czech authorities, certification, and translations. Any error or incompleteness can lead to the rejection of the application and prolong the entire process. 

ARROWS ensures the preparation and review of all documents, communication with Portuguese notaries and authorities, and thanks to the ARROWS International network, we can also provide comprehensive legal representation directly in Portugal. Get in touch with us at consultation@arws.cz to get a tailored legal solution.

What is NIF and How to Obtain It?

The Portuguese tax identification number (NIF, Número de Identificação Fiscal) is absolutely essential for any business activity in the country. Without a NIF, you cannot open a bank account, enter into contracts, rent property, or register a company.

EU citizens can apply for a NIF directly at the Portuguese tax office, while non-EU citizens must appoint a tax representative in Portugal. The process involves submitting a passport, proof of address, and, if applicable, a power of attorney for the representative.

For companies, the process is more complex. It requires the company registration form, incorporation documents, information about directors and beneficial owners, and the address of the registered office in Portugal. 

The NIF for a company is issued automatically upon registration in the commercial register and also serves as the NIPC (tax identification number of a legal entity).

Fees for the NIF vary depending on the situation – for individuals, registration is usually free, but for companies with multiple beneficial owners or when a power of attorney is required, costs may increase.

A common mistake is filling in information incorrectly or failing to follow the correct procedures, which can lead to the rejection of the application or being blacklisted by tax authorities. 

ARROWS will ensure the flawless acquisition of the NIF for your founders and the company, including the appointment of a trusted tax representative if necessary. Do you need legal help? Contact us at consultation@arws.cz.

How Does the Company Registration Process Work?

Registering a company in Portugal involves several consecutive steps that must be carried out in a precise order and in accordance with Portuguese law.

Step 1: Approval of the Business Name

First, you must obtain a certificate of admissibility of the name (Certificado de Admissibilidade) from the National Registry of Legal Entities (RNPC). You can propose three name options, and the application must also include the detailed purpose of the company and the municipality for the registered office. Approval takes approximately 15 days, and the certificate is valid for three months.

Step 2: Drafting the Incorporation Deed and Articles of Association

After the name is approved, the partners or their representatives must prepare the incorporation deed and the company's articles of association, which contain the full identification of the directors, commitments to the share capital, provisions on the remuneration of directors, and clauses on the management and representation of the company. These documents must be signed and certified by a notary. Foreign investors can use a power of attorney.

Step 3: Registration in the Commercial Register

The company must then be registered in the Portuguese commercial register (Conservatória do Registo Comercial). The required documentation includes the name approval certificate, the incorporation deed and articles of association, declarations of acceptance of office by the directors, declarations of beneficial ownership, and proof of tax numbers for all parties involved. Upon successful registration, the company is assigned a Portuguese tax identification number (NIPC).

Step 4: Tax Registration

After registration in the commercial register, you must register the company with the Portuguese tax authority (Autoridade Tributária e Aduaneira) for corporate income tax, VAT, and other taxes. This step is essential to start invoicing and access the VAT system.

Step 5: Registration with Social Security

The company must also be registered with the Portuguese social security system (Segurança Social), which happens automatically upon registration in the commercial register. Employers must register their employees within 2 days of starting work.

Step 6: Opening a Corporate Bank Account

After establishing the company, you can open a corporate bank account in a Portuguese bank or a financial institution based in the EU. Banks usually require the company registration certificate, articles of association, identification of directors and partners, and proof of the company's address.

The entire process typically takes 5 to 23 business days, depending on the chosen method and the completeness of the documentation. Online registration using the "Empresa Online" service can be completed in 1–2 days, while the traditional process takes longer.

ARROWS handles company formations abroad on a daily basis and can significantly shorten the time and minimize the risk of errors. We are insured for damages up to CZK 500,000,000, so it is safer for you to have the matter professionally secured. Write to consultation@arws.cz.

What Are the Tax Obligations of a Company in Portugal?

