Thinking of starting your own business in Portugal? Whether you're an expat, remote entrepreneur, or local resident, Portugal offers a favorable environment for small businesses and startups. In this 2025 guide, we’ll walk you through the legal structures, registration process, and key tax considerations to launch your company smoothly and legally.

🏢 Business Structures in Portugal

Choosing the right legal entity is your first step. Here are the most common types:

• Empresário em Nome Individual: Sole proprietorship – fast and low-cost setup for freelancers.
• Sociedade Unipessoal por Quotas (Unipessoal LDA): Single-member limited liability company.
• Sociedade por Quotas (LDA): Private limited company with two or more partners.
• Sociedade Anónima (SA): Public limited company – best for large enterprises with shareholders.

📋 Step-by-Step: How to Register a Business

Starting a business in Portugal involves several administrative steps. Here’s the basic process:

• Step 1: Get your NIF (Número de Identificação Fiscal)
• Step 2: Open a Portuguese bank account
• Step 3: Choose your business structure and name (verify name availability)
• Step 4: Register at Empresa na Hora (online or in person)
• Step 5: Obtain a permanent business address in Portugal
• Step 6: Register with Social Security and Finanças (Tax Office)

💼 Freelancer vs. Company Setup

If you plan to work solo as a consultant or creative, registering as a freelancer (sole trader) might be enough. But if you want to scale, hire, or limit liability, forming an LDA company is the better route.

• Freelancer: Easier to set up and manage, but less protection.
• LDA Company: Limited liability and more credibility, but higher accounting and reporting requirements.

💶 Taxes You’ll Need to Pay

Portugal’s tax system includes several components for business owners:

• Corporate tax (IRC): 21% on profits (some regions offer reduced rates)
• VAT (IVA): Standard rate is 23% (lower rates for certain goods and services)
• Social security: 23.75% employer contribution (freelancers pay ~21.4%)
• IRS (personal income tax): Progressive rates if you're a sole trader

📊 Accounting & Reporting

Keeping your books in order is essential for compliance. Here’s what to expect:

• Freelancers: Simplified accounting, quarterly VAT returns, annual IRS return
• LDA/SA companies: Must hire a certified accountant, submit regular financial statements and file IRC returns
• Invoices: Must use certified invoicing software (e.g., InvoiceXpress, Moloni)

📍 Business-Friendly Locations in Portugal

These areas are popular for startups and entrepreneurs:

• Lisbon: Thriving tech and startup scene, international networking
• Porto: More affordable, creative ecosystem growing fast
• Madeira: Special tax incentives via the Madeira Free Trade Zone
• Braga / Coimbra: Emerging hubs for innovation and education

📈 Government Incentives & Support

Portugal offers several programs to encourage entrepreneurship:

• Startup Portugal: Grants, incubators, and mentorships
• IEFP Incentives: Employment subsidies for hiring locals
• Golden Visa (for investment): For those setting up large businesses
• Non-Habitual Resident (NHR) scheme: Tax benefits for new residents (valid until end of transition period)

✅ Final Thoughts

Portugal is one of the most attractive EU countries to start a business. With streamlined registration, growing markets, and support from the government, it’s a fantastic base for both freelancers and companies. Just be sure to understand your tax responsibilities and get professional help when needed.

Tip: Consider speaking to a local accountant (TOC) or legal advisor to make sure your business is set up correctly from day one.

📽️ Want a Visual Walkthrough?

Here’s a helpful video guide that walks you through the process of starting a business in Portugal in 2025: