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Portugal Country profile

Economic, political and social situation, tax system, opportunities to invest and negotiate...

Portugal

Capital: Lisbon

Population

Total Population: 10,379,007
Natural Increase: 0.5%
Density: 113 Inhabitants/km²
Urban Population: 67.4%
Population of main cities:Lisbon (552,700); Porto (237,600); Vila Nova de Gaia (186,500); Amadora (175,200); Braga (136,900); Funchal (111,600); Coimbra (105,900); Setúbal (98,200); Almada (96,400)
Ethnic Origins: The population is made up of a largely homogeneous Mediterranean community, with a minority of people of Asian or African origin, many of whom immigrated during decolonisation. The largest groups of foreign residents in Portugal are Brazilians, Cape Verdeans, British, Romanians, Ukrainians and Chinese. (National Institute of Statistics of Portugal).
Official Language: Portuguese
Other Languages Spoken: Spanish, French and English are the foreign languages best known and utilised in business relations.
Business Language(s): The language utilised depends on the age of your business contact. Typically, those under 40 will also speak English. Those over 40 tend to speak French. That being said, Spanish is gaining ground within the Portuguese business scene.
Religion: Catholics: 95%
Literacy Rate:93.8%
National Currency: Euro (EUR)

Country Overview

Area: 92,230 km²
Type of State: Portugal is a republic based on a parliamentary democracy. The constitution establishes a 'semi-presidential' regime for the country.
Type of Economy: High-income economy, OECD member.
High level of deficit and public debt since the economic crisis
HDI*: 0.830/1
HDI (World Rank): 43/188

Note: (*) The HDI, Human Development Index, is an Indicator Which Synthesizes Several Data Such as Life Expectancy, Level of Education, Professional Careers, Access to Culture etc.

Telecommunication

Telephone Code:
To call from Portugal, dial 00
To call Portugal, dial +351
Internet Suffix:.pt
Computers:17.2 per 100 Inhabitants
Telephone Lines:42.6 per 100 Inhabitants
Internet Users:64.0 per 100 Inhabitants
Access to Electricity: 100% of the Population

Foreign Trade in Figures

 
Foreign Trade Indicators20182019202020212022
Imports of Goods (million USD)89,06089,53877,89598,200114,848
Exports of Goods (million USD)68,36167,06361,49675,22982,273
Imports of Services (million USD)18,80019,90515,63720,18623,877
Exports of Services (million USD)39,45639,99925,48732,23846,537

Source: WTO – World Trade Organisation, Latest data available.

 

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Latest Update: January 2024

COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
The summary of the EU’s economic response to the COVID-19 pandemic is available on the website of the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) in Portugal, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Economic Outline | Political Outline

 

Economic Outline

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After achieving several years of sustained growth, economic output in Portugal fell sharply following the outbreak of the COVID-19 pandemic. Nevertheless, the country recovered quickly, growing by 6.2% of GDP in 2022. The year was characterized by a good start thanks to a strong rebound in the tourism sector and a positive balance in the export of services; although growth was hampered in the second half due to supply-chain disruptions, elevated energy prices and rising interest rates. The implementation of the European Recovery and Resilience Plan is expected to support the economy over the forecast horizon, but there are risks that implementation delays continue. For 2023, the IMF expects growth to be sluggish (0.7%): elevated energy bills will constrain private demand, whereas the weaker performance of Portugal’s main trading partners should contribute to a slowdown in trade. Only in 2024, when the global political and economic condition is expected to normalize, GDP growth will resume at a faster pace (2.4% - IMF).

The Portuguese government had managed to gradually reduce its budget deficit in recent years, reaching positive territory. This trend was reversed by the impact of COVID-19 first, and then by the energy prices shock that was exacerbated by the Russian invasion of Ukraine. The energy-related measures taken by the Portuguese government – including income support and reduced indirect taxes for both households and firms - were worth close to 2.1% of GDP in 2022, and contributed to a budget deficit of around 0.7% of GDP. On the other hand, public revenues benefited from strong economic growth and high prices. Despite the fact that the positive performance of government revenue is expected to continue over the forecast horizon, the IMF sees the budget deficit at 1% of GDP this year and in 2024. Driven by a favourable nominal growth-interest rate differential, the public debt-to-GDP ratio decreased to 114.7% in 2022 (from 127.4% one year earlier) and should follow a downward trend in 2023 (111.2%) and 2024 (106.7%). After stagnating for several years, inflation spiked to 7.9% last year, propelled by high energy prices, which triggered pass-through effects to other goods and services, and a severe drought that contributed to one of the highest hikes in unprocessed food prices among the eurozone. The IMF forecasts inflation to gradually ease to 4.7% this year and 2.6% in 2024 amid a tighter European monetary policy and the normalization of energy and food costs.

The unemployment rate decreased to 6.1% in 2022 (down from 6.6% one year earlier). Although wage growth strengthened, it was not enough to protect households’ purchasing power. According to the IMF, unemployment should increase marginally over the forecast period, up to around 6.5%. Overall, Portuguese GDP per capita (PPP) is estimated at USD 42,067 in 2022 (IMF), still 22% below the EU’s average. According to the latest figures from the national statistical office INE, 18.4% of the population is at-risk-of-poverty, corresponding to the proportion of inhabitants with an annual net equivalent monetary income below EUR 6,653.

 
Main Indicators20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD)252.13276.43289.52303.24316.27
GDP (Constant Prices, Annual % Change)6.72.31.52.22.0
GDP per Capita (USD)24,54026,87928,12329,53130,878
General Government Balance (in % of GDP)-1.2-0.7-0.3-0.4-0.3
General Government Gross Debt (in % of GDP)113.9108.4104.099.996.2
Inflation Rate (%)n/a5.33.42.42.2
Unemployment Rate (% of the Labour Force)6.16.66.56.36.2
Current Account (billions USD)-2.933.633.282.922.24
Current Account (in % of GDP)-1.21.31.11.00.7

Source: IMF – World Economic Outlook Database, Latest data available.

Note : (E) Estimated data

 

Main Sectors of Industry

The agricultural sector comprises around 2.2% of Portugal’s GDP and employs 6% of the active population (from 10% a decade ago - World Bank, latest data available). The main crops produced include cereals, fruits, vegetables and wine (Portugal is the ninth-largest wine exporter in the world). Mining, specifically copper and tin, represents a good part of the country’s GDP, with Portugal being one of the largest marble exporters. Furthermore, the forests of Portugal provide a large part of the world's supply of cork. According to the first estimate of the Economic Accounts for Agriculture, the income of agricultural activity, in real terms, per annual work unit, registered a sharp decline in 2022 (-11.8%). Between January and October 2022, exports of agricultural products increased by 30.5% (National Statistics Institute), with imports increasing at a faster pace (+32.2%).

The industrial sector employs 25% of the workforce and contributes to 19.7% of Portugal’s GDP. The manufacturing industry is modern and dominated by small and medium-sized companies. Its main sectors of activity are metallurgy, machinery, electrical and electronics industries, mechanical engineering, textiles and construction. Biotechnologies and IT are also growing. According to data from the World Bank, the manufacturing sector alone contributes 12% of GDP. Portugal has increased its role in the European automobile sector and has an excellent mould manufacturing industry. According to data by the National Statistics Institute, in 2021, the total sales of products and services in the manufacturing industries increased by 15%, in nominal terms, totalling EUR 96.8 billion, surpassing the pre-COVID level by 2.9%.

The services sector comprises 64.7% of GDP and employs around 70% of the active population. Tourism, in particular, plays an important and rapidly increasing role in the Portuguese economy. After suffering following the COVID-19 pandemic, the revenue of the accommodation sector in the first ten months of 2022 already surpassed that of 2019 (also due to the increase in prices of services provided). The Portuguese banking sector improved its liquidity and solvency in recent years, playing a critical role in supporting the economy’s financing and liquidity needs. It comprises 145 institutions: 61 banks, 81 mutual agricultural credit banks and 3 savings banks, with the five largest banks accounting for 77% of total assets (European Banking Federation).

 
Breakdown of Economic Activity By SectorAgricultureIndustryServices
Employment By Sector (in % of Total Employment)5.223.970.9
Value Added (in % of GDP)1.919.165.5
Value Added (Annual % Change)-2.92.17.9

Source: World Bank, Latest data available.

 

Indicator of Economic Freedom

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
67,5/100
World Rank:
52
Regional Rank:
29

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.72/10
World Rank:
35/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

Political Outline

Current Political Leaders
President: Marcelo Rebelo de Sousa  (since 9 March 2016) - PSD
Prime Minister: António Luis Santos da Costa (since 24 November 2015) - PS
Next Election Dates
Presidential: January 2026
Legislative: January 2026
Current Political Context
Early elections were called after parliament was dissolved on 3 November 2021 because of the rejection of the budget presented by the minority government led by Prime Minister Antonio Costa of the Socialist Party. New elections were held on 30 January 2022: the Socialist party obtained an outright majority (117 seats out of 230) thus being able to govern without the support of its former allies. The main opposition party remained the centre-right PSD (76 seats), whereas support for the far-left BE, PAN, LIVRE parties and the PCP-PEV alliance remained flat or collapsed. The main breakthrough was achieved by the far-right party Chega, which obtained 12 seats and became the country's third political force.
The year 2022 was characterized by the Russian invasion of Ukraine, which prompted a severe reaction from the EU and a sharp rise in energy prices. The government adopted several packages worth 2.1% of GDP to contain the consequences of such an increase, while also focusing on renewable energies. Moreover, the development of Portugal’s lithium deposits has been another government focus in light of the fact that the country sits on an estimated 10% of overall lithium deposits in Europe, sparking peaceful protests and legal actions from environmental groups.
Main Political Parties

The main political parties in Portugal include:

Type of State
Portugal is a republic based on a parliamentary democracy. The constitution establishes a 'semi-presidential' regime for the country.
Executive Power
The President is the Head of State and the commander-in-chief of the army. He or she is elected by universal suffrage for a five year term. After a general election, the leader of the majority party or coalition is usually appointed to be Prime Minister by the President, for a four year term. The Prime Minister is the head of the Government and holds executive power, which includes implementing laws and overseeing the everyday running of the country. The Council of Ministers is appointed by the President on the recommendation of the Prime Minister. There is also a Council of State, which acts as an advisory body to the President.
Legislative Power
Portuguese legislative power is unicameral. The parliament, called the Assembly of the Republic, has 230 seats. The members are elected by universal suffrage for a four year term. The executive branch of government is directly or indirectly dependent on the support of Parliament, often expressed by a vote of confidence. The Prime Minister cannot dissolve the Assembly, but the President can do so and call for an early election. Portuguese citizens enjoy considerable political rights.
 

