Each month, Proudly Portugal invites an individual or brand to share their LGBTI+-related knowledge and advice about visiting, relocating, or investing in Portugal. 

This month, we hear from Joana Cadete, a lawyer at Raposo, Sá Miranda & Associados, who will share her knowledge and advice related to LGBTI+ on investing in Portugal.

Portugal – a country with opportunities to be explored 

Ready to demystify all bureaucratic processes? Portugal is a country full of opportunities ready to be explored, so if you wish to invest in a better future, you should read this article first!

As the search for a place in the sun continues to increase, especially after two years of lockdown, deciding which country to invest in becomes essential. But worry not! We’ve reached the best in the field to help us break down which steps you should consider when creating a business and relocating to a new, promising country.

It’s known that Portugal has been a trendy country in the last couple of years for the LGBTI+ community to relocate permanently and create their businesses. The rights currently enshrined for LGBTI+ people – access to marriage, medically assisted procreation, adoption under equal conditions, rights of transgender people to access health care and the possibility of changing their name and sex in the civil registry – have placed Portugal at the top of the countries most sought after by the Queer community. Added to this is a sense of security that, unfortunately, is not found in other countries worldwide.

Thus, while it is true that Portugal is still a conservative country, the truth is that a high level of development has been achieved from a legislative point of view.

Let’s talk about Visas, shall we?

Currently, many visas increasingly characterise and place Portugal on an international and pleasant level, both for investors and future residents. In any of the situations, the legislator thought not only of the principal applicant but also of his family members, thus allowing the obtainment of a residence permit based on family ties.

Firstly, within the scope of the investor profile, the Golden Visa stands out and is currently in the process of legislative revision. The Residence Permit through Investment (ARI), the legal terminology of the Golden Visa, requires the realisation of an investment in Portugal that can focus on the following:

  1. In the creation of at least 10 (ten) jobs;
  2. In real estate investment (with a minimum amount of €500,000 and €350,000 if you acquire a property for rehabilitation work). The minimum amount of eligible investment can be reduced by 20% if the investment takes place in low-density territories;
  3. Investment in investment funds (minimum amount of €500,000);
  4. In the transfer of capital in the minimum amount of € 1,500,000;
  5. In the transfer of capital in the minimum amount of €500,000 intended for the constitution or reinforcement of the share capital of a commercial company with its registered office in national territory, combined with the creation or maintenance, respectively, of five permanent jobs;
  6. Investment of at least €250,000 to support artistic production, recovery or maintenance of national cultural heritage. Investment of at least €250,000 to support artistic production, recovery or maintenance of national cultural heritage.

The Golden Visa submission process does not require the presence of the investor (or their family members) in the national territory. It is only needed after scheduling in the national territory for collecting biometric data.

All investments must be held for five years, obliging investors to visit Portugal for a minimum of 14 days every two years (validity of the residence permit) to renew and preserve their residence permits. On the other hand, there are other visa options for future residents, which require permanent residence in Portugal for their applicants. These visas can be extended to different profiles and incomes of different natures earned abroad.

Applications for residence visas must be submitted to the Portuguese Consulate in the country of nationality or legal residence. After approval of the visa by the Consulate, a residence visa is issued, valid for four months, and the respective appointment date for collecting biometric data at the competent immigration services.

The D7 Visa 

Enjoyment of Own Income is based on stable and regular income obtained abroad, applicable to beneficiaries of income from movable or immovable property, financial investments, and pensioners, among other situations duly assessed on a case-by-case basis. Earned income must be equal to or greater than the minimum wage in Portugal.

In turn, the regime of digital nomads aims to attract subordinate or independent workers who perform functions for foreign entities remotely who want to live in Portugal with a salary equal to or greater than € 2,800. On the other hand, from the perspective of entrepreneurs, Portuguese legislation provides for the D2 Visa – Visa for Entrepreneurial Immigrants, aimed at creating a company in Portugal with a relevant corporate purpose for Portuguese society and economy. It is also admissible to apply for this visa to develop an entrepreneurial project, including creating a company integrated into a certified incubator (StartUp Visa program).

All types of residence visas require that holders of residence permits not be absent from Portugal for more than six consecutive months or eight interpolated months during the validity period of each residence, namely valid for two years, renewable for three years.

After five years of legal residence in Portugal, citizens may apply for permanent residence or Portuguese nationality. Additionally, it should be noted that the exercise of some professions is regulated, requiring specific authorisations and/or adequate training, sometimes granting equivalence and recognition of diplomas obtained abroad. In any case, resorting to specialised legal support is recommended to assess the most appropriate solution for the specific profile of the investor.

Labor

To enter national territory, foreign citizens must hold a valid visa suitable for travel. The visa may be annulled by the issuing entity, in a foreign territory, by the SEF, in the national territory or at border posts when its holder is subject to an indication for return or indication for refusal of entry and stay in the Schengen Information System (SIS), in the SEF Integrated Information System or make false declarations in the visa application.

