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Starting a Business in Portugal

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Starting a Business in Portugal

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Why Start A Business In Portugal?

Portugal has being trying to shake the stigma of Spanish footnote for years. It has been characteristically heroic in its attempt to escape the parenthesis of afterthought and affiliation, and it's a damn shame. Portuguese history is often overlooked and misattributed, but as transient empires (come and) go, Portugal was an intrepid shaker and colony maker. It left its footprints all over the world, not least in South America. Portuguese footprints may not have been stamped with such authority on its modern market, but as it stands, things are looking good.

Names like Volkswagen, Visteon, Delphi, Microsoft, Lear and Mitsubishi, among others, have chosen Portugal as a place to base themselves, and below are just a few examples of why business do, indeed, chose to base themselves there:

  • It has one of the lowest operational costs in western Europe
  • It is a founding member of the European Monetary Union
  • With an impressive investments track record, many companies chose to bring new ventures to the country
  • It is one of the continents youngest and most zealous workforces, offering top class training facilities
  • It offers one of the world's top and most dextrous incentives deals
  • High increase in productivity in both manufacturing and services
  • A vast range of locations and facilities at competitive prices and readily available
  • Paramount support services for investors, including ongoing support
  • One of the continent's best records for industrial relations
  • A high quality of life with one of Europe's lowest rates of crime

The combination of Portugal's economic liberality, healthy relationship with the EU and prime geographical location, make it an organic gateway between the EU and other world markets. Portugal actively seeks foreign investment, and provides subsidies to many investments. Foreign investment is welcomed in all sectors open to private investment. There are restrictions on foreign investment in certain strategic sectors, and since its ascension to the EU, Portugal has undergone remarkable increases in both direct and portfolio foreign investment.

What is the population?

The population is approximately 10.71 million.

What is the time difference?

The time in Portugal is GMT.

What is the climate?

The capital, Lisbon, has a warm climate. In spring and summer, temperatures average at 30C, sometimes higher. Winters are wet and windy, temperatures usually around 10C.

What are the languages?

The official Language of Portugal is Portuguese. Portuguese is also the official language of Portuguese colonies: Brazil, Angola, Mozambique, Sao Tome e Principe, Guinea Bissau, Cape Verde and East Timor. English and French are common in the business environment. English is also taught in schools - an official part of the curriculum, in fact. Generally, the Portuguese have a grasp of the English language.

What is the currency and exchange rate?

As a firm member of the European Union, Portugal uses the Euro.

Economic Overview

Portugal has gradually become one of the most attractive locations and potentials for trade and development in the European Union. It's economy has grown expeditiously since it joined the EU, back in 1986. It truly has been a success story. Portugal's medium yearly GDP is consistently above the European average, even when faced with slow decrease recently.

It is a highly eclectic service-based economy. Over the last twenty years, Portugal has decided to privatise many of the state-controlled corporations. It has also shown a relaxation in many areas of the economy, namely in the finance sector and telecommunication. Portugal was welcomed by the European Monetary Union in the late nineties, for which it adopted the Euro as its currency.

With an unenviable educational system, Portugal faces a slump in qualified workers, which, in turn, has proved a big obstacle toward heightening productivity and progression. It is currently being outshined by producers offering lower costs for direct investment opportunities in Asia and central Europe.

Small and medium sized businesses are idiosyncratic of Portuguese industry. Over three quarters of them employ approximately fifteen workers or less and most, like Italy, family-orientated affairs. A consequence of the Portuguese revolution meant that many of the countries top industries were transposed to public ownership. However, since it joining of the EU, many of these have returned to private hands, and in some cases their former owners. The government still holds a few, which, it claims, it aims to privatise in the near future.

Portugal can boast the advantage of EU funding, intending to contemporise its infrastructure, bringing it more to the standard of other EU countries. It has been allocated over 22 billion Euros to work with. The fundaments of the infrastructure renovation include new motorways; an improvement of the railway network and lines; redevelopment of sea ports; the expansion of the metro system; creation of a new light railway; contemporise the water system; refining postal and telecommunications services; building of new, modern hospitals, academic institutions and accommodation.

The government does face tough challenges in its attempt to boost the country's competitiveness while balancing it with the aims of the European budget deficit (3% GDP).

