How to navigate the business sector in Portugal

Portugal has become an increasingly popular destination for businesses looking to expand into Europe. So how to navigate it successfully?

Unlocking tech talent stories

April 11, 2023

Portugal has become an increasingly popular destination for businesses looking to expand into Europe. With its strategic location, welcoming business environment, and skilled workforce, Portugal is an attractive destination for companies in a wide range of industries. 

Let’s take a closer look at the business sector in Portugal and provide some tips on how to navigate it successfully.

Legal and regulatory framework

The legal and regulatory framework is one of the most critical factors for businesses to consider when entering the Portuguese market. As a member of the European Union, Portugal is subject to EU laws and regulations, which can be both a challenge and an opportunity for foreign companies. 

On the one hand, complying with EU regulations can be daunting, especially for businesses coming from countries with different legal systems. On the other hand, being part of the EU means that companies operating in Portugal have access to a large and diverse market with more than 500 million consumers.

EU regulations cover a wide range of areas, including trade, intellectual property, consumer protection, and competition law. For example, EU rules on product safety and labelling are among the most stringent in the world. These regulations are designed to protect consumers and ensure a level playing field for businesses across the EU.

Portuguese law is also influenced by civil law traditions, which can differ from common law systems in other countries. This means that companies entering the Portuguese market may need to invest in legal advice to understand the local legal framework fully. Softlanding can provide legal and regulatory advice to help businesses navigate the complexities of the Portuguese legal system.

In recent years, Portugal has made efforts to modernise its legal framework to make it more business-friendly. The government has simplified the process of setting up a business, and it offers a range of incentives and subsidies to foreign investors. Portugal has also implemented reforms to improve the judicial system’s efficiency, making resolving disputes easier and faster.

One of the most significant benefits of doing business in Portugal is its membership in the EU. This means that businesses operating in Portugal have access to the EU’s single market, one of the world’s largest. The single market is a regulatory framework that allows goods, services, capital, and people to move freely across EU borders. This means businesses can sell their products and services to consumers in other EU countries without tariffs or other trade barriers.

Cultural differences

yellow tram in lisbon

Photo by Nextvoyage on Pexels

Another important factor to consider is the cultural differences between Portugal and other countries. Portuguese business culture is generally more relaxed and informal than in many other European countries, and relationships and personal connections are often more important than formal contracts or agreements. This means building strong relationships with business partners and investing time and effort in networking is important.

Working with a local partner or advisor

One of the best ways to get started in Portugal is to work with a local partner or advisor. Softlanding, for example, is a company that provides business services and support to companies looking to enter the Portuguese market. They can provide advice and guidance on legal and regulatory issues, help with market research and analysis, and offer support with networking and business development.

Another important consideration is the language barrier. While many Portuguese people speak English, it’s important to understand Portuguese well to build strong relationships with business partners and customers. Softlanding can provide language support to help companies navigate this challenge.

Setting up a business in Portugal

When it comes to setting up a business in Portugal, there are several options available. Limited liability companies (LLCs) and joint stock companies (JSCs) are the most common types of companies. 

LLCs are the most common type of company in Portugal, and they are often preferred by small and medium-sized businesses due to their flexibility and ease of setup. JSCs are more complex and require more capital to set up, but they offer greater protection for shareholders and are better suited to larger companies.

Choosing the right type of company is essential when setting up a business in Portugal. It’s also important to consider the tax implications and the level of investment required before choosing a type of company. Softlanding can provide expert advice and support to help businesses make the right decisions when setting up a company in Portugal.

Understanding the tax system

Once a business is set up in Portugal, it’s important to understand the tax system. Portugal has a relatively low corporate tax rate of 21%, which is significantly lower than many other European countries. However, other taxes are also to consider, such as value-added tax (VAT), social security contributions, and local taxes. Softlanding can provide guidance and support with tax planning and compliance.

This webinar on how to succeed in Portugal’s competitive business ecosystem while staying tax efficient also gives great insider tips. 

Promising industries in Portugal

In terms of industries, Portugal has a diverse economy with opportunities in a wide range of sectors. Some of the most promising sectors for foreign investors include technology and innovation, renewable energy, tourism, and real estate

Portugal has made significant investments in its technology infrastructure in recent years, making it an attractive destination for companies in the tech industry. 

bridge and the tagus river in Lisbon

Photo by Helio Dilolwa on Pexels

Portugal is also a leader in renewable energy, particularly in the areas of wind and solar power. The government has set ambitious targets for renewable energy production, which has created opportunities for companies in this sector. 

The tourism industry is another area of strength for Portugal, particularly in the areas of cultural and heritage tourism. The country’s rich history and vibrant culture make it an attractive destination for tourists worldwide. 

Softlanding can provide support and guidance for companies looking to enter any industry, including a strong network of contacts and partners, as well as help with regulations and licensing, making it an ideal partner for companies looking to enter the country.

Logistics of doing business in Portugal

Finally, it’s important to consider the logistics of doing business in Portugal. The country has a modern and efficient transportation infrastructure, including a well-developed road network, ports, and airports. Lisbon, the capital city, is the main hub for international business, with a large and growing airport and a modern port facility. 

Portugal is a great destination for businesses looking to expand into Europe. With its welcoming business environment, skilled workforce, and strategic location, it offers numerous opportunities for companies in a wide range of industries. The Portugal Tech Hub free ebook is a great place to read more about Portugal and the advantages and process of doing business there. 

It’s important to understand the legal and regulatory framework, cultural differences, language barriers, and logistics of doing business in Portugal to succeed. Working with a local partner like Softlanding can help you navigate these challenges and capitalise on the country’s opportunities.

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