Indicator of Freedom of the Press

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
9/180
 

Indicator of Political Freedom

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7
Civil Liberties:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

 

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Latest Update: January 2024

In this page: Foreign Trade in Figures | Trade Compliance | Standards

 

Foreign Trade in Figures

Portugal's economy is open to foreign trade, which represents 86% of its GDP (World Bank, latest data available). While the country has traditionally exported agricultural products, textiles and clothing, it has begun to export an increasing amount of technological equipment. In 2021, the country mainly exported machinery and mechanical appliances (14.3%) and vehicles and other transport equipment (13.2%). The largest commercial surpluses remained in the transactions of mineral products, cellulose pulp and paper, clothing and footwear. The main product groups of imports were machinery (18.6%), chemical products (12.3%), mineral fuels (11.4%), and vehicle and their parts (10.4% - Statistics Portugal).

Data from Statistics Portugal (INE) shows that in 2021 the main trading partners were Spain (26.7% of total exports), France (13.1%), Germany (11%) and the U.S. (5.6%). Portugal’s main suppliers were Spain (32.8%), Germany (12.4%), France (6.7%), and the Netherlands (5.3%). The main extra-EU supplier of goods to Portugal continued to be China, with imports from this partner increasing by 28.6% (4.7% of total imports). Overall, the European Union accounted for 71.5% of exports and 73.6% of imports.

The country has a structural trade balance deficit. In 2021, Portugal exported goods worth USD 75.1 billion (+22.1% year-on-year), with imports increasing at a faster pace (+25.9%, at USD 97.7 billion). However, Portugal is a net service exporter (USD 32 billion in exports against USD 20.8 billion in imports - data by WTO). The country’s overall balance of trade was negative by 3% (was 2.1% one year earlier – World Bank). In the accumulated period January to October 2022, compared to the same period one year earlier, exports increased by 24.4% (EUR 72.5 billion) and imports rose by 33.4% (EUR 100.4 billion - data INE).

 
Foreign Trade Values20182019202020212022
Imports of Goods (million USD)89,06089,53877,89598,200114,848
Exports of Goods (million USD)68,36167,06361,49675,22982,273
Imports of Services (million USD)18,80019,90515,63720,18623,877
Exports of Services (million USD)39,45639,99925,48732,23846,537

Source: World Trade Organisation (WTO), Latest data available.

 
Foreign Trade Indicators20182019202020212022
Foreign Trade (in % of GDP)86.486.676.286.1102.6
Trade Balance (million USD)-18,415-18,226-14,236-18,745-27,739
Trade Balance (Including Service) (million USD)2,1681,836-4,388-6,766-5,083
Imports of Goods and Services (Annual % Change)5.04.9-11.813.211.1
Exports of Goods and Services (Annual % Change)4.14.1-18.613.416.7
Imports of Goods and Services (in % of GDP)43.043.139.244.552.6
Exports of Goods and Services (in % of GDP)43.443.537.041.650.0

Source: World Bank, Latest data available.

 
Foreign Trade Forecasts20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change)8.02.82.02.02.0
Volume of imports of goods and services (Annual % change)5.23.92.92.92.6

Source: IMF, World Economic Outlook, Latest data available.

Note: (e) Estimated Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
Spain26.2%
France12.3%
Germany10.8%
United States6.5%
United Kingdom4.9%
Italy4.5%
Netherlands4.0%
Belgium2.4%
Angola1.8%
Poland1.4%
Main Suppliers
(% of Imports)
2022
Spain31.9%
Germany11.0%
France6.1%
China5.1%
Netherlands5.0%
Italy4.8%
Brazil4.2%
United States3.2%
Belgium3.2%
Nigeria1.8%

Source: UN Comtrade Database, Latest data available.

 

Main Products

82.6 bn USD of products exported in 2022
Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals6.9%
Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702)5.1%
Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s.3.9%
Uncoated paper and paperboard, of a kind used for writing, printing or other graphic purposes, and non-perforated punchcards and punch-tape paper, in rolls or in square or rectangular sheets, of any size, and handmade paper and paperboard (excl. newsprint of heading 4801 and paper of heading 4803)2.2%
Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather (excl. orthopaedic footwear, skating boots with ice or roller skates attached, and toy footwear)2.2%
Revolution counters, production counters, taximeters, milometers, pedometers and the like (excl. gas, liquid and electricity meters); speed indicators and tachometers (excl. those of heading 9014 and 9015); stroboscopes1.7%
New pneumatic tyres, of rubber1.7%
Plates, sheets, film, foil and strip, of non-cellular plastics, not reinforced, laminated, supported or similarly combined with other materials, without backing, unworked or merely surface-worked or merely cut into squares or rectangles (excl. self-adhesive products, and floor, wall and ceiling coverings of heading 3918)1.5%
Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006)1.4%
Motor vehicles for the transport of goods, incl. chassis with engine and cab1.3%
115.3 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous minerals, crude6.7%
Petroleum gas and other gaseous hydrocarbons4.4%
Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702)4.3%
Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals3.4%
Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s.3.0%
Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006)2.1%
Electrical energy1.9%
Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528)1.4%
Electronic integrated circuits; parts thereof1.4%
Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, incl. photovoltaic cells whether or not assembled in modules or made up into panels (excl. photovotaic generators); light emitting diodes; mounted piezoelectric crystals; parts thereof1.3%

Source: UN Comtrade Database, Latest data available.

 
 

Trade Compliance

International Conventions
Member of the World Trade Organization (WTO)
Member of the Organisation for Economic Co-operation and Development (OECD)
Party to the Kyoto Protocol
Party to the Washington Convention on International Trade in Endangered Species of Wild Fauna and Flora
Party to the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal
Party to the Montreal Protocol on Substances That Deplete the Ozone Layer
Party to the Wassenaar Arrangement on Export Controls For Conventional Arms and Dual-Use Goods and Technologies
Party to the International Coffee Agreement
International Economic Cooperation
Portugal is a member of the following international economic organisations: IMF, European Union, ICC, WHO, OECD, Schengen Convention, European Economic Area, Latin American Integration Association (observer), among others. For the full list of economic and other international organisations in which participates Portugal click here. International organisation membership of Portugal is also outlined here.
Free Trade Agreements
The up-to-date list of Free Trade Agreements signed by Portugal can be consulted here.
Party of the ATA Convention on Temporary Admissions and Use of the Carnets
Yes

As a Reminder, the ATA is a System Allowing the Free Movement of Goods Across Frontiers and Their Temporary Admission Into a Customs Territory With Relief From Duties and Taxes. The Goods Are Covered By a Single Document Known as the ATA Carnet That is Secured By an International Guarantee System.
Party of the TIR Convention
Yes

As a Reminder, the TIR Convention and its Transit Regime Contribute to the Facilitation of International Transport, Especially International Road Transport, Not Only in Europe and the Middle East, But Also in Other Parts of the World, Such as Africa and Latin America.
Accompanying Documents For Imports
Goods coming into one of the 25 countries of the European Union from another country in the Community are exempt from Customs duties and Customs formalities.
The documents required for moving goods between EU countries are as follows:
  • the commercial invoice (at least a duplicate copy, which must contain, besides the usual information, the intracommunity VAT number of the operator who is carrying out the delivery, that of the buyer by which he is identified in the country of delivery, and it must mention "VAT exemption, art. 262 b-1 of the CGI")
  • the delivery note
  • the sanitary and phytosanitary certificates
  • the single administrative document (SAD)

In the case of temporary export within the EU, the ATA carnet and the Community carnet are not needed. It is enough to keep a register listing the temporary shipments.

No transport documents are required for intracommunity trade.
However, in the case of goods transiting or destined for one of the EFTA countries (Iceland, Norway, Liechtenstein and Switzerland), form T2 should be produced or a copy A (computerized transit). In the same way, goods transiting or destined for the Channel Islands or the Canaries must be accompanied by form T2F.

Free-trade zones
The "Zona Franca da Madeira", located in the Madeira island is the only free zone on Portuguese territory. For further information, you can consult the International Business Centre of Madeira's website.
For Further Information
Portuguese agency for investment and foreign trade (Business Development Agency)
Ministry of Foreign Affairs
Ministry of the Economy
Non Tariff Barriers
As it is a member of the European Union, Portugal enforces the Community regulations which are valid throughout the Union. The main non-Customs barrier concerns agricultural products and is based upon the CAP (Common Agricultural Policy).
Sectors or Products For Which Commercial Disagreements Have Been Registered With the WTO
Protection of patents
Assessment of Commercial Policy
The WTO webpages on Portugal
Barriers to exchanges, inventoried by the United States

 

Standards

National Standards Organisations
Portuguese Certification Association (APCER)
Integration in the International Standards Network

At the European level:

At the international level:

Obligation to Use Standards
Conformity to standards is compulsory for products such as machines, tools, electrical appliances, sports equipment, toys etc., and this list continues to grow. Goods which have complex technology or are potentially dangerous must be submitted for rigorous testing and approval procedures before they can be marketed in Portugal.
Classification of Standards
NP, the national certfication mark
CE, European certification mark (compulsory for a product to be sold on the market)
Assessment of the System of Standardization
The Portuguese are increasingly receptive to standards being observed; the PT mark, or the ISO 9000 certification, are well known to consumers and firms, and they are appreciated for their guarantee of the quality and safety of products and services. Information and awareness campaigns are carried out by public institutions.
Online Consultation of Standards
APCER (Certification Association)
Associations of Standards Users
Portuguese Certification Association (APCER)

 

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Latest Update: January 2024

In this page: Business culture | Opening Hours

 

Business culture

The Fundamental Principles of Business Culture
Portuguese business culture bears some of the characteristics of Mediterranean business culture but can be slightly different at times. It is characterised by a distinct relationship-based tradition. The family has been the backbone of the country's social order for centuries. Family members care for each other, to a degree that loyalty towards the family comes before loyalty towards business. The Roman Catholic Church has also shaped work ethics and influenced the hierarchical structure of many Portuguese firms, where age and seniority are respected.

As most companies are hierarchical, decisions are mostly made from the top down. Authority and responsibility are concentrated in the person at the top. Nevertheless, managers will avoid direct conflict with staff members by addressing their concerns and being considerate of possible personal problems. While low-rank employees may be consulted, the management will not necessarily seek to reach a consensus. Decision-making is a very long process in Portugal and managers will go through all the details before giving a final answer. However, once a decision has been reached, it is rarely amended and the terms of a deal are fully enforced.

