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How to Create a Subsidiary in Portugal

Create Subsidiary in Portugal

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When thinking about starting a business in Portugal, one of the first things that spring to mind is: what is the best type of company entity for? This blog explains how to create a subsidiary in Portugal.

One of the most attractive limited liability company models in Portugal is the so-called Subsidiary companies. This is known in Portugal as the “Sociedades por Quotas”.

This blog outlines:

  • the main characteristics of this type of private company
  • what it takes to create a subsidiary in Portugal
  • and some of the processes required to do so.

Table of Contents

  • What is a subsidiary
  • The process of creating a subsidiary
  • What’s the best way to create a subsidiary
  • What happens after the creation of a subsidiary

What is a Subsidiary?

By rule, foreign companies who want to have limited liability over the company create subsidiaries in Portugal.

The foreign company considers them a legal entity and can hire employees and conclude contracts without the approval of the foreign company. Furthermore, the share capital can be partially or entirely owned by the foreign company and the minimum share capital is €1. 

The parent company can create the subsidiary as a:

  1. Sole proprietor
  2. Or an agreement between the company and one or more persons. There needs to be at least one Director.

The shareholders are not personally liable for the company’s debts of the company. Only their contributions to the share capital limit the liability. However, the partners jointly liable for all the matters outlined in the company statutes.

Furthermore, the rules for foreign investors are not the same as those regulating domestic investment. Also, international investment is not subject to any type of registration or special notification.

The Process of Creating a Subsidiary

Let’s take a closer look at the steps we need to take to create a subsidiary.

The first step is applying for a Tax Identification Number. Individuals need a NIF and companies need a NIPC in Portugal. 

The next step is applying for a valid name for the new company with the National Register of Collective Persons, or RNPC.

Next up is drafting the company’s Articles of Association and registering the company with the RNPC.

The final stage is opening a company bank account and appointing a Chartered Accountant. So the company informs the tax authorities that its activity has started.

From start to finish, the entire process takes between two to four weeks. 

What’s The Best Way to Create a Subsidiary in Portugal?

There are three ways to set up a company in Portugal: online, in-person or the traditional method.

Online:

This is the most practical way to incorporate a company. A lawyer uploads all the documents to the Commercial Registry Portal. Later, once the documents are submitted, the Commercial Registry will have ten working days to respond to the application.

After confirming the incorporation, the government will send the commercial registry certificate, company card, and payment receipts by regular mail to the company’s registered address.

In-Person:

If speed is the priority, the fastest way to open a subsidiary in Portugal is to visit the office in person. It takes around an hour approximately and you can create three forms of companies:

  • unipersonal LLC
  • LLC
  • or a public limited company. 

For most, the process is essentially the same as online but with one key difference – it requires pre-approved Articles of Association but these can always be changed later.

Once complete, the applicant is given an online code to access the company’s commercial register for a period of three months. They will also receive a paper certificate.

Traditional:

The process is the same, except the applicant must request an appointment with the relevant administrators. This is much slower and more expensive and typically only used for incorporating a European public limited company.

What Happens After the Creation of a Subsidiary?

However, once the business exists, you must register it with the Registo Central de Beneficiátio Efective, or RCBE. This administrator was created to comply with anti-money laundering laws and seeks to strengthen the transparency, trust and security of economic transactions between national and international entities operating in Portugal.

If companies don’t register, they cannot distribute profits, execute any real estate business, agree contracts with public entities or benefit from European support funds. This is why it is so important to create a subsidiary in Portugal.

With all the information provided it is already possible to have a broad and panoramic view of what a subsidiary is, what it takes to create one, and how to do it.

The whole process, accompanied by a dedicated and experienced professional of Lexidy LegalTech Boutique, will make the experience of starting a business in Portugal as simple as making a cup of coffee.

Our team of lawyers in Portgual is here to help all clients, large and small, with the plans for company formation. If you are interested in learning more about subsidiaries and whether they are the correct structure of your business in Portugal, speak with the Corporate Team at Lexidy LegalTech Boutique to understand your situation better.

Soon, you will be able to create a subsidiary in Portugal!

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