Starting an NGO in Portugal
Our corporate lawyers will guide you through the process step-by-step.
How can a lawyer help me Start and NGO in Portugal?
The importance of a lawyer in setting up an NGO in Portugal lies in the guidance received from lawyers specializing in nonprofit organizations throughout the process.
We will assist in drafting the documents needed since some of them, like the bylaws or the Founding Act, can be very lengthy and difficult tasks. It is important to bear in mind that it is not only important to cover legal aspects, but that a lawyer should also provide you with a more complete overview: such as the taxation of donations, the treatment of personal data of members and volunteers, etc.
Incorporating an NGO without a lawyer can lead to costly mistakes during its constitution or later problems in the operation and objectives that you want to develop.
¨We will be with you each step of the journey.¨
What is an NGO?
An NGO’s literal meaning is Non-Governmental Organization. These are entities of social initiative and humanitarian aims, which are independent of the public administration and are non-profit making.
It is very important to establish that, in Portugal, you can establish an NGO under two different types of legal structures: foundations and associations.
On the one hand, an association is an organization that is created on a non-profit basis, by three or more people, for a purpose of general interest. On the other hand, a foundation is defined as an organization whose main characteristic consists of an allocation of assets (coming from third parties) and assigned to a wide variety of nonprofit purposes.
The difference between an association and a foundation also lies in the way these organizations are set up. A foundation requires an initial endowment (250.000 €) and must be set up in the presence of a Notary in the form of a Public Deed. In the cases where the initial endowment of a foundation is constituted by a patrimonial collection, it must also include a portion in cash, tending at least 30% of the total of the initial endowment that, in any case, cannot be less than EUR 100.000,00. The concerned patrimony collection should be transferred to the ownership of the Foundation. An association, on the other hand, does not require an initial donation and does not need a notarial deed to be set up. An association can be established in person at the “Associação na Hora” section of the local Commercial Register, and the Articles of Association can be drawn up in advance by the founders or at the Balcony, using the pre-approved template automatically generated by the Commercial Registry.
As these entities do not generate profit, they are taxed on their overall income, as well as on asset increments freely obtained. Unlike commercial business entities which are subject to a 25% corporate tax rate, the rate for these entities is generally 20%. Nevertheless, entities that acquire the status of administrative public utility, or private institution of social solidarity (IPSS) benefit from an exemption of this rate, as long as they meet all the several requirements and it is recognized by order of the Minister of Finance. These entities are subject to VAT, except in the case of exempt services, and are exempt from stamp duty.
These entities fundamentally pursue activities of general interest, but are not prevented from exercising incidental economic activities, as long as the proceeds are not distributed among their members.
Requirements for Setting Up an NGO in Portugal?
The requirements for starting a foundation are:
- Have a social purpose. The entity must seek to benefit a generic group of beneficiaries, and cannot have as its purpose the benefit of the private interests of its members.
- It must be not for profit. The positive result of the economic resources must not be distributed among the members of the body but reinvested to be used for the fulfillment of the aims of the foundation. Non-profit should not be confused with not needing economic resources, as these are fundamental for organizations to be able to fulfill their aims.
- To have a minimum financial endowment of € 250,000.00.
- Must be set up in front of a notary in the form of a public deed.
The requirements for associations are as follows:
- Must have a minimum of 2 founders with a Portuguese tax ID.
- The governing bodies are composed of three bodies: i) General Assembly; ii) Board of Directors; iii) Supervisory Board. Each body should have an odd number of members, with, at least, 3 members on each one. That makes 9 members necessary for the association to start operating.
- It is the general assembly that elects the members of the association’s bodies, whenever the statutes do not establish another choice process.
- The members of the governing bodies don’t need to be Portuguese or live in Portugal, but they must have a Portuguese Tax ID (NIF).
Frequently Asked Questions
NGOs are private, non-profit organizations that arise from civil and popular initiatives. They are usually linked to social, cultural, development or other projects.
A civil society is an agreement between the partners whereby several persons jointly pool money, property and other assets to achieve a common purpose, which must be profitable for all and in accordance with the contribution of each party.
They provide public services without replacing the State, involving the different members of a community and without receiving any financial gain, everything they receive is destined to the welfare of the communities where they carry out their projects.
Both the association and the foundation can develop economic activities as long as they are related to their main purpose and any profit generated is reinvested in actions that are related to the latter.
Depends if it’s an association or a foundation.
In the case of the association, the supreme body would be the General Assembly, which in turn would elect a Board of Directors, which must have the structure determined in the statutes and which generally consists of a president, a secretary, a treasurer and members.
Unlike in an association, the administration and governance is the responsibility of the board of directors.
No, they just need to have a Portuguese tax number (NIF), which we can help obtain.
We are a department formed by qualified legal experts who have been trained in the field of corporate law. We work on these requests every day and it’s our passion. For us, Lexidy is a way of life and what excites us the most is to be able to deliver the happiness and satisfaction of a successful process. We want to help you achieve your goals and dreams.
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