Portuguese professionals are very relationship-oriented. Strong and long-standing relationships are considered crucial, not just among partners, but also within a company. It is important to take time to get to know Portuguese contacts and best to avoid showing a fake interest just to approach them. Despite being considerate planners, the Portuguese can also engage in business based on whether they like their foreign counterpart or not. Furthermore, establishing a personal relationship gives Portuguese business contacts a sense of security and assurance that they will not be misled or cheated.
First Contact
Meetings should be arranged a month ahead of time and reconfirmed a few days before. It is recommended to avoid setting up an initial meeting in June (when there are many public holidays), August (school holidays) and December (Christmas and the end of the financial year). Face-to-face meetings are always preferred over conference calls and e-mails. The first meeting usually allows parties to get to know each other and establish a certain level of trust. While most Portuguese are proficient in English, it is courteous to ask before the meeting if an interpreter is necessary.
Time Management
The Portuguese have a loose sense of time; however not to the same extent as most other Mediterranean countries. Foreign business contacts are expected to show up on time to meetings, even when their Portuguese counterparts may be late. If you are running late, it is recommended to phone your contact and inform them of your delay.  Meetings may have agendas, but they are mostly used to introduce or raise a topic and do not necessarily serve the purpose of a schedule.
Greetings and Titles
Handshakes (more on the relaxed side) are the most common form of greeting. It is customary to let the woman extend her hand first. Close business associates (especially women greeting women or greetings between men and women) can also greet each other with a light kiss on the cheek. Titles can be quite important, especially during the initial stages of contact with Portuguese associates. It is recommended to address people by using Mr. or Mrs. followed by the surname (Senhor is for Mr., Senhora is Mrs.). In Portugal, it is customary to refer to university graduates as "Dr" (doutor), or "Dra" (doutora, for women) before the family name. It is recommended to wait for the Portuguese counterpart to tell if it is OK to call them by their first name.
Gift Policy
Gifts are not necessarily exchanged between business associates; however, it is not too uncommon to exchange small gifts after an initial meeting or at the end of a successful negotiation. It is advisable to bring gifts that are representative of your country. Gifts are usually opened immediately. If invited to a Portuguese home, it is recommended to bring liquor, flowers or a box of chocolates.
Dress Code
Business dress code is rather formal for both genders. Men are expected to wear conservative dark coloured suits with shirt and tie whereas stylish business suits or dresses and blouses are acceptable for women. Casual attire is not common, even in modern and creative industries. Being well-groomed and stylish is regarded as sign of prestige.
Business Cards
There is no protocol surrounding the exchange of business cards. Cards are usually exchanged after the first meeting. It is always best to treat cards with respect.
Meetings Management
Getting down to business can take a quite bit of time and the first meeting is usually kept for parties to get to know each other. It is not recommended to push for a decision right from initial meetings. Small talk, especially on your first impressions of Portugal and the Portuguese culture, is expected and appreciated.

The Portuguese tend to be very thorough and are known to have an eye for detail, therefore they are careful and considerate planners. In addition to facts and figures, Portuguese associates are likely to ask detailed questions about the delivery times, currency and payment terms. They are also likely to take into account short-term and long-term influences and developments and it is important that you have explored all possibilities and scenarios before finishing your presentation/submitting a proposal. The Portuguese may be less keen on radical or unconventional solutions than elsewhere in Europe (especially Northern Europe). Written documentation is very common in Portugal and it is recommended to bring handouts to meetings.

In contrast to Spain and some other Mediterranean countries, people in Portugal use less gesticulation when talking. They also tend to remain calm and avoid emotional outbursts. The Portuguese communicate rather directly; however, they will remain polite while doing so. It is important to remain courteous but also patient as meetings are seen as an opportunity for everyone to comment. Hard sell tactics and confrontation are to be avoided at all costs. Interrupting someone is quite common as many people can speak at once during meetings.

Business lunches and dinners are quite common and are seen as an opportunity to get to know the other party. Meals tend to be very long (two hours or more) and less formal than office meetings. It is not customary to discuss business during meals, unless the host raises the subject.
Sources for Further Information
Culture Crossing - Portugal Business Culture
Cultural Atlas - Business etiquette in Portugal
Business Culture - Business etiquette in Portugal
Expatica - Business culture in Portugal
Global Affairs Canada - Portuguese Business Culture
 
 

Opening Hours

Opening Hours and Days
Businesses are closed between 12:00 noon and 3:00 p.m. (for lunch), on Saturday afternoons and Sundays. Banks typically close at 3:00 p.m., while shops close at 7:00 p.m. Hypermarkets close at 12:00 midnight from Monday to Saturday, but will also close at 12:00 on Sundays in November and December.
 

Public Holidays

New Year's Day1 January
Shrove Tuesday (the day before Ash Wednesday, the first day of Lent) (though not compulsory, all companies and public and private organisations take the day as a holiday)March/April
Good Friday (the Friday before Easter)March/April
Freedom Day25 April
Labour Day1 May
National Day10 June
Corpus ChristiJune
Saint Anthony (in Lisbon and some other smaller cities)13 June
Saint John (in Porto, Braga and some other smaller cities)24 June
Assumption15 August
Birth of the Republic5 October
All Saints1 November
Independence Day1 December
Immaculate Conception8 December
Christmas25 December, (while 24 December is not a public holiday, is considered to be one by decision of the Council of Ministers every year)
 
Holiday Compensation
Consult the Portugal Employment Reform.
 

Periods When Companies Usually Close

There are not many periods when companies close in Portugal. The Administration and companies are always open, with most staff and management present.
 
Hotel reservation websites
Public holidays
Worldwide Public holidays

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information

 

Corporate Taxes

Tax Base For Resident and Foreign Companies
A company is deemed to be resident in Portugal if its head office or effective management is located in Portugal.
Any fixed place of business (e.g. a place of management, a branch, an office, a factory, a workshop, etc.) in Portugal through which the business of an enterprise is wholly or partly carried on is deemed to constitute a permanent establishment in the country.
 

Tax Rate

IRC - Portuguese standard corporate tax21% for mainland Portugal
Corporate income tax for SMEs17% on the first EUR 50,000 of taxable income (12.5% for SMEs that are located in Portuguese inland regions; 11.9% in Madeira)
21% on the excess
State surcharge ("Derrama Estadual") levied on residents and non-residents with a permanent establishment3% for profits between EUR 1.5 million and EUR 7.5 million; 5% on profits between EUR 7.5 million and EUR 35 million; and 9% on profits exceeding EUR 35 million
Companies resident in the Azores16.8%

Surtax:

- 2.4% applicable to the taxable profit exceeding EUR 1.5 million and up to EUR 7.5 million.

- 4% applicable to the taxable profit exceeding EUR 7.5 million up to EUR 35 million.

- 7.2% applicable to the taxable profit exceeding EUR 35 million.

Companies resident in the Autonomous Region of Madeira14.7%

Surtax:

- 2.1% applicable to the taxable profit exceeding EUR 1.5 million and up to EUR 7.5 million.

- 3.5% applicable to the taxable profit exceeding EUR 7.5 million up to EUR 35 million.

- 6.3% applicable to the taxable profit exceeding EUR 35 million.

Municipal surcharge ("Derrama Municipal") levied on residents and non-residents with a permanent establishmentVaries according to municipality, up to 1.5%
 
Tax Rate For Foreign Companies
Resident companies are taxed on their worldwide income. Foreign companies are subject to the same taxes as local companies, but they are only taxed on Portuguese-source income. The tax rate on investment income that is both derived by non-resident entities subject to a privileged tax regime in their country of residence and included on Portugal's blacklist is 35%. Certain withholding taxes apply to income generated in Portugal that is attributable to non-residents without a permanent establishment in the country.
Capital Gains Taxation
Capital gains are generally included in taxable profits and taxed at the standard corporate rate. Gains on the disposal of shares may be exempt if the following conditions are met: 1) the shareholder is not considered a transparent entity 2) the entity has held at least 10% of the capital of the subsidiary for at least 12 months 3) if the entity is a foreign company the corporate income tax in its country of residence covers at least 60% of the tax due in Portugal. The exemption does not apply if the dividend payment is tax-deductible. Since 1 January 2018, capital gains on the indirect sale of certain properties are also subject to corporate income tax.
If tangible fixed assets, biological assets, or intangible assets (excluding those acquired from or sold to related parties or investment properties) are sold after being held for at least one year, 50% of the resulting gains can be exempted from taxes if the entire proceeds from the sale are reinvested within a specified timeframe. However, this reinvestment rule does not apply to gains evaluated in the context of mergers, demergers, or asset-for-share transactions, nor does it apply when assets are transferred for reasons unrelated to the taxpayer's business activities.
Main Allowable Deductions and Tax Credits
Expenses incurred to generate profits and certain provisions (including bad debt and inventory losses) are deductible from the corporate tax base. With certain limitations, impairment losses on doubtful debts are deductible for tax purposes when insolvency or recovery has been requested or the credits have been claimed in court. Small companies also benefit from special tax regimes. Start-up and research expenses are deductible for tax purposes in the respective tax year.

Donations to authorised charitable institutions are allowable at up to 0.8% of turnover, with the possibility for an increase of the amount actually spent up to 150%, same as for donations of computers, software equipment, training, and consultancy in the area of computers granted to the national government, municipalities, foundations, museums and other charitable institutions. Donations to authorised educational, sport and environmental institutions are allowable at up to 0.6% of turnover, with the possibility for an increase of the amount actually spent up to 140%. Contributions made to the state, municipalities, and foundations in which the state or municipalities have an initial capital stake can be fully deducted, and there is also a potential to increase the deductible cost by up to 140%.

Pension, invalidity, and health schemes are tax-deductible up to a rate of 15% of annual staff expenses, only if, among other conditions, they are available to all employees and the management and disposition of the benefits are outside the control of the taxpayer. Companies may only deduct net financing expenses up to the higher of the following limits: EUR 1 million or 30% of the earnings before depreciation, amortisation, taxes, and net financing expenses, adjusted for tax purposes.

A tax credit covering 32.5% of research and development expenditure is available for the year in which these expenses are incurred and can be carried forward for a period of eight years. Companies can claim an additional tax credit of 50% of R&D expenditure if their expenditure exceeds the average in two fiscal years (capped at EUR 1.5 million). Other tax incentives are available for qualifying new investment projects, fixed-asset investments, intellectual property, and the creation of jobs.

Costs incurred by SMEs in 2021 and 2022 with joint external promotional activities are tax deductible for 110% of the respective amount.

For the assessment of the 2022 taxable profit, costs and losses associated with the consumption of electricity and natural gas, exceeding the amount from the previous tax year and excluding any received funding, can be considered for 120% of their respective value. Similarly, costs and losses incurred or borne in acquiring specific goods used in agriculture can be considered for 140% of their respective amount for the purpose of assessing the 2022 taxable profit.

Net operating losses can be carried forward (up to 65% of taxable profits) without time limitation. The carryback of losses is prohibited.

Other Corporate Taxes
Other taxes levied include property transfer tax (Imposto Municipal sobre as Transmissões Onerosas de Imóveis or IMT - payable by the buyer at a maximum rate of 6.5% on the transfer of residential property, 5% on the transfer of rural property, 7.5% on the transfer of other urban property and 10% if the purchaser is located in a listed tax haven); municipal real estate holdings (Imposto Municipal sobre Imóveis or IMI - 0.3% to 0.45% for urban real estate, 0.8% for rural real estate, 7.5% for property owners residing in a tax heaven); stamp duties (0.5% to 10%, the latter being applicable to certain donations and inheritances).