Types of Visas

A. Job Search Visa

  • It is a recent visa intended for citizens who intend to enter Portugal to look for work. It is a visa that:
  1. Enables its holder to enter and remain in national territory to look for work, subject to compliance with specific requirements:
    • Has not been subject to a removal measure and is in the subsequent period of prohibition of entry and stay in national territory;
    • It is not indicated, for return, accompanied by a ban on entry into the SIS by any Member State of the European Union or where the Implementing Convention is in force;
    • Is not indicated to refuse entry and stay, under the terms of article 33 in the SEF Integrated Information System or for return;
    • Have means of subsistence, defined by the decree of the members of the Government responsible for the area of internal administration and solidarity and social security;
    • Have a valid travel document;
    • Have travel insurance;
    • Have parental authorisation or equivalent document when the applicant is a minor and during the period of stay is not accompanied by someone who exercises parental responsibilities or responsibilities within the scope of the accompanied adult.
  2. Authorises its holder to carry out a dependent work activity until the visa expires or until the residence permit is granted;
  3. It is granted for a period of 120 days, extendable for another 60 days and allows entry into Portugal.
  • The visa for looking for a job includes a date for scheduling with the competent services (SEF) to grant residence permits within 120 days. After the constitution and formalisation of the employment relationship in that period, the applicant has the right to apply for a residence permit, provided you meet the general conditions for granting a temporary residence permit.
  • Temporary stay, residence and job search visas are valid only for Portuguese territory.
  • At the end of the maximum period of validity of the visa for looking for work without the employment relationship having been established and the subsequent document regularisation process initiated, the visa holder must leave the country and can only file a new application again visa for this purpose, one year after the expiry of the validity of the previous visa.

B – Residence/Temporary Stay Visa

1) The temporary stay visa is intended to allow entry for stays in Portugal for less than one year. This is valid for the duration of the stay and multiple entries into national territory.

2) This is a visa that may be granted for:

  • Seasonal subordinate work – Temporary stay visa for seasonal work for longer than 90 days.
  • Self-employment – Temporary stay visa to carry out an independent activity.
  • Highly qualified professional activity – Temporary stay visa for carrying out scientific research activity in research centres, a teaching activity in a higher education establishment or a highly qualified activity for less than one year. Known for D3 Visas.
  • Remote work / Digital Nomad – Temporary stay visa for professional activity provided remotely.
  • Teaching/scientific research – Temporary stay visa to carry out scientific research activity in research centres, a teaching activity in a higher education establishment or a highly qualified activity for less than one year.
  • Amateur sporting activity – Temporary stay visa for carrying out an amateur sporting activity.

3) It is renewable for successive periods of two years and whenever there is a change in the identification elements registered therein.

C – Visa to obtain a Residence Permit

1) It is valid for two entries and four months when the holder must apply to the Foreigners and Borders Service for a residence permit.

2) Types:

  • Subordinate work – D1 visa;
  • Remote work / Digital Nomad;
  • Independent work;
  • Highly qualified activity / Subordinated highly qualified activity / Teaching;
  • Sports activity.

3) Once the residence permit has been granted, we are faced with a document that has no validity limit but must, however, be renewed every five years or whenever justified; that is when there are changes in the elements of personal identification.

4) The request for a residence permit can be made by the person concerned or by his legal representative with the SEF in the area where the person resides.

5) Pending the application for a residence permit, for reasons not attributable to the applicant, there is currently no impediment to exercising a professional activity under the terms permitted by law, namely due to the existence of an Expression of Interest, provisional document before obtaining the residence permit.

D – General Documents

To obtain the indicated visas, there is a series of mandatory documentation, namely:

a) Request in proper form;

b) Two identical photographs, passport-type, updated and in good condition to identify the applicant;

c) Proof of regular status, if you are of a nationality other than that of the country where you are applying for a visa, valid longer than the date of expiry of the visa you are applying for;

d) Request for consultation of the Portuguese criminal record by the Foreigners and Borders Service (not applicable to minors under 16);

e) Valid travel insurance to cover expenses necessary for medical reasons, including urgent medical assistance and eventual repatriation*

f) Return transport ticket, except when a residence visa is requested**;

g) Proof of the existence of means of subsistence as defined by order of the members of the competent Government*;

h) Certificate of criminal record from the country of origin or from the country where the applicant has resided for more than one year (children under 16 are exempt from presenting documents relating to the criminal record), with the Hague Apostille (if applicable) or legalised.

* The indicated documents are waived in the case of CPLP citizens and upon presentation of a Term of Responsibility from the person responsible for the arrival of the foreign worker.

**Applicants admitted to a higher education institution are exempt from presenting subsistence means.

E – Additional Documentation

1) In the case of obtaining a residence visa for subordinate work (D1 visa), an Employment Contract or Promise Contract of Employment Contract or Individual Expression of Interest must also be presented: Declaration of the IEFP, Proof that you are qualified to practice the profession, when it is regulated in Portugal (if applicable).

2) If a self-employed worker is involved, they must submit a Membership Agreement or a Written Proposal for a Service Provision Agreement for liberal professions, a Declaration issued by the competent authority stating that you are authorised to carry out the activity in Portugal (if applicable).

3) If you are a teacher or perform a highly qualified or cultural activity, an invitation letter must be presented, either issued by the IEFP, by a company or research centre.