Portugal's main export commodities are:

  • Agricultural products
  • Food product
  • Oil products
  • Chemical products
  • Plastics and rubber
  • Skins and leather
  • Wood and cork
  • Wood pulp and paper
  • Textile materials
  • Clothing
  • Footwear
  • Minerals and mineral products
  • Base metals
  • Machinery and tools
  • Vehicles and other transport material
  • Optical and precision instruments
  • Computer accessories and parts
  • Semi-conductors and related devices
  • Household goods
  • Passenger cars
  • Wine products

It's not dissimilar primary import commodities are:

  • Agricultural products
  • Food products
  • Oil products
  • Chemical products
  • Plastics and rubber
  • Skins and leather
  • Textile materials
  • Clothing
  • Footwear
  • Minerals and mineral products
  • Base metals
  • Machinery and tools
  • Vehicles and other transport material
  • Computer accessories and parts
  • Semi-conductors and related devices
  • Household goods

What are the essentials I need to know?

Investment from overseas has been increasing recently; namely since Portugal accession to the European Union. The alterations that were required for this accession have consequently had a profound effect on the Portuguese economy. Indeed, it has resulted in a confident economic stability, which has, in turn, led to an increase in foreign capital being invested. This stability, coupled with the nation's huge tourist industry have been very decisive and attractive matters.

Furthermore, Portugal's traditional presence and involvement in places like Brazil and Africa, give its industry a distinct advantage; the establishing of commercial contacts, business opportunities, access to the expanding markets.

Labour and workforce

Labour in Portugal is mainly regulated by the new Working Code. There are also many collective agreements celebrated between the employers and employees' representative organisations.

Labour matters have a close connection with social security, which in Portugal is obligatory. It provides cover for accidents at work and retirement.

General labour contracts do not have to be written. However, labour contracts with a defined period must be written. Labour contracts with workers from outside the European Union must always be written and registered with the authorities.

Trial periods can vary from 15 days to 240 days. This is unless the collective agreement states a differently. Term contracts have a maximum period of 6 years and are only permitted if there is a reason that does not justify a definite labour contract.

Employers must oblige the law, and can only terminate a labour contract by following the disciplinary procedures that are set out in official legislation.

Social Security

All employees and self-employed persons must be covered by social security, although there are some specific social security schemes for some activities.

Employers must withhold 11% of the employee's salary and they are required to pay a further 23.75%. The payment of both parts is the responsibility of the employer.

Advertising and marketing

The main types of advertising in Portugal, like here in the UK, are television, radio, newspapers, magazines and specialist trade directories.

There are approximately fifty advertising companies in Portugal. Some will have special knowledge in television, others in radio commercials and direct mailing, etc.

The Institute of Advertising Self-Regulation (ICAP) is the advertising standards authority and is funded by the advertising industry to enforce the regulation of advertising content. ICAP deals with complaints and investigations, and has the authority to ask advertisers to withdraw or amend their advertisement. ICAP is a member of EASA (European Advertising Standards Alliance).

Etiquette

Meetings - Initials meet-and-greets are reserved, yet polite. As in the UK, a handshake accompanied by direct eye contact and the appropriate greeting for that time of day is common place. Once a personal relationship has developed, welcomes become more personal. Men may greet each other with a hug and a handshake and women often kiss each other on the cheek.

Click here to Ask an Expert about Starting a Business in Portugal

Organisations that can assist with Starting a Business

  • > Adminex Solutions UK Ltd

    THE TRUSTED GLOCAL SOLUTIONS PROVIDER Providing Global solutions locally Helping to internationalize the SME

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  • > Sovereign Group

    Sovereign offers a range of advisory and support services to assist companies of all sizes to establish successful business operations in foreign markets.

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  • > Redesmere

    Caught out by Brexit? Concerned about Trump’s unpredictability?

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  • > ACOQ CONSULTING

    Business Information is presently a key word that will strongly affects your future . Our Service intends to provide information for management necessary to Create, Maintain and Develop businesses.

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  • > Global Training Partners

    GTP cross cultural trainings and intercultural workshops help global companies in improving their communication, efficiency and profitability when doing business across cultures.

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  • > Blue Marble Global Payroll

    Simplified Global Payroll Companies with global employees often find that managing payroll in multiple countries is complicated - different systems, laws, and languages in each country, lack of reporting, and constantly changing laws and regulations each year. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, aggregated reporting, and a hybrid service model in 135+ countries around the world.

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  • > Accounting Advantage Lda

    A complete service with everything you need to start and develop your business

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  • > De Pinna, Notaries

    Multi-lingual Notaries to notarise, translate and legalise documents for international use

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