A standalone tax of 35% is levied on indemnities and compensation as well as bonuses paid to members of the board and managers (if exceeding 25% of their annual remuneration and EUR 27,500). Certain deductible expenses are subject to a standalone tax, including entertainment expenses (10%), undocumented expenses (taxed at 50%, or 70% in the case of taxpayers enjoying a partial or total tax exemption), expenditures on private cars (taxed at rates from 5% to 35% depending on the acquisition price of the car), daily allowances and employees' travelling costs (taxed at 5%).

A special contribution is levied on companies operating in the financial sector, with two different tax bases: the contribution is applicable at a maximum of 0.11% on base I and at 0.00030% on base II.

Social security contributions paid by the employer amount to 23.75% of the monthly gross remuneration.

A carbon tax due by the user in the amount of EUR 2 applies on air, sea and river travel. A levy amounting to EUR 0.30 per package applies to disposable plastic and aluminium packages (the latter contribution shall not apply to single-use beverages and will come into force as of September 2023).

Special taxation rules apply to entities engaged in activities such as oil exploration, prospecting, and production, and to those operating in the gaming industry.

Other Domestic Resources
Portuguese Tax and Customs Authority
Doing Business: Portugal, to obtain a summary of taxes and mandatory contributions
 

Country Comparison For Corporate Taxation

 Portugal
Number of Payments of Taxes per Year8.0
Time Taken For Administrative Formalities (Hours)243.0
Total Share of Taxes (% of Profit)39.8

Source: The World Bank - Doing Business, Latest data available.

Accounting Rules

 

Accounting System

Accounting Standards
IFRS Standards apply to all domestic and foreign public companies. SMEs may choose between IFRS Standards as adopted by the EU and Portuguese national accounting standards. Subsidiaries of foreign non-IFRS companies must use Portuguese accounting standards.
Accounting Regulation Bodies
CNC, Portuguese Accounting Standards Board
Accounting Law
Decree Law No. 98/2015 - Código das Sociedades Comerciais (Companies Code), Decree Law No. 486/99 - Código dos Valores Mobiliários (Securities Code).
Difference Between National and International Standards (IAS/IFRS)
IFRS Standards are required for all domestic public companies and listings by foreign companies (except in the case of a foreign company whose home jurisdiction’s standards are deemed by the EU to be equivalent to the IFRS Standards. IFRSs are not required for SMEs, however they have the option to choose between IFRS Standards as adopted by the EU and Portuguese national accounting standards.
 

Accounting Practices

Tax Year
The tax year generally corresponds to the calendar year, although a different tax year is possible for resident companies and non-resident companies with a permanent establishment in Portugal. Once selected, the same tax accounting period must be maintained for at least five years.
Accounting Reports
Company financial statements must include a balance sheet (simple or detailed presentation), a profit and loss account (drawn up as a table), notes to the accounts and an annual report (called D.O.G. 'Documento de Orgão de Gestão').
Publication Requirements
There are three types of companies which are required to publish their financial statements: public companies, limited liability companies and companies listed on the stock exchange.

A company's financial statements are to be published once a year.

 

Accountancy Profession

Accountants
There are 3 categories of accountant:
- the "Contabilista" : an accountant, with 3 years of higher studies, but with no capacity to sign the financial statements of the company;
- the "T.O.C" (técnico oficial de contas) : a chartered accountant, with 3 or even 5 years of higher studies in accountancy, and who has taken an examination to be a member of the Chamber of TOCs. He has the capacity to sign the financial statements;
- the "R.O.C." (Revisor Oficial de Contas) : a statutory auditor, with 3 to 5 years of higher studies in accountancy, economy, management or audit. Either they take an examination to join the Order of ROCs, or the Studies Institution is recognised by them and by the government. There are individual ROCs (more than 1 300 are registered) and ROC Societies (SROC), with more than 200 registered companies.
Professional Accountancy Bodies
OCC, Order of Chartered Accountants
APOTEC, Portuguese Association of Accounting Technicians
APC, Portuguese Association of Accountants
Member of the International Federation of Accountants (IFAC)
Yes
Member of Other Federation of Accountants
Member of the European Federation of Accountants and Auditors for SMEs (EFAA)
Member of Accountancy Europe
Member of the Federation of Latin American Chartered Accountants.
Audit Bodies
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organisation.

Some external auditors that can be utilised include: Mazars, , KPMG, , D.F.K e Associados and Moore Stephens

 
 

Consumption Taxes

Nature of the Tax
Imposto Sobre o Valor Acrescentado (IVA) = Value-Added Tax (VAT)
Standard Rate
23% (Mainland Portugal); 22% (Madeira); 16% (Azores)
Reduced Tax Rate
Reduced VAT rates are available at 13% and 6%.
The 13% rate (12% in Madeira and 9% in Azores) applies to: some foodstuffs; restaurant & cafe food; some agricultural supplies; wine; mineral water; diesel for agriculture; some goods and services for consumption onboard transportation; access to direct broadcasting of concerts, theatres, amusement parks, museums, cinemas and similar events; sale and installation of specific heaters and boilers that work with biomass; pellets and briquets made from biomass. Click here for a full list.
The 6% rate (5% in Madeira and 4% in Azores) applies to: basic foodstuffs; water supplies; certain pharmaceutical products; medical equipment for disabled persons; children’s car seats; children’s diapers; domestic passenger transport; some books (excluding e-books); certain newspapers and periodicals; TV licence; social housing; renovation and repair of private dwellings; certain agricultural supplies; hotel accommodation; some social services; some medical and dental care; collection of domestic waste, minor repairs of bicycles; domestic care services; fruit juices; firewood; cut flowers and plants for decorative use and food production; construction work on new buildings; some legal services; some goods for consumption onboard transportation; treatment of wastewater; some works of art, collectors' items and antiques. Click here for a full list.
Exclusion From Taxation
Exempt supplies include leasing or letting of immovable property; medical services; financial services; insurance; copyrights by authors; training provided by public sector institutions. Click here for more information.

Exports, intra-community supplies and international passenger transport are zero-rated. Furthermore, the Portuguese government has implemented a temporary measure wherein a zero VAT rate (with the right to deduct) is applied to a specified list of essential food products. This zero VAT rate is applicable to both imported and domestically supplied goods within Portugal, starting from April 18th to October 31st, 2023. The list of products eligible for the temporary 0% VAT rate includes nutritious essential food items such as vegetables, fruits, oils, fish, and meat.

Method of Calculation, Declaration and Settlement
The rate of VAT is applied to the sales price. As per the cash accounting regime, taxpayers only pay VAT when they receive payment of an invoice from a customer. There is no VAT registration threshold; however, an exemption is available for self-employed persons in case of one-time taxable events with a value lower than EUR 25,000. Returns are filed monthly (if turnover exceeds EUR 650,000) or quarterly (if turnover did not exceed EUR 650,000). Quarterly returns must be filed by the 10th day of the second month following the end of the relevant quarter. Payment is due by the 20th day of the second month following the end of the relevant quarter.
Other Consumption Taxes
There are different types of excise duties, such as petroleum and energy products tax, alcohol and alcoholic beverages tax, tobacco tax, vehicle tax, excise on non-alcoholic beverages with added sugar, etc.
Other taxes include a vehicle tax (IUC), payable each year from the day of registration of a vehicle with Portuguese authorities. Its rate varies according to the model of the vehicle, size, date of manufacture and CO2 emission rate. A 10% stamp duty is levied on gifts and inheritances (unless the heir is the spouse, descendant or ancestor of the donor/decease). An acquisition tax for property sales and transfers also applies.
A carbon tax due by the user in the amount of EUR 2 applies on air, sea and river travel. A levy amounting to EUR 0.30 per package applies to disposable plastic and aluminium packages (the latter contribution shall not apply to single-use beverages and will come into force as of September 2023).

Individual Taxes

Tax Base For Residents and Non-Residents
An individual is deemed to be resident in Portugal for tax purposes if he/she spends more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned; or if he/she maintains a habitual residence in Portugal during any day of the period referred above (even if the 183 days condition is not met).
Individuals that were not Portuguese residents in any of the five tax years before moving to Portugal may request a special "non-habitual" tax residency status for 10 years. TEST
 

Tax Rate

Personal income tax (IRS)Progressive rate from 14.5% to 48%
Up to EUR 7,47914.5%
EUR 7,479 - 11,28421%
EUR 11,284 - 15,99226.5%
EUR 15,992 - 20,70028.5%
EUR 20,700 - 26,35535%
EUR 26,355 - 38,63237%
EUR 38,632 - 50,48343.5%
EUR 50,483 - 78,83445%
Over EUR 78,83448%
Additional solidarity rate
EUR 80,000 - 250,0002.5%
Over EUR 250,0005%
Non-residents25% flat rate (on Portuguese-source income)
Non-habitual ResidentsFlat rate of 20%

10% for pension income from 1 April 2020 (exempt for those already registered as NHRs by 31 March 2020 or as Portuguese residents)
A foreign tax credit for international double taxation is available against any foreign tax paid on such incomes. The taxpayer may opt-out of this regime and be taxed at normal progressive rates
 
Allowable Deductions and Tax Credits
Business expenses are generally deductible at different rates, including entertainment expenses and per diems.
Tax credits may be claimed according to the family composition, children (fixed amount of EUR 600 per dependant, plus an additional deduction of EUR 126 when the dependents are aged up to 3 years and an additional EUR 300 per dependent for the second and subsequent dependents who are not older than 6 years old), certain general expenses (35% of the expenses incurred by any member of the household, limited to EUR 250 per taxpayer) and health expenses (15%, up to a limit of EUR 1,000), interest on certain loans and financial leasing rent, education expenses (30% of expenses incurred for each member of the household, capped at a global limit of EUR 800), retirement home expenses, VAT borne in certain sectors, qualifying pension fund contributions, donations (without limits if made towards central, regional or local administration and foundations or 15% for other beneficiaries), alimony payments (20%), and more.
150% of union fees may be deducted against employment or pension income, up to a limit of 1% of the gross employment or pension income. EUR 4,104 of pension income is tax-exempt.

A partial exemption is available on employment income earned by taxpayers aged between 18 and 26 (28 in case of conclusion of a PhD) that do not qualify as dependents and earn a yearly gross income equal to or lower than EUR 29,179. The taxable income is reduced by 50% in the first year capped at 12.5 times the amount of the Social Support Index (“Indexante dos Apoios Sociais” or “IAS”); 40% in the second year capped at 10 times the amount of the IAS; 30% in the third and fourths years capped at 7.5 times the amount of the IAS; 20% in the fifth year capped at five times the amount of the IAS.

A tax deduction is permitted for the full amount of VAT paid by any member of the household on the purchase of public transport tickets, as long as the expense is supported by an invoice. This deduction already applies to monthly passes. The same tax deduction is applicable to periodical magazines and journals, including those in digital format, that are subject to the reduced VAT rate.
Special Expatriate Tax Regime
Non-residents are liable to income tax only on Portuguese-source income, including remuneration borne by a Portuguese company or permanent establishment. They are taxed at a flat rate of 25% on their taxable remuneration.

