An Overview of Living and Investing in Portugal

This article presents an overview of the legal aspects of living and doing business in Portugal.

1. About Portugal

Portugal has a rich seafaring past and is one of Europe’s well-preserved gems with its land of traditional villages, vibrant and tech enabled cities and a countryside strewn with historical treasures.

A member of the European Union (“EU”) since 1986, Portugal is one of the most cost-effective countries in which to live in Europe. Low-priced food and wine coupled with first-class healthcare services, high quality of life is readily achievable. Portugal is robustly equipped with a network of well-developed infrastructure and a globally competitive workforce. For centuries, Portugal has indisputably maintained its greatest treasure — a renowned reputation for hospitality that makes the country a haven of congeniality and safety.

Both retrospective and innovative, Portugal is now a bridge between past and future.

2. Living in Portugal

Characterizing the cost of living of any country is naturally conditioned by two factors: location and lifestyle. Urban living has nothing in common with living in a small town or countryside, where income and expenses associated with accessing facilities, are often entirely different. In Portugal, prices tend to be higher in the coastal areas, especially large cities like Lisbon and Porto, as well as the tourist resorts that are found in the Algarve.

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Lisbon’s Old Town.

Although the cost of living in Portugal is beginning to rise as the country falls into line with the rest of the EU, it remains one of the most economical countries in which to reside in Europe, where a high quality of life is easily achievable.

English is spoken in the main commercial and tourist centers, but some knowledge of Portuguese is essential for those wishing to settle in Portugal.

It is not probable you will find permanent employment without the ability to communicate in Portuguese.

3. Entry and Residence in Portugal

3.1. EU Nationals

EU nationals wishing to settle in Portugal (whether for employment, self-employment, provision of services, studies or retirement), are not required to obtain a residence permit to reside in Portugal.

EU Nationals may travel, circulate and work freely in any Member State, enjoying the same rights as citizens of the host country. Family members are also entitled to free circulation, irrespective of their nationality.

Consequently, EU Nationals have the right to carry out a professional activity in Portugal, under either an employed or self-employed regime, without the need to apply for a work permit, and also enjoy the same rights as Portuguese workers regarding salary, working conditions, access to lodging, vocational training, social assistance, and trade union rights.

Thus, upon entry of an EU National in Portugal, the only formality to be complied with is the possession of a valid identification document (passport or identity card). Nevertheless, EU Nationals who intend to live in Portugal for a period exceeding 3 months must formalize their right of residence by registering within 30 days from the end of their first three months in the country.

Family members of an EU National, who are not EU Nationals, will not require entry visas if a visa-free scheme applies; however, they will have to comply with specific residency formalities.

Swiss nationals have the same rights as EU nationals regarding entry and residence in Portugal.

3.2. Non-EU Nationals

Non-EU nationals must apply personally, at a Portuguese Consulate in their country of origin or residence, for entry visa, if a visa-free scheme does not apply.

The entry visa is valid for a maximum period of 120 days, depending on the nationality of the applicant. The visa may be extended up to 180 days.

Non-EU Nationals must apply personally for a residence permit at the relevant Delegation of the Foreigners and Borders Service. Applying for a specific residence permit for employees may be required for non-EU citizens.

3.3. Employment for foreigners

Portuguese Rules set out certain specific provisions on the employment of foreigners within Portugal. Foreigners legally allowed to stay or reside in the country, and to work therein under an employment agreement, have the same rights and obligations as Portuguese employees.

Employment agreement should be concluded in writing and comply with the formalities required by the specific legislation.

EU Nationals have the right to carry out a professional activity in Portugal, under either an employed or self-employed regime, without the need to apply for a work permit (restrictions of regulated professions apply). They also have the same rights as Portuguese workers with regards to salary, working conditions, access to lodging, vocational training, social assistance and trade union rights.

3.4. Personal Income Tax

Personal Income Tax is due on income arising worldwide, received by individuals residing in Portugal, as well as on the income received or deemed to have been received in Portugal by non-resident individuals. Income arising from illegitimate sources is also taxable. Any payment even if received in goods is also considered to be income.

Like in most countries worldwide, tax residency in Portugal is enforced on individuals that stay within its territory for more than 183 days in a fiscal year. Other residency tests are available.

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The non-habitual tax regime is one of the most successful programs to attract investors and entrepreneurs to Portugal.

The non-habitual resident (NHR) tax regime, in force since 2009, is available to any individual who was not a Portuguese tax resident in the previous five years prior to moving to and becoming a tax resident in Portugal. The regime is applicable for a period of 10 years.

The NHR grants new residents a more beneficial tax regime than those falling within the scope of the existing concept of ordinary tax residency.

3.5. Benefits of the NHR regime

The regime provides attractive tax saving opportunities to value added professionals, entrepreneurs and investors who want to reside and do business in or from Portugal.

In contrast to the taxation regime of ordinary residents, the non-habitual residency regime provides special exemptions and tax rate caps.

Tax exemptions exist for specific types of income, mainly passive income such as dividends and interest.

As a rule, foreign source income will be tax exempt in Portugal if it was taxed at source (regardless of the rate) or might have been taxed at source according to the applicable Treaty to Avoid Double Taxation.

In specific scenarios, the regime allows for the non-taxation of pensions both in Portugal and in the source country.

There is no wealth tax and remittance of funds is tax-free. As no inheritance tax is levied and there is no gift tax on donations made to family members, Portugal is also a great jurisdiction to avoid a decrease in estate value through tax leakage.

More information about the NHR is available here.

