How to Start a Business in Portugal as a Foreigner: Visas, Taxes, and Tips

Portugal has become an increasingly attractive destination for foreign entrepreneurs. With its strategic location in Europe, welcoming startup ecosystem, and relatively low cost of living, the country is ideal for launching a business. Whether you’re a freelancer, startup founder, or small business owner, here’s everything you need to know about how to start a business in Portugal as a foreigner — including visa options, tax obligations, and practical tips for success.

Visa Options for Entrepreneurs

To legally start and operate a business in Portugal as a non-EU citizen, you’ll need a tax number, but if you want to be living in the country managing your business, you will need the appropriate visa or residency permit. Here are the most common options:

1. D2 Visa (Entrepreneur Visa)

The D2 visa is designed specifically for entrepreneurs, freelancers, and independent service providers. It allows you to reside in Portugal while running a business.

Requirements:

Proof of a viable business plan
Business registration in Portugal (or intent to register)
Sufficient financial means to support yourself and fund the business
Accommodation in Portugal
Clean criminal record

Why choose the D2 Visa?

Flexible for both new and existing businesses
Leads to residency and eventual citizenship
Can include dependents (spouse and children)

2. Digital Nomad Visa (D8 Visa)

If you’re earning remotely (e.g., freelancers or agency owners), this visa allows you to reside in Portugal and potentially evolve into running a local business over time.

Tip: Consult an immigration lawyer to determine the best visa based on your current situation and long-term goals.

Setting Up Your Business: Step-by-Step

Once you have your tax number, you can register and launch your business in Portugal. Here’s how:

Step 1: Choose the Right Business Structure

Sole Proprietorship (Empresário em Nome Individual) – ideal for freelancers or small one-person operations.
Single-Member LLC (Sociedade Unipessoal por Quotas) – limited liability, common for small businesses.
Private Limited Company (Sociedade por Quotas – LDA) – suitable for startups and businesses with partners.

Step 2: Register with Portuguese Authorities

You can incorporate a company in-person or online.

You’ll need:

A Portuguese NIF (tax ID number)
Company name approval (if applicable)
Articles of association
Statement accepting management role
Identification documents
Accountant

Step 3: Open a Portuguese Business Bank Account

You’ll need this to deposit share capital, handle business expenses and pay corporate tax.

Step 4: Enroll with the Tax Office (Finanças) and Social Security

Once registered, your accountant must:

Notify Finanças of your business activity (Declaração de Início de Atividade)
Enroll in Social Security (Segurança Social) within 30 days

Taxes in Portugal for Foreign Business Owners

Understanding your tax obligations is key to staying compliant and avoiding fines.

1. Corporate Income Tax (IRC)

Standard rate: 20%
Small businesses may qualify for reduced rates on the first €25,000 of profit

2. Personal Income Tax (IRS)

If you operate as a sole proprietor, profits are taxed under the progressive IRS system (13%–48%).

3. Value Added Tax (VAT / IVA)

Standard rate: 23%
Some services/products may be taxed at 6% or 13%

4. Social Security Contributions

Entrepreneurs: approx. 21.4%*70% of declared income (after the first year)
Limited companies also contribute to social security on behalf of employees

5. Invoicing and Bookkeeping

You must:

Use certified invoicing software
Submit monthly SAF-T files
File quarterly VAT returns (if applicable)
Work with an accountant familiar with Portuguese regulations

Business Tips for Foreigners in Portugal

Learn the Basics of the Language

While many people speak English, doing business (especially with local institutions) is easier with some Portuguese. Basic fluency helps with:

Networking
Reading official documents
Communicating with accountants or vendors

Hire a Local Accountant, even when not mandatory

Portuguese tax rules can be complex and change often. A certified accountant (Contabilista Certificado) ensures:

Timely filings
Proper deductions
Compliance with social security and VAT rules

Take Advantage of Support Programs

Portugal offers various programs to support entrepreneurs:

Startup Portugal – government-backed initiatives
IEFP Incentives – for hiring and training
Tech Visa – for tech startups hiring international talent

Network Locally

Attend startup events, join expat business groups, and connect with chambers of commerce. Lisbon, Porto, Lagos and Braga all have active entrepreneurial communities.

Mind the Bureaucracy

Expect some paperwork and delays, especially if you’re dealing with:

Bank accounts
City halls (Câmara Municipal)
Public services

Patience and preparation are key.

Why Start a Business in Portugal?

Quality of Life – sunshine, beaches, great food, and safety
Low Startup Costs – compared to the U.S. or Northern Europe
Gateway to Europe – access the entire Schengen Area
Talent Pool – educated, multilingual workforce
Startup Ecosystem – coworking spaces, incubators, and events

Final Thoughts

Starting a business in Portugal as a foreigner is a smart move — especially if you take the time to understand visa options, tax obligations, and legal requirements. Whether you’re launching a small consulting firm, an online shop, or a tech startup, Portugal offers the right balance of opportunity, lifestyle, and affordability.

Need legal support to start your business in Portugal? Contact us today — we help expats navigate immigration, setup, and compliance with ease.