A taxpayer who has become tax-resident in Portugal for a certain year and has not been taxed as resident in Portugal for any of the previous five years may apply for the special tax regime for "non-habitual tax residents". Non-habitual residents are taxable on worldwide income, but may be exempt from tax on certain foreign-source income. In general terms, non-habitual residents are taxed at a flat rate of 20% in respect of employment income (Category A) and self-employment income (Category B) arising from high-value activities of a scientific, artistic, or technical nature. Entrants in the regime that became Portuguese tax residents as from 1 April 2020 are liable to a 10% tax rate on pension income. For further information, click here.

A tax exemption also applies to outbound expatriates, who are resident individuals assigned abroad for a period longer than 90 days.
Foreign residents may be exempt from social security in Portugal if they contribute to a compulsory social security system in a European Union country or a country that has a bilateral social security agreement with Portugal.

Capital Tax Rate
In general, capital gains are subject to a flat rate of 28%. Gains arising on the sale of shares held on micro and small companies not listed in the stock exchange are taxed only on 50% of their value. Capital gains earned by non-residents that are not borne by a permanent establishment in Portugal are fully taxable at a flat rate of 28%. 50% of capital gains arising from the sale of real estate by tax residents in Portugal is taxed at marginal rates varying between 14.5% and 48% (exemptions apply for primary residencies).

For gifts and inheritances, a 10% stamp duty is imposed, unless the heir is the spouse, descendant or ancestor of the donor/deceased, which are exempted. Donation of property is taxed under the stamp tax at 0.8%.

A municipal property tax is charged on the registered value of real estate (Imposto Municipal sobre Imóveis or IMI - 0.3% to 0.45% for urban real estate, 0.8% for rural real estate, and 7.5% for property owners residing in a tax heaven). The tax is owed by the real estate owner, the usufructuary, or the holder of the surface right of a real estate unit with reference to 31 December of the relevant financial year.

Employees contribute 11% of the gross salary for social security. The contributions rate for self-employees is 21.4%.

Portugal does not levy net wealth or net worth tax.

Double Taxation Treaties

Withholding Taxes
Dividends: 25% (paid to a company)/28% (individual)/35% (resident of a tax haven)
Interest: 25% (paid to a company)/28% (individual)/35% (resident of a tax haven)
Royalties: 25% (paid to a company or a non-resident individual)/16.5% (resident individual)/35% (resident of a tax haven)

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Consumer Profile | Marketing opportunities

 

Consumer Profile

Consumer Profile
Portugal has a population of 10.24 million people, with a negative growth rate of 0.2% in 2022 (CIA). The median age among the Portuguese population is 46.9 years (Data Reportal, 2022), with 13% of the population under the age of 15, 64% between 15-64 and 23% over 65 (World Bank, 2021). As of 2022, life expectancy is 81.5 years of age. About 67.4% of the population is urban, with the majority of people concentrated around the area of Lisbon (almost 3 million people) and Porto (1.3 million people) (CIA, 2022).
Nationally, the average household size is 2.5 people per household - compared to 3.3 people thirty years ago (Eurostat). Currently, 27.5% of households consist of only one person, 49.2% have two of three people, 19.3% have four or five and only 3.9% have six members or more. Of all households, 22.3% consist of a couple with children, 23.9% of a couple alone, and 4.7% of a single parent with children (Eurostat, 2020). The proportion of adults with upper secondary and tertiary attainment has been growing steadily in Portugal for the last two decades. About 55% of adults aged 25-64 have completed upper secondary education, lower than the OECD average of 79%, and around 28.2% have attained a tertiary education degree, lower than the the OECD average of 38.6% (OECD, 2021). Currently, 100% of children aged between 5 and 14 are enrolled in school. Surplus occupations include the following skilled professionals: mining professionals, workers in textile, clothing and leather industries construction workers and similar; blacksmiths, toolmakers and related trades workers; and keyboard operators. On the other hand, the ageing of the Portuguese population, which implies a greater need for healthcare services, drives the growing demand for health professionals.
Purchasing Power
GDP per capita increased in 2021, reaching USD 35,888.2 PPP (World Bank). The average monthly salary in Portugal is EUR 1,250.75, and the country's minimum wage of EUR 823 is the lowest in Western Europe. Consumer spending decreased during the Covid-19 pandemic, and in the context of the war in Ukraine and rising inflation, purchasing power has been decreasing. In 2020, purchasing power in Portugal stood at 76.4% of the EU average, with the country occupying the 16th place among countries in the EU, according to the the National Statistics Institute. Portugal is one of the most unequal countries in the EU, with 20% of its wealthiest citizens earning an income that is 5.7 times higher than 20% of its poorest. Inequality has been increasing, as has the country's Gini Index, which is currently 33 (INE). Furthermore, the wage gap between men and women in Portugal is 11.7%, which is the similar to the OECD average. Lisbon is the city with the highest wages in Portugal, followed by Porto and Funchal.
Consumer Behaviour

Recent developments in the social, economic and technological context have had a high impact on the consumption habits of the Portuguese, and today there is a greater concern with the management of the family budget, as well as a concern with the environmental aspect of products, such as sustainability and the origin of the products they consume. The Portuguese are becoming more concerned about their personal comfort and well-being, especially the younger generations. A trend among the Portuguese youth is to buy natural, organic, locally grown foods. According to , 45% of Portuguese claim to be willing to pay more for products and services provided by companies committed to having a positive social and environmental impact. On average, Portuguese consumers tend not to be impulsive buyers, especially after years of recession. Portuguese consumers tend to be loyal to clothing brands, but they are usually not loyal to food brands, as they tend to buy whatever is cheapest. Additionally, consumers prefer foreign products - with the exception of food. Nevertheless, in recent years there have been public awareness campaigns focused on encouraging people to buy domestic products. The Portuguese consumer has currently been described as "addicted to deals", as purchases of products on sale account for nearly half of all the purchases made in the country every year. Good prices and sales are the factors that most influence purchasing decisions and are what attract the Portuguese consumer. A typical Portuguese consumer values convenience and proximity in retail, favouring hypermarkets and being open to abundant promotions throughout the country. In the context of the Covid-19 pandemic and the rising inflation resulting from the war in Ukraine, the average consumer has decreased spending. Nowadays, consumers are becoming more connected and demanding, making consumption less impulsive and more thoughtful. Consumers are more price sensitive and have adopted more contained, conscious, responsible and sustainable consumer practises. Planning, rational choice, and the effort to reduce impulse buying are evidenced by the growing weight of sales. Consumers also value the interaction and experience when making a purchase. Even though e-commerce has been growing in the country, in-store purchases are still preferred among Portugal's ageing population, with on-line shopping being favoured by those under 30. According to Hipersuper, 60.9% of Portuguese consumers shopped online in 2022. According to a survey held by Eurostat, the Portuguese are the ones using collaborative platforms such as Uber and Airbnb least amongst Europe. On average, only 6% of the Portuguese booked their accommodations online, compared to 17% of their other European counterparts. The same goes for online reservations of transportation services: the member States average is 8%, while in Portugal it is 2%.

Consumer Recourse to Credit

Consumers are becoming more optimistic about the Portuguese economic future, which has been reflected by growing levels of spending. Consumers are also more willing to borrow in order to pay for purchases, especially when it comes to expensive items, such as cars and houses. With the improvement of confidence levels that made consumers more prone to making purchasing decisions supported by the use of loans, credit concession recorded the highest levels in a decade, in 2018, as the improvement of the economic prospects among Portuguese households has made them more confident towards assuming financial commitments with banks (consumer credit also experienced a decline in non-performing loans). Nevertheless, while outstanding balance on consumer credit recorded higher current value growth in 2019 compared to the previous year, gross lending experienced a notable slowdown. The situation worsened in 2020 following the outbreak of COVID-19 epidemic: according to figures from the Bank of Portugal, new consumer credit decreased 64% in April compared with the same period of the previous year, to EUR 203 million (whereas as of 2018, an average of EUR 20 million of consumer credit was requested in Portugal every day).
Use of electronic payment instruments has certainly been growing since they replaced the older means of payments, namely the cheque, which had a strong usage in Portugal in the past. Recently, the public administration gave a significant boost to electronic means of payment in particular when pensions began to be paid with credit transfers rather than cheques. Contactless card payments are not that popular yet, but their utilisation is now growing every day, and they are becoming as common as they are in the rest of Europe. As at 31 December 2019, there were 24.6 million active payment cards in Portugal (+4.2% y-o-y), with the number of debit cards growing by 5.8% and credit cards reversing the trend with a decreased of 1.6% (Bank of Portugal).

Growing Sectors
Aeronautical industry, construction, mining, cultural and creative industries, textiles, agriculture, biotechnology, healthcare, ICT, infrastructure, water and energy, maritime industry, fishing, and tourism.
Consumers Associations
DECO, Portuguese Association for the Defence of the Consumer
Portal do Consumidor, General Consumption Direction
 

Population in Figures

Total Population:
10,379,007
Urban Population:
67.4%
Rural Population:
32.6%
Density of Population:
113 Inhab./km²
Men (in %)
48.3%
Women (in %)
52.8%
Natural increase:
0.52%
Medium Age:
39.0
Ethnic Origins:
The population is made up of a largely homogeneous Mediterranean community, with a minority of people of Asian or African origin, many of whom immigrated during decolonisation. The largest groups of foreign residents in Portugal are Brazilians, Cape Verdeans, British, Romanians, Ukrainians and Chinese. (National Institute of Statistics of Portugal).
 

Population of main cities

CityPopulation
Lisbon552,700
Porto237,600
Vila Nova de Gaia186,500
Amadora175,200
Braga136,900
Funchal111,600
Coimbra105,900
Setúbal98,200
Almada96,400

Source: Citypopulation.de, Latest available data.

 

Age of the Population

Life Expectancy in Years
Men:
78.0
Women:
84.3

Source: World Bank, Latest data available.

 
Distribution of the Population By Age Bracket in %
Under 5:
4.2%
6 to 14:
9.1%
16 to 24:
10.7%
25 to 69:
59.5%
Over 70:
16.5%
Over 80:
6.6%

Source: United Nations, Department of Economic and Social Affairs, Population Division, Latest data available.

 

Consumption Expenditure

Purchasing Power Parity202220232024 (e)2025 (e)2026 (e)
Purchasing Power Parity (Local Currency Unit per USD)0.550.550.550.550.55

Source: IMF – World Economic Outlook Database, Latest data available.

Definition: Purchasing Power Parity is the Number of Units of a Country's Currency Required to Buy the Same Amounts of Goods and Services in the Domestic Market as USD Would Buy in the United States.

Note: (e) Estimated Data

 
Household Final Consumption Expenditure202020212022
Household Final Consumption Expenditure
(Million USD, Constant Price 2000)
134,853141,129149,283
Household Final Consumption Expenditure
(Annual Growth, %)
-7.04.75.8
Household Final Consumption Expenditure per Capita
(USD, Constant Price 2000)
13,09613,66814,383

Source: World Bank, Latest data available.