Supervisor

From a tax point of view, Portugal has implemented several incentives intending to make the country more attractive in tax terms. Firstly, the “Non-Habitual Residents” program, henceforth “RNH”, stands out. This tax regime aims to attract qualified professionals and retired people from other countries. This regime generally offers a fixed IRS rate of 20% for passive income from dependent and independent work, in addition to tax exemption on income from foreign sources. Additionally, obtaining a complete exemption from the IRS in certain activities with high added value is possible. These tax advantages have attracted foreign investors and contributed to increased the number of foreign residents in Portugal.

To access this RNH regime, it is necessary not to have been a tax resident in Portugal in the previous five years and to carry out one of the high-added-value activities in the ordinance published by the Ministry of Finance. If you meet the criteria, you can benefit from the RNH for ten years.

In addition to the RNH, Portugal has ensured attractive tax conditions for new residents. To this end, it entered several conventions to avoid international double taxation (CDT). These conventions allow the income of foreign citizens from countries with which Portugal has a CDT and obtained in Portuguese territory to benefit from lower withholding rates, constituting an important tax advantage. Portugal celebrated several DTCs, following the OECD model, and is negotiating, signing or ratifying many others with countries in Europe, North America, South America and other regions.

These measures have strengthened Portugal’s position internationally as a fiscally attractive destination for qualified professionals, investors and foreign companies. By creating tax incentives such as the “Non-Habitual Residents” regime and establishing CDTs with several countries, Portugal aims to boost investment, encourage economic activity and attract foreign talent.

Types of incorporation/legal structures for small/medium enterprises and freelancers

A light, simple structure is recommended. A limited liability company (“Sociedade por Quotas”) is the best option – no mandatory share capital, low registration costs (at the Commercial Registry Office of around €400.00) and swift process.

Steps to be taken regarding immigration, business registration, etc;

The main steps are: 

  1. Request for a Portuguese tax number for the shareholder(s) and the members of the Board of Directors; 
  2. Company’s name approval; 
  3. Drafting of the company’s incorporation document; 
  4. Execution of the company’s incorporation document; 
  5. Commercial registration of the company’s incorporation; 
  6. Company’s ultimate beneficial owner registration; 
  7. Registration with Tax Authority and Social Security. 

Tax, social and insurance schemes (incentives and advantages, but also deadlines, disadvantages or small “pitfalls” to be aware of)

The tax system in Portugal has changed over the years, aiming to attract investors, promote entrepreneurship and boost the country’s economy.

Under Portuguese tax law, an individual is considered a resident of Portugal if they spend more than 183 days, consecutive or not, in the country within 12 months beginning or ending in the tax year in question. Alternatively, even if you spend less than 183 days in Portugal, you can be considered a resident if you have a habitual residence in the country during any day of that period.

Regarding taxes, it is essential to consider the Personal Income Tax (IRS), levied on the income of citizens residing in Portuguese territory and non-residents who earn income in Portugal. The IRS rate is determined based on the taxpayer’s income bracket, applying the deductions provided for in the legislation, such as education and health expenses. The calculation of the IRS is done individually. However, couples or people in a de facto union may file a joint declaration, where the tax is levied on the sum of the family’s income.

Those who obtain income from dependent work, business, professionals, capital, property, assets and pensions in Portuguese territory must declare this income. Citizens must submit annually a declaration referring to the previous year’s payment, together with other information relevant to their tax situation. The deadline for submitting the IRS Declaration starts on April 1st and ends on June 30th, regardless of whether it is a working day. It is mandatory to send the declaration electronically through the Finance Portal.

In the business context, the Corporate Income Tax (IRC) is applied to the profits of companies based in Portugal. Companies established in other countries but operating in Portuguese territory are also subject to IRC, levied only on the portion of income obtained in Portugal.

In recent years, mainland Portugal’s corporate tax rate has remained at 21%. In the autonomous regions of Madeira and the Azores, the rate applied is 14.7% in 2022. It is important to note that small and medium-sized companies benefit from a reduction in the corporate income tax rate. In Mainland Portugal, a rate of 17% is applied on the first €25,000 of taxable income, while in the islands, this rate is 11.9%.

Still, concerning corporate taxation, Portugal provides several tax benefits that can reduce the tax rate or base on which the tax will be levied.

Thus, the Portuguese tax regime offers several benefits that allow optimising the deduction from taxable income in areas such as capital contributions by partners in the company, copyright and industrial property, and the agricultural sector.

Thus, Portugal provides a series of benefits for self-employed workers and companies wishing to establish themselves in the country. Together with the natural advantages that Portugal offers, these incentives have contributed to the mass arrival of people and companies to the country.

What professional services will need to be hired (accountants, lawyers, etc.);

A chartered accountant must be retained upon incorporation of the company.

What to do and what not to do when hiring employees;

It is essential to understand that labour laws vary from country to country, and Portugal, from this point of view, still has a lot of formalities to comply with. They must ensure that all workers are registered with Social Security, can carry out a professional activity and that the remuneration conditions are respected so that the activity can be carried out.