Understanding the tax system is key to successful business in Portugal. The corporate income tax (IRC) was reduced from 21% to 20% as of January 1, 2025. Small and medium-sized enterprises (SMEs) and so-called Small Mid-Cap companies are eligible for a reduced rate of 16% on the first 50,000 euros of taxable income. Income exceeding this amount is taxed at the standard rate of 20%.mcs+3​

In addition, a state surcharge (derrama estadual) is applied progressively: 3% on taxable profit exceeding 1.5 million euros up to 7.5 million euros, 5% on profit from 7.5 to 35 million euros, and 9% on profit exceeding 35 million euros.

VAT (IVA) in Portugal is applied at three rates: standard 23%, reduced 13% and 6%, plus a zero rate for intra-EU and international transactions. The threshold for VAT registration for resident businesses is set at 15,000 euros per year from 2025. For foreign companies without a registered office in Portugal, there is no threshold – they must register immediately.

VAT returns are filed monthly (for companies with a turnover over 650,000 euros) or quarterly (for companies with a lower turnover).  The deadline for filing is the 10th day of the month following the end of the tax period (for monthly filings) or the 15th day (for quarterly filings). 

In addition, companies must file an annual tax return within five months after the end of the tax period. The annual financial statements must be submitted by July 15 of the following year through the IES (Simplified Business Information) form.

Social Security: Employers are required to contribute 23.75% of employees' salaries to the social security system, while employees contribute another 11%. Payments must be made by the 20th day of the following month.

The ARROWS law firm provides comprehensive legal advice in the area of tax obligations, including tax structure optimization, preparation of documentation for tax authorities, and representation during audits. 

Thanks to our knowledge of the double taxation treaty between the Czech Republic and Portugal, we can minimize your overall tax burden. For a legal consultation, write to us at consultation@arws.cz.

What Are the Accounting and Reporting Obligations?

Portuguese companies are subject to strict accounting and reporting obligations, which require regular preparation and submission of financial statements.

Financial statements must include:

• A balance sheet.

• An income statement.

• A cash flow statement (depending on the size of the company).

• Notes to the financial statements.

• A management report.

Directors are required to prepare financial statements within three months after the end of the fiscal year and present them to the partners, who have another three months to approve them. 

After approval, the financial statements must be filed with the commercial register within 15 days. If the fiscal year corresponds to the calendar year, the latest date for filing is June 30.

SAF-T (Standard Audit File for Tax) is an electronic reporting format that standardizes the exchange of accounting and tax data between businesses and tax authorities. Businesses in Portugal must submit SAF-T files for billing data monthly by the 5th day of the following month. 

The annual SAF-T for accounting records must be submitted before the tax return filing deadline. All companies must use certified billing software if their annual turnover exceeds 50,000 euros, they have more than one employee, or they use software to issue invoices. 

Fines for non-compliance with this obligation range from 200 to 3,750 euros, or from 3,000 to 18,750 euros for using uncertified software. An audit is mandatory for all joint-stock companies (SA) and for limited liability companies (Lda.) that exceed two of the three thresholds in two consecutive years:

• Total assets: 1,500,000 euros

• Net turnover: 3,000,000 euros

• Average number of employees: 50

Failure to comply with these obligations can lead to fines, administrative measures, forced liquidation of the company, and personal liability of the directors. 

ARROWS will ensure the complete preparation of accounting documentation, selection and cooperation with certified accountants, preparation of audited statements, and submission of all required reports on time and in accordance with legal regulations. Get in touch with us at consultation@arws.cz to get a tailored legal solution.

What Must You Fulfill When Employing Workers?

If you plan to employ workers in Portugal, you face a number of legal obligations that you must comply with from day one.

Employment contracts in Portugal must be concluded for an indefinite period unless the law explicitly permits fixed-term contracts. Fixed-term contracts are limited to the temporary needs of the employer, and their duration is limited to a maximum of 2 years.

Written form is mandatory for:

• Fixed-term contracts.

• Contracts with foreign employees.

• Contracts with multiple employers.

• Part-time contracts.

• Management contracts.

Within 60 days of starting employment, the employer must provide the employee with written information about working conditions, including the identification of the employer, workplace, job position, working hours, and basic salary.

Before starting work, the employer must register the employee with the Portuguese social security system. Failure to register employees or irregular payments can lead to fines, interest, and audits.