 
 
Information Technology and Communication Equipment, per 100 Inhabitants%
Telephone Subscribers114.9
Main Telephone Lines42.6
Cellular mobile subscribers114.9
Internet Users64.0
PCs17.2

Source: International Telecommunication Union, Latest data available.

Marketing opportunities

 

Media in Which to Advertise

Television
Television advertising has great influence on consumer behavior. TV ad spending decreased dramatically from 2007 to 2013, but has steadily increased since despite not reaching pre-2007 levels (Statista). Showing an advertisement during games or soap operas on early evening TV will reach the biggest numbers of viewers. TV receives 74% of national advertising revenue (Marktest).

Main Televisions
SIC TV
RTP Group (RTP1, RTP2)
Groupe Prisa (TVI)
Zon
Press
Advertising published in newspapers helps sway consumer's purchasing decisions and informs them of special offers. It is influential because the reader can assimilate it in their own time. Average circulation has decreased year to year, although 68.2% of Portuguese regularly read newspapers and magazines in 2016 (Marktest). Newspapers receive 9% of national advertising revenue.

Main Newspapers
Diario de Noticias
Público
Correio de Manha
Jornal de Noticias
Expresso
The Portugal News
Algarve Resident
Algarve Daily News
Mail
Mail ads are mostly done by email now, but t is not very effective for advertising as people are often inundated by spam. Physical mail ads are still used as a publicity tool in Portugal.
In Transportation Venues
From billboards in the streets, posters on bus shelters, in metro or railway stations, advertising is appearing more and more on transport itself.

Market Leaders:
JC Decaux Portugal
Radio
Portugal has over 300 radio stations. A large number of Portuguese people take travel to work by car, which makes radio popular. In 2016, 73% of Portuguese had the habit of listening to the radio (Marktest). Radio receives 4% of total national advertising revenue.

Main Radios
RDP - public national station
Radio Comercial - national and commercial station
TSF - national and commercial station
Web
With email being filtered, its impact has been lowered. ATM ads can be effective.
There were 7.4 million Portuguese Internet users as of March 2017, a 72.4% penetration (Internet World Stats). Detailed online advertising spending in Portugal can be found here.


Market Leaders:
Spectacolor
Portuguese For Dummies
Main Advertising Agencies
Publicis Group
Mind Share World
 

Main Principles of Advertising Regulations

Beverages/Alcohol
Advertising alcohol is prohibited on television and radio between 7 am and 9.30 pm according to the AACS - Advanced Access Content System (sect. III, art. 17).
Cigarettes
Any advertising for tobacco is prohibited whatever the medium (Advertising Code Chap 2, sect. III, article 18). The EU Tobacco Advertising Directive bans tobacco advertising in printed media, radio, and internet as well as the sponsorship of cross-border events or activities. Tobacco advertising on television has been banned in the EU since the early 1990s.
Pharmaceuticals/Drugs
Article 19 of Section 3 in the Advertising Code prohibits advertising of medicines, even in specialized technical reviews. Decree Law 5/2017 prevents conflicts of interest between the pharmy industry and healthcare professionals and closely matches European Commission standards. For more informatión, visit the INFARMED website.
Other Rules
The Advertising Code also prohibits misleading advertising. Comparative advertising is authorized under certain conditions (Article 16, Section 2, Chapter 2).
Use of Foreign Languages in Advertisement
Possible under certain conditions.
Organizations Regulating Advertising
Regulating entity for communication (ERC)

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Market Access Procedures | Distributing a Product

 

Market Access Procedures

 
 

Customs Procedures

Import Procedures
The following documents must be presented to the Customs office:
  1. a brief declaration (air or maritime manifest) of the goods.
  2. a common law declaration (SAD, single administrative document), as well as the accompanying documents to allow their clearance. The SAD form can be obtained from Chambers of Commerce or an authorised printer. A computerised Customs clearance platform (SOFI: International freight computer system) can be accessed in Customs offices or in some Chambers of Commerce.
  3. Commercial invoice
  4. Packing list
  5. Certificate of origine
  6. Insurance certificate (where applicable)

In the case of deliveries and purchases within the European Union, the declaration of exchange of goods (DEB) or Intrastat declaration must be sent to the Customs service.
All companies established outside of the EU are required to have an Economic Operator Registration and Identification (EORI) number if they wish to lodge a customs declaration or an Entry/Exit Summary declaration.

As part of the 'SAFE' standards advocated by the World Customs Organisation (WCO), the European Union has set up a new system of import controls, the 'Import Control System' (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Programme eCustoms, has been in effect since January 1, 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.

The Modernised Customs Code (MCC) of the European Union simplifies various procedures such as: introducing a paperless environment, centralised clearance and more. For more information, check the EU’s Customs website. Further details are available on the website of Portuguese customs (in Portuguese).

Specific Import Procedures
As a member of the European Union, goods entering Portugal may be placed under any of the following treatments:
 
Transit, which comprises external and internal transit:
  • External transit: non-Union goods may be moved from one point to another within the customs territory of the EU without being subject to import duties, other charges related to the import of the goods (i.e. internal taxes) and commercial policy measures. Moving goods to another EU Member State means the customs clearance procedures are transferred to the customs office of destination.
  • Internal transit: Union goods may be moved from one point to another within the customs territory of the EU without any change to their customs status. This includes transporting goods through another territory that is outside the EU customs territory.
Storage, which comprises customs warehousing and free zones:
  • Customs warehousing: non-Union goods may be stored in premises or any other location authorised by the customs authorities and under customs supervision ('customs warehouses') without being subject to import duties, other charges related to the import of the goods and commercial policy measures.
  • Free zones: Member States may designate parts of the customs territory of the Union as free zones. They are special areas within the customs territory of the Union where goods can be introduced free of import duties, other charges (i.e. internal taxes) and commercial policy measures, until they are either assigned another approved customs procedure or re-exported. Goods may also undergo simple operations such as processing and re-packing.
Specific use, which comprises temporary admission and end-use:
  • Temporary admission: Non-Union goods can enter the EU without the payment of import duties, provided they are intended for re-export without being changed. The maximum period for temporary import is two years.
  • End-use: goods may be released for free circulation under a duty exemption or at a reduced rate of duty on account of their specific use.
Processing, which comprises inward and outward processing:
  • Inward processing: Goods can be imported into the EU, without being subject to duties, taxes and formalities, to be processed under customs control and then re-exported. If the finished products are ultimately not exported, they become subject to the applicable duties and formalities.
  • Outward processing: Union goods may be temporarily exported from the customs territory of the Union for processing purposes. The processed goods may be released for free circulation with total or partial relief from import duties.

The EU framework sets forth several regulations that can have an impact on import procedures: Waste Electrical and Electronic Equipment Directive (WEEE Directive), the ROHS Directive, Cosmetics Regulation, and Registration, Evaluation and Authorisation of Chemicals (REACH), agricultural documentation and sanitary certificates (Fisheries).

Importing Samples
For the import, export and re-export of commercial samples, the ATA (Temporary Admission) carnet can be used. Temporary entry can be allowed for goods in transit, for manufacturing, for temporary storage in bonded warehouses or for temporary importation. Generally, temporary entry of goods requires the deposit of a guarantee for import duties and VAT.
It must be written on the product that it is a free sample and that it may not be sold. Otherwise, in order for samples of commercial value to enter Portugal duty- and tax-free, a bond or deposit of the total amount of duties and taxes must be arranged. Samples must be re-exported within one year if the deposit is to be recouped. Samples with no intended commercial value enter Portugal free of duties and taxes. 'No commercial value' should be written on the appropriate shipping documents.
 
 
 

Customs Duties and Taxes on Imports

Customs threshold (from which tariffs are required)
Customs duties are not charged if the total value of the goods does not exceed EUR 150 (excluding shipping charges and insurance).
Average Customs Duty (Excluding Agricultural Products)
Operations carried out within the EEA are duty-free.
The Common Customs Tariff of the European Union applies to goods originating outside Europe. Generally the duty is relatively low, ranging from 5.0% to 14% on industrial goods. However, many products have reduced duties or no duties at all by virtue of trade agreements (according to Eurostat, around 70% of the imports that enter the EU do so at zero tariff).
Agricultural products imported from outside the EU are subject to the Common Agricultural Policy (CAP), with custom duties on these items being supplemented with a system of variable levies or other charges.

For more information, consult the Taxation and Customs Guide published by the European Commission.

Products Having a Higher Customs Tariff
The sectors of fabrics and items of clothing (high duties and quotas) and foodstuffs (preferential treatment and many tariff quotas, CAP) still experience protection measures. According to the recently published 2019 EU Trade Policy Review (WTO), the sector with the highest average tariffs is the dairy sector (32.3%), followed by sugar and confectionery (27.0%), meat (19.0%), cereals and preparations (17.2%) and fruit and vegetables (13.0%). Concerning non-agricultural products, fish and fishery products (11.8% on simple average) and clothing (11.6%) are the sectors with the highest tariff protection.

More information can be found in the WTO Tariff profile of the EU.

Preferential Rates
In the framework of several agreements that the European Community has concluded with third countries, as well as in the framework of autonomous preferential arrangements for some beneficiary countries, tariff concessions are provided for a pre-determined volume of goods. These tariff concessions are called "preferential tariff quotas". Click here to visualize preferential agreements by country.
Customs Classification
The Combined Nomenclature of the European Union integrates the HS nomenclature and supplements it with its own subheadings with an eight-digit code number and its own Legal Notes created for Community purposes. In order to get exhaustive regulations and custom tariffs rates regarding their products, exporters shall refer to the TARIC code and its database, which includes all applicable customs duties and all customs trade policy measures for all goods.
Method of Calculation of Duties
Ad Valorem on the CIF value of the imports. Consult the calculation of customs duties on the European Union website.
Method of Payment of Customs Duties
Custom duties are payable in cash or via other payment instrument (by cheque, by cash money order, by bank transfer); an extension of the time limit for payment may be granted through systems of collection credit or duty credit.
Import Taxes (Excluding Consumer Taxes)
Products imported from outside the EU are subject to VAT.
Excise taxes are levied on a limited number of products: gasoline, diesel fuel, spirits, beer, wine, bottled water, cider, tobacco, motor vehicles, liquid petroleum gas. The excise rates vary depending on the products. The tax is imposed whether the goods are manufactured in the country or imported from EU or non-EU countries.
Alcoholic beverages
Energy products and electricity
Tobacco products
 
 

Labeling and Packaging Rules

Packaging
It must conform to European legislation on the prevention of health risks to consumers and the protection of the environment, especially as regards waste treatment. Packaging in wood or vegetable matter must be subjected to a phytosanitary inspection. Any name symbols and marks relating to the product must be found on the exterior of the packaging.
For further information, consult the summary of European legislation concerning this.
Languages Permitted on Packaging and Labeling
All products retailed on the Portuguese market must be accompanied by an information leaflet in Portuguese. Portuguese or international law must have authorized any foreign words or abbreviations. The writing must be clear and non-promotional.
Unit of Measurement
The metric system is obligatory.
Mark of Origin "Made In"
It is compulsory and controlled by Customs.
Labeling Requirements
Age of consumers for products such as toys, alcoholic beverages, colorings, etc. Basic requirements include the origin of the product, name/trademarks, composition, usage instructions, required dates.
Specific Regulations
European legislation provides for specific labeling rules for certain products such as foodstuffs, household equipment, sportswear, textiles, pharmaceuticals, detergents, tobacco, fertilizers, alcoholic beverages and foodstuffs containing preservatives and colorings, dangerous or toxic products, etc.
Labeling of seeds from genetically modified varieties or products containing GMOs is compulsory; the agents of the plant protection services are authorized to make random checks on the conformity of batches of seeds and imported plants, the agents from the Competition and Fraud squad do the same for products suitable for human consumption.