3.6. Consular Registration in Portugal

Consular registration, though not mandatory in Portugal, is important as it enables the Embassies to assist its citizens more efficiently when certificates are required, and to contact residents speedily, if necessary.

3.7. Residency Permit for Investors — Portuguese Golden Visa

Since 2012, non-EU and non-EEA Nationals have been eligible to apply for the Golden Visa, a residence permit granted where certain types of investment have been carried out by foreigners in Portugal.

Such investments may be made individually or through the incorporation of a Portuguese company.

a) Real Estate Investments

Acquisition of real estate worth at least 500,000 Euros; or

The acquisition of a real estate for a minimum purchase price of 350,000 Euros, if the property is at least 30 years old or is located within an urban regeneration and the buyer refurbishes it; or

b) Capital Investments

Bank deposit or investment into financial products valued in excess of 1 million Euros; or

Transfer of capital in excess of 350,000 Euros for the acquisition of participation units in venture capital funds, with a maturity date of 5 years, investing at least 60% of the capital in Portuguese companies; or

c) Arts & Science Patronage

Transfer of capital in the minimum amount of 250,000 Euros, for the purposes of investing in or supporting art production or the restoration and maintenance of national cultural heritage, through services carried out by a range of public or private entities; or

Transfer of capital in the minimum amount of 350,000 Euros for scientific research purposes; or

d) Business Investments

Creation of a business employing 10 individuals; or

Transfer of capital in the amount of 350,000 Euros for the incorporation or capitalization of a Portuguese company, combined with the creation of 5 jobs for a minimum of three years.

e) Lower thresholds for investment

Please note that some investment thresholds are reduced by 20% if the investment is conducted in a low-density area (if there are fewer than 100 inhabitants per square kilometer or the gross domestic income per capita is lower than 75% of the national average).

f) Evidence of the investment

Upon submitting the application together with the abovementioned documents, the applicant must also provide evidence of the investment.

The type of evidence required by the Portuguese Authorities varies according to the type of investment activity conducted in Portugal.

More information about the Golden Visa is available here.

4. Banking in Portugal

Both resident and non-resident individuals can open a Portuguese bank account in Euros or any other foreign currency.

Portuguese banks offer a wide range of products and financial services. The banking industry is extensively regulated by both domestic legal provisions and EU financial directives, while banking activities in Portugal are further regulated and supervised by the Bank of Portugal. There are several types of bank accounts, which include current and savings accounts, joint accounts, business accounts, online banking. Other accounts are designed as savings accounts for children, students, and pensioners.

There are no restrictions on the amount of currency entering or leaving Portugal, but large sums of money should be transferred through proper banking channels. Banks may require disclosing the money’s origin for the purposes of complying with money laundering and anti-terrorism funding regulations.

For individuals to open a bank account in Portugal, a Portuguese taxpayer number is required in addition to fiscal representation (if the individual is not a resident of the EU).

Foreign companies are also able to open bank accounts in Portugal for international business, but they must be registered with the Tax Authorities and Corporate Registry.

The Deposit Guarantee Fund compensates account holders at credit institutions authorized to accept deposits failing to meet their obligations. Account holders are compensated up to a limit of Euro 100.000,00 per account per bank.

The Fund also intervenes to restore the solvency and liquidity conditions of banks in line with a financial reorganization plan conducted by Banco de Portugal.

5. Portuguese Companies

Both resident and non-resident individuals or companies can incorporate a company in Portugal.

Companies with head office in Portugal will be regulated by Portuguese Company Law. In some instances, companies with their head office abroad carrying out business activities in Portugal on a permanent basis must establish a permanent establishment in Portugal.

5.1. Types of Portuguese companies

Investment in Portugal is usually conducted through the incorporation of a company, in order to benefit from limited liability. Portuguese provisions do not foresee the possibility of incorporating Common Law Partnerships, except for professional partnerships such as law firms.

The types of companies most frequently adopted in Portugal are Private Limited Quota Companies, Sole Quotaholder Companies, and Joint Stock Companies.

Private limited quota companies (“Sociedades por Quotas”) is the most common, simple and financially-sound solution for small to medium enterprises, since there they are not subject to any minimum share capital requirement.

Sole quota holder companies (“Sociedades Unipessoais por Quotas”) are incorporated at the outset by a single shareholder and for that reason are not suitable for joint ventures.

The incorporation of Joint-stock companies (“Sociedades Anónimas”) requires five shareholders (natural personal) or one corporate shareholder. The minimum share capital of € 50,000 makes it a suitable equity vehicle for larger investments.

Usually, the choice between corporate vehicles will depend on the complexity of the project, on the investments involved and on mandatory legal requirements for particular sectors.

5.2. Other aspects

The company name must reflect the company’s activities and should not be misleading as regards the identification of shareholders, nor should it be subject to confusion with another previously registered name. A corporate name must not include forbidden expressions or expressions contrary to the principle of good morals. The principle of exclusivity will protect the corporate name in Portugal.

For a company to commence business activities, registration with the Tax Authorities, Social Security Authorities and the appointment of a Portuguese accountant is required.


This publication or document contains general information and is not intended to be comprehensive nor to provide legal or tax advice or services. It should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Professional legal advice should be requested for specific cases. We do not undertake any continuing obligation to advise on future legal amendments, or of the impact on the conclusions herein. Prior results do not guarantee a similar outcome. The contents of this publication or document may not be reproduced, in whole or in part, without the express consent of GFDL.

Contact us

GFDL Advogados assists both individuals and companies regarding doing business, investing and moving to Portugal. For more information visit our website.

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