Mandatory insurance against industrial accidents must be secured from the first day of work. Employers who do not provide this coverage assume all risk and costs associated with any occupational accidents or illnesses, with potential civil and criminal consequences.

Misclassification of workers as independent contractors is one of the most common errors and can lead to significant fines, back tax assessments, and legal disputes. 

If the working relationship shows signs of subordination (working under the direction and supervision of the employer for remuneration), a court or labor authority may reclassify the relationship as an employment contract retroactively.

The minimum wage in Portugal for 2025 is approximately 820 euros per month (it was 705 euros in 2023). Employees are entitled to a minimum of 22 days of paid leave per year and a number of other statutory benefits.

The ARROWS law firm regularly provides advice in the area of labor law, including the preparation of employment contracts, internal regulations, training on labor law issues, and representation in labor disputes. 

Our lawyers will ensure that your employment in Portugal is fully in line with local regulations, minimizing the risk of disputes and fines. For an immediate solution, write to us at consultation@arws.cz.

What Licenses and Permits Might You Need?

Depending on the type of business, companies in Portugal may need specific permits and licenses to start and operate their activities.

Business licenses are required in a number of areas, including:

• Retail and wholesale.

• Construction and real estate.

• Leisure services (travel agencies, car rentals).

• Financial services (auditors).

• Hospitality (restaurants, hotels) – require both building permits and permits to meet health and safety standards.

Import and export licenses are needed for companies involved in trade, and some goods may be subject to restrictions. An environmental permit is necessary for activities with an environmental impact, issued by the Environmental Agency.

Building permits are issued by the local municipality and are required for construction and renovations. Licenses in the tourism sector (hotels, resorts, campsites, travel agencies) are issued either by local councils or Turismo de Portugal.

Travel agencies can only be operated by companies and must have a minimum share capital of 100,000 euros.  Applications for licenses are submitted through the Directorate-General for Economic Activities (DGAE) via the Balcão do Empreendedor (BDE) portal. 

Each economic sector has specific licensing requirements, so it is important to consult the list of licenses provided by the Portuguese government. Incorrect or missing licenses can lead to fines, suspension of activities, and criminal sanctions. 

ARROWS provides comprehensive legal advice on obtaining all necessary permits and licenses, communicating with regulators and supervisory bodies, and fulfilling related obligations. Do you need legal help? Contact us at consultation@arws.cz.

Visa Requirements and Residence Permits

If you plan to actively manage a company or provide services in Portugal, you may need a visa or a residence permit.

EU citizens do not need any special permit to act as a director or to reside in Portugal. They only need to register at the nearest town hall within 30 days after their first three months of residence.

Non-EU citizens who plan to live and do business in Portugal must apply for a visa, such as the D2 visa for entrepreneurs.

Requirements for the D2 visa include:

• Reaching the age of majority (18 years).

• A clean criminal record.

• A Portuguese tax identification number (NIF).

• A Portuguese bank account.

• Registration of a Portuguese company (Lda.) or proof of intent to register a company.

• A detailed business plan demonstrating economic benefit to Portugal.

• Sufficient funds to start and manage the business, including the ability to pay annual corporate income tax and social security contributions.

• Proof of accommodation in Portugal (lease agreement or proof of ownership).

• Travel health insurance covering a minimum of 30,000 euros.

The minimum initial investment (share capital) for small businesses in Portugal is typically recommended to be around 5,000 euros.

After obtaining the D2 visa and residence permit, you can apply for permanent residence after five years of continuous residence and for Portuguese citizenship after six years. 

ARROWS can provide legal advice on preparing the D2 visa application through the ARROWS International network, including preparing the business plan, securing all necessary documents, and communicating with Portuguese consulates. Write to consultation@arws.cz.

How to Use the Double Taxation Treaty?

The Czech Republic and Portugal have signed a double taxation treaty that protects Czech companies and entrepreneurs from being taxed twice on the same income.

The treaty allocates taxing rights according to the type of income:

• Income from employment and self-employment is usually taxed in the country where the work is performed.

• Business profits are taxed in one country unless the business has a permanent establishment (office or branch) in the other country.

• Dividends, interest, and royalties are subject to reduced withholding tax rates under the treaty, often between 5% and 15%, depending on the circumstances.