Distributing a Product

 

Distribution Network

Types of Outlet

Hypermarkets, supermarkets
Situated in towns.They sell foodstuffs and non food products.
Continente, Feira Nova, Auchan, Bonjour, Intermarché
Department stores
Located in the town center on several floors. They have various specialized departments.
El Corte inglés
Hard discount
Mainly trade in food. They sell products of the distributor's own brand or no brand at all. People prefer them for their discount prices.
Lidl, Aldi
Cash and Carry
Hypermarkets reserved for professionals.
Recheio
Factory shops or "brand centers"
Factory shops or "brand centers" on the outskirts of towns which sell designer seconds from previous collections. Large precincts with many shops, one for each brand selling former collections in leisure surroundings, with cinema complexes, lots of restaurants and often gardens.
Alcochete
Traditional shops
Found in villages and towns, in each district, and mainly sell clothes, food, bookshops, decoration, etc.
Shopping malls
Enormous shopping malls, found in towns, are open all week, from Monday to Sunday: 9 am to 11 pm. They are real life resorts: spas, gyms, crèches, restaurants, cinemas, churches, children's play grounds, general or specialized hypermarkets (like FNAC or Toys'r'us), cafés and shops. In these large spaces, the shops are usually franchises, and, being surrounded by huge parking lots, where families can walk around, they are in serious competition with traditional shops.
Colombo, Vasco da Gama
 

Evolution of the Retail Sector

Growth and Regulation

The Portuguese population is concentrated along the coast. The major distribution centres are Lisbon in the south and Porto in the north, although the regional centres of Braga (north of Porto) and Setubal (south of Lisbon) have come into their own in recent years. The Lisbon area has the highest purchasing power in the country and suffers.

In 2020, the retail sector was negaitvely impacted by the Covid-19 pandemic but the food segment performed well. According to figures from the Portuguese Association of Distribution Companies (APED), food retail sales increased 8.1% in volume in 2020 compared to the previous year. In value, food sales in large-sized commercial establishments increased by 2.9% compared to 2019, reaching EUR 13.8 billion in 2020 (INE). Supermarkets remained the largest channel within grocery retailing in the country in terms of value in 2021. Given the increasing trend for local consumers to make more frequent trips to grocery retailers (although with a lower overall spend), major chains have been adapting by opening smaller stores nearer to local neighbourhoods and enhancing customers in-store experience (for example introducing leisure areas). At the same time, the weight of promotions in food retailing continued to increase, making Portuguese consumers those who show greater appetite for promotional campaigns in Europe.

The competitive environment is quite concentrated in the grocery store-based retailing, with Continente accounting for the largest share, followed closely by Pingo Doce. The market share of the five major distribution groups in Portugal has considerably increased in the last decade, accounting for around 70% (USDA, latest data available). However, in 2019 the Spanish retailer Mercadona opened its first store in Portugal (it had 32 stores in July 2022), and it could impact retail dynamics in the Portuguese market.

Changing consumer habits, demographic factors and the development of e-commerce and new technologies are leading the sector to conceive new commercial formats, where consumers increasingly appreciate proximity and value-added services. Consumers are buying more online and retailers are increasingly investing in this channel, especially following the outbreak of the COVID-19 pandemic and the restrictions that followed.

Market share
Portugal's retail sector is among the most concentrated and competitive in Europe. Grocery retailers remain the largest of the retail sector.

According to the latest figures available from the USDA, the Portuguese food retail market is highly concentrated, with a market share divided as follows (2020):

•    Sonae Group (including Continente, Modelo Continente - hypermarkets brand leader) is the country's most popular grocery retailer with a market share of 26.8%
•    Jeronimo Martins in the challenger (Pingo Doce - supermarket leader) has a share of 22.9%
•    German discount Lidl - 11.3%
•    Intermarché (France) - 8.8%
•    Auchan Group (from France) - 5.6%
•    Dia (Span) - 3.9%
•    Leclerc (France)
•    Aldi (Germany)

Retail Sector Organisations
Portuguese Association of Distribution Companies (APED)
Ministry of Economy
 

E-commerce

Internet access
According to the latest information available, 66% of the Portuguese population, about 7 million people, use the internet. Internet penetration in Portugal is currently at 63.2% and should reach 66.6% by 2021. Smartphone penetration is 55.7% and is projected to grow to 63.5% by 2021. 90% of online sales in Portugal were made via computer, while 4% of purchases were made via tablet, and 4% via smartphone. The most popular search engines are Google (91.63%), Bing! (2.71%), Yahoo! (1.94%), Baidu (1.29%), Yandex Ru (0.63%), Shenma (0.62%).
E-commerce market
E-commerce in Portugal is estimated to have increased by over 12% in 2017, and total online sales of goods and services in the country are estimated to reach EUR 4.73 billion by the end of 2018. This represents a significant growth compared to the 10.52% increase of last year. One in ten Portuguese sites recorded a 100% growth in the number of customers, according to data from the Quarterly Barometer ACEPI/Netsonda. In 2018, user penetration was 62.8%, and is expected to hit 66.7% by 2022. Total e-commerce revenue across all product categories is US$ 2.97 billion, and is expected to reach US$ 4.6 billion by 2021. Toys, hobby & DIY is currently the leading product category, accounting for US$ 808 million market share. Fashion is a close second, accounting for US$ 801 million. By 2021, Fashion will lead the charge, valued at US$ 1.3 billion. Toys, hobby & DIY is also expected to grow, reaching US$ 1.2 billion.
Social media
Portugal’s Social Media Penetration is 48% of the population, and is expected to reach 52% by 2021. There are 6.10 million active social media users in Portugal. Out of all Portuguese Facebook users, 85% access it via mobile, and 72% use Facebook every day. The most popular networks are Facebook (74.57%), Pinterest (7.37%), Youtube (6.46%), Twitter (5.25%), Tumblr (2.14%) and Instagram (1.78%).
 

Direct Selling

Evolution of the Sector
The World Federation of Direct Selling Associations (WFDSA) 2017 report shows retail direct selling in Portugal fell 6.6%, was valued at USD 251 million, and involved 200,600 independent representatives. Another 2017 WFDSA report divides retail sales as follows: cosmetics and health care (53%); wellness (37%); and clothing and accessories (8%).

Euromonitor International notes direct selling enrollment increases despite falling unemployment, which involves younger people joining the industry in pursuit of greater flexibility and independence. Oriflame, Avon, Yves Rocher, and Mary Kay have dominated the beauty and personal care direct selling segment for years and have resisted competition from stores such as Kiko Milano by launching new products, hiring more consultants, and investing in both promotional activities and partnerships. International companies dominate direct selling in Portugal. Mary Kay had the strongest value sales growth while Vorwerk led direct selling in 2017 with its Bimby brand.

SELDIA and Direct Selling Europe promote best practices in the industry.
 
 

Commercial Intermediaries

Trading Companies
 
  • Type of Organization
Being listed with trading groups is an obligatory step for breaking into the hypermarket sales market. The cost of getting onto the listing can be substantial and promotional operations are at the supplier's expense. The distributors do not negotiate with foreign suppliers, making it necessary to go through a Portuguese intermediary (a non-manufacturing importer, a manufacturer of similar products or a service company). Trading companies also supply the markets of some Portuguese-speaking African countries, and Portugal thus serves as a logistic and commercial platform.
  • Main Actors
Five buying groups account for 90% of supplier purchases: Sonae, which recently bought Carrefour Portugal, and increased its weight in local distribution, Auchan, Jerónimo Martins and Intermarché. For a department store listing, there is also El Corte Inglés in Lisbon and Porto.
Wholesalers
 
  • Type of Organization
There are two main types of company:
- companies specializing in a range of products: meat, dairy products (for example Sogenave) or wine (Vinalda)
- national cooperatives, which serve retailers all over the country (for example Grupac, a wholesalers' group for foodstuffs, CNR).
  • Main Actors
Sogenave
CNR (confederaçao nacional Retalho)
GCT-Gestão Comercio total
Ramazzotti
Useful Resources
Portuguese Association of Distribution Companies (APED)
Portuguese Logistics Association (APLOG) (in Portuguese)
Distribuiçao Hoje (Magazine about distribution)
 

Using a Commercial Agent

The Advantages
More realistic for a small or medium enterprise as concerns marketing strategy. Most often they are exclusive agents for the whole country.They are also often distributors/importers for other ranges of products. The agent is quite rare and limited to a few sectors such as chemical products, industrial products and high-tech components, and some foodstuffs (dried fruit, some food additives).
Where to Be Vigilant
The agent should be chosen for his motivation, his interest in the product, his references and the range of products he is in charge of. Supplementary commercial investments will be necessary to support the agent's work (catalogs, samples of products, etc.). One needs a local representative with good contacts in order to be aware of future contracts and participate in tenders. Many projects are EU-funded, so an EU partner is desirable (and often fundamental) when bidding.
Elements of Motivation
The rate of commission is an important element for motivation. Recourse to a system of contests and competition between agents is sometimes practised and supervision and close contact may be necessary for a good follow-up of the agent's activity.
The Average Amount of Commission
An agent on commission is paid according to the turnover he achieves.
Breach of Contract
The termination of an agency contract is carried out with one month's notice during the first year, two months' notice the second year, and three months' notice the third and following years. The agent is entitled to compensation if he is not the cause of the breach of contract. Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals.
Finding a Commercial Agent
CCI Porto, Porto Commercial Association
Alibaba
 

Setting Up a Commercial Unit

The Advantages
Being present on the market, controlling the networks, lower labor costs.
Where to Be Vigilant
The procedures for setting up a company were considerably simplified. However, some processes continue to be rather slow and demanding, such as getting authorizations from town halls or municipal services or the follow up of work (if it is necessary to build or fit out installations).
Different Possible Forms of Settlement
 
  • A Representative Office
A representative office may be necessary to obtain market, or other, data and provide promotional support. However, a representative office cannot be involved in commercial transactions or generate income, and so it cannot manage orders directly.
  • A Branch Office
A branch office can take and fill orders and carry out a marketing or advertising program, recruit the sales force and carry out promotional activities. Setting up a branch office is considered a direct investment and must be declared to the Portuguese Ministry of Finance.
  • A Company
Setting up a subsidiary takes time and is expensive. However, it offers a better guarantee of protection for the registered trade mark, of obtaining credit and of breaking into the market. The Portuguese Ministry of the Economy has created centers for setting up companies in order to shorten the process. For further information, visit the Empresa Na Hora website.
 