• Pensions and social security are generally taxed only in the country of residence.

Methods for preventing double taxation include tax exemption or tax credit. Czech legislation generally applies the ordinary tax credit method, which means that if the tax in Portugal is lower than in the Czech Republic, the Czech company must pay the difference. If the tax in Portugal is higher, no additional tax needs to be paid in the Czech Republic.

Correct application of the treaty requires thorough knowledge of both tax systems, identification of permanent establishments, and correct classification of income. 

ARROWS provides expert legal opinions and advice on the application of the double taxation treaty, communication with tax authorities in both countries, and optimization of the tax structure. For a legal consultation, write to us at consultation@arws.cz.

When and How to Terminate a Company or Branch?

If you decide to terminate your activities in Portugal, you must follow precise legal procedures for the dissolution and liquidation of the company.

The dissolution process begins with a resolution of the general meeting, which must be approved by a qualified majority of three-quarters of the share capital. If the company owns real estate, a notarial deed must be executed by a notary. In other cases, minutes of the general meeting with the decision to dissolve are sufficient.

After dissolution, the company enters liquidation. The partners appoint one or more liquidators who manage the assets, pay debts, and distribute the remaining funds. Liquidation must be completed within two years, with the possibility of extension for another year based on a decision of the partners.

Obligations during liquidation include:

• Within 15 days, the tax authority (Autoridade Tributária) must be informed of the dissolution and appointment of the liquidator.

• Within 10 days thereafter, the same notification must be submitted to social security.

• Within 2 months, the registration of dissolution must be filed with the commercial register.

Upon completion of the liquidation, a final meeting must be called to approve the accounts and closure.  The formal act of closure must be registered with the commercial register. Only then is the company considered legally dissolved. The termination of activities must be notified to the tax authority within 15 days and to social security by the 10th day of the following month.

If these formalities are not met, the company may still be considered active for tax and social security purposes, which can lead to fines.

ARROWS will handle the entire process of dissolution and liquidation of the company in Portugal, including preparing the general meeting resolution, communicating with notaries, tax authorities, and the commercial register, and ensuring the proper settlement of all liabilities. Write to consultation@arws.cz.

Why Entrust Company Formation to the ARROWS Law Firm?

Establishing a company or branch in Portugal is not just an administrative matter. It is a complex legal process full of procedural details, exceptions, connections to other regulations, and hidden risks that a layperson often does not see.

Individual steps that look simple at first glance have complicated procedural details in the real world – from the correct classification of income for tax purposes, through the choice of the optimal legal form with regard to liability and tax risks, to ensuring compliance with Portuguese labor law regulations. 

Thanks to our ARROWS International network, we handle cases with an international element practically every day and have more than ten years of experience in providing services to clients worldwide. 

Our portfolio includes more than 150 joint-stock companies, 250 limited liability companies, and 50 municipalities and regions – we pride ourselves on speed and high quality. ARROWS is insured for damages up to CZK 500,000,000, so it is safer for you to have the matter professionally secured. We also regularly partner with corporate lawyers to resolve special matters.

Our services include:

• Legal analysis and advice on choosing the optimal legal form.

• Preparation of all incorporation documents, contracts, and articles of association.

• Securing NIF for founders, directors, and the company.

• Communication with Portuguese authorities, notaries, and the commercial register through ARROWS International.

• Securing tax registration and optimizing the tax structure using the double taxation treaty.

• Legal advice on employing workers and preparing employment contracts.

• Representation before registers, regulators, and supervisory bodies, including fulfillment of obligations.

• Obtaining necessary licenses and permits.

• Professional training in the given area, including a certificate.

• Legal support in obtaining the D2 visa.

We can connect clients with each other if they have interesting investment or business opportunities. We also like to hear interesting entrepreneurial or business ideas.

If you do not want to risk mistakes, damages, or fines, you can safely leave the whole matter to ARROWS. Just contact the office at consultation@arws.cz and get a legal solution tailored to your needs.

Don't want to solve this problem alone? More than 2,000 clients trust the ARROWS law firm, and we have been awarded Law Firm of the Year 2024. See our references HERE, and it will be our honor to help you solve your problem. The inquiry is free of charge.