Franchising

Evolution of the Sector

Overall, the economic climate in Portugal is open to franchises, especially for new and innovative concepts. The outlook for the franchise sector continues to be fairly positive, mainly due to the number of outlets and shopping malls in the country. There are over 500 franchises operating in the market and the number of franchised units is estimated to be around 11,300. Local franchisors represent 53% of the total market share, followed by Spain with 17% and the U.S. with 9% (representing 44 brands). Portugal continues to offer opportunities for expansion and the market still has room for new, internationally known franchising concepts. According to a report by the Portuguese Franchising Association, although in 2018 there was a decrease in the number of brands operating in franchising in Portugal (528 in 2018 against 610 one year earlier), the weight of franchising in the country GDP rose significantly - from 2.84% to 3.96% - with a total turnover of just above EUR 8 billion. Such report confirms that the services sector holds 57.7% of investors' preference, with services for individuals occupying 43.6%. The services sector is followed by commerce (29%) and restaurants (13.3%).
 
There are a number of laws that govern the operation of franchises within the EU; however, the potential franchiser should take care to look not only at the EU regulations, but also at the Portuguese laws concerning franchising. There is no domestic legislation that specifically regulates franchising alone. However, franchising is subject to the provisions applicable to general contracts, which are contained in the Portuguese Civil Code 1967 (Código Civil). Competition laws are also applicable to the parties to a franchising contract.

Some Big Franchises
List of the largest franchises
For Further Information
ANJE, National Association of young businessmen
 

Finding Assistance

Export Trading Companies
Cavex, Agrifood, fur trade, industrial equipment, wood, products for the public buildings and works sector, etc.
Azinor, Public buildings and works, pharmaceuticals, food, clothes, etc., a very wide spectrum of activity
Vinalda, Wines and spirits
Recommended Resource
Pedro Guerra
Campo grande, 46 - 8º esq
1700-093 Lisboa
Portugal
Tél : 00.351.210133542
Email :pedrorodguerra@gmail.com
Activities :
- consultant in foreign trade
- training in Portuguese, as a foreign language and business language, marketing
- translator Portuguese-French and French-Portuguese (Diploma of the Chamber of Commerce and Industry of Paris)
Portugal Trade Portal
 
 
 
 

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Customs Procedures | Industrial and Manufacturing Profile |Identifying a Supplier | Controlling the Quality of the Products | Organizing Goods Transport To and From Portugal

 

Customs Procedures

Export Clearance
Firstly, the exporter/informant presents the goods, an export declaration and, if necessary, an authorization or export license to the competent Customs office for the place where he has set up a business or where the goods are packaged or loaded for export transportation. In a second stage, the goods are presented at the customs office of exit which examines the goods presented based on the information received from the customs office of export and makes sure that they correspond to those declared and supervises their physical departure (Article 332 UCC IA).
For more detailed information, consult the “Export procedure” page on the website of the European Commission.
However, circulation of goods within the EU is free.
Necessary Declaration
Export documentation requirements vary depending on the value of the goods, the destination of the shipment and if the goods are controlled, prohibited or regulated. Goods that must be reported require a bill of landing/airway bill, an SAD (Single Administrative Document) export declaration, a commercial or a pro-forma invoice, as well as any export permits, certificate, licenses required for controlled, prohibited or regulated goods. All controlled, regulated commodities require an export permit regardless of the value. It is extremely important that all documents tendered for export clearance processing are accurate in every way. Incomplete or inaccurate documentation may result in lengthy delays in customs processing and may result in warehousing and other customs fees.
The customs declaration must be submitted using electronic data-processing techniques to the customs office where the goods were presented and must contain information on the origin of the goods, the customs tariff and customs valuation of the goods. For more detailed information, consult the dedicated page on the European Commission website.
Restrictions
The European Union does not apply any particular export restriction. It is only prohibited to export cultural artefacts, specimens of flora and fauna which are threatened with extinction and war material, arms, munitions and suchlike.
Export Taxes
The European Union has abolished export taxes.
Under certain circumstances, the EU pays export refunds for basic agricultural products (dairy products, sugar, eggs, cereals and rice) that are exported in the form of processed agricultural products. Since 2014, export refunds may only be granted in cases of major market disturbance.

Industrial and Manufacturing Profile

Industry represents 18.9% of GDP (World Bank, 2019). The new information and communication technologies (NICT), pharmaceutical, automobile, biotechnology and mold  industries occupy an important place in Portugal's industrial landscape.

Type of Manufacturers

Original Equipment Manufacturers
OEMs in Portugal are generally pharmaceutical laboratories, some textile and top-of-the-range shoe companies.
Subcontractors
For some years now, Portugal has been a country with many opportunities for subcontracting because of its geographical proximity and low labor cost. The association of the metallurgical and metalomechanical sector has even created a service: "the subcontracting exchange". There are still opportunities in the textile and furniture sectors.
Useful Resources
Marklines

Identifying a Supplier

Portuguese multisector Business directories

Colist - Portugal business directory

Diretorio - Portugal business directory

Emlista - Portuguese business directory

Expat.com - Portugal business directory

ezilon Europe - Portugal business directory

Portoxxi - Directory of companies in Porto

The Yellow Pages - Find a business in Portugal

Portuguese Marketplaces

Sample of marketplaces incorporated in Portugal (A to Z)

 

Upcoming Trade shows in Portugal

February 21st, 2024
February 22nd, 2024
February 23rd, 2024
February 28th, 2024
March 1st, 2024
March 1st, 2024
March 6th, 2024
March 10th, 2024

Other Useful Resources

Trade Agencies and Their Representations Abroad
Portuguese Chamber of Commerce
 
 

Finding Assistance

Recommended Resource
Pedro Guerra
Campo grande, 46 - 8º esq
1700-093 Lisboa
Portugal
Tél : 00.351.210133542
Email :pedrorodguerra@gmail.com
Activities :
- consultant in foreign trade
- training in Portuguese, as a foreign language and business language, marketing
- translator Portuguese-French and French-Portuguese (Diploma of the Chamber of Commerce and Industry of Paris)

Controlling the Quality of the Products

Quality Control Organizations
Bureau Veritas

Organizing Goods Transport To and From Portugal

Main Useful Means of Transport
According to the latest data provided by the Instituto Nacional de Estatística (Estatísticas dos Transportes e Comunicações 2019), as of December 31, 2019, the Portuguese railway network was 3,620.7 km in length. The railway stock was comprised of 377 traction vehicles, 2,684 wagons and 1,008 vehicles for the transport of passengers. In 2019, goods moved by railway transport (9.7 million tonnes) registered a variation of -8.4%, of which 7.4 million tonnes of goods were moved in national traffic.
The results of the Road Goods Transport Survey (ITRM) for the year 2019 showed a decrease of 2.2% in the weight of goods transported by road to 154.4 million tonnes.
The movement of goods in national seaports stood at 85.3 million tonnes (of which 72.7 million tonnes in international traffic), decreasing by 5.6% y-o-y. Sines handled 38.9 million tonnes and represented 45.6% of the national total, followed by Leixões (21.0% of the total) and Lisbon (12.3%).
Concerning airports, there was a 12% increase in freight movement, reaching a total of 193.0 thousand tonnes in 2019.
 
 

By Sea

Ports
Port of Lisbon
Transport Professionals
Port Line
Transinsular

By Air

Airports
Transport Professionals
TAP AIR PORTUGAL
SATA Airlines

By Road

Transport Professionals
European Road Hauliers Organization

By Rail

Transport Professionals
Comboios de Portugal

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

The Sociedade por quotas de responsabilidade limitada (Lda): Limited Liability Company
Number of partners: Two partners minimum. There may be one partner only in the case of a Single Person Private Limited Liability company (SUQ).
Capital (max/min): Minimum EUR 1.
Shareholders and liability: Liability is limited to the amount of capital contributed.
The Sociedade anonima de responsabilidade limidada (SA): Public Limited Company
Number of partners: Five partners minimum; they may be foreigners and non-residents.
Capital (max/min): 50,000 EUR minimum, entirely taken up, with the obligation to release at least 30%.
Shareholders and liability: Liability is limited to the amount of capital contributed.
The Sociedade em nome colectivo: General Partnership
Number of partners: Two partners minimum.
Capital (max/min): No minimum share capital.
Shareholders and liability: Liability is joint and indefinite regarding third parties.
The Sociedade em comandita: Limited Joint-stock Partnership
Number of partners: Two partners minimum, with active partners and silent partners.
Capital (max/min): No minimum share capital.
Shareholders and liability: Liability is indefinite for active partners, and limited to the amount of capital contributed for silent partners.
 

Business Setup Procedures

Setting Up a CompanyPortugal
Procedures (number)6.00
Time (days)6.50

Source: The World Bank - Doing Business, Latest data available.

 
The Competent Organisation
ePortugal web portal
For Further Information
Consult Doing Business Website, to learn about procedures to start a Business in Portugal
Trade Register, in Portuguese
 

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Informa - Portuguese business directory

Kompass - Portugal Business directory

 

Recovery Procedures

Principle
Within the framework of the safeguard scheme, two legal decisions are generally made:
- being put into receivership, a state where payment stops, it is impossible to face the liabilities due with the current assets.
- compulsory liquidation, a persistent state where payment stops and receivership is manifestly impossible.
Minimum Debt-to-Capital Ratio Triggering Liquidation
No minimum
Reorganization and Rehabilitation Laws
Company insolvency and recovery Code

The Active Population in Figures

201820192020
Labour Force5,267,8125,288,7335,190,690

Source: International Labour Organization - ILOSTAT, Latest data available.

 
201720182019
Total activity rate74.91%75.39%75.77%
Men activity rate78.29%78.47%78.69%
Women activity rate71.76%72.51%73.04%

Source: International Labour Organization - ILOSTAT, Latest data available.

 
For Further Statistics
INE
For Further Information About the Labour Market
CES, The Economic and Social Council

Working Conditions

Opening Hours
 
  • Legal Weekly Duration
39 hours
  • Maximum Duration
Maximum duration: 10 hours a day and 48 hours a week.
  • Night Hours
Between 9 pm and 6 am.
Working Rest Day
Sunday
Paid Annual Vacation
22 working days a year, +3 for regular attendance (no unjustified absences).
Retirement Age
65
Child Labour and Minimum Age For Employment
16
Informal Labour Market
Undeclared work is above all made up of only partially declared hours of work or undeclared overtime.
This is especially in Public Buildings and Works, where the control of workmen's wages (particularly foreigners) is inaccurate.

The Cost of Labour

Pay

Minimum Wage
EUR 705 per month if based on 14 payments in a year, or EUR 823 based on 12 payments (source: Eurostat, Government of Portugal, 2022)
Average Wage
Gross average monthly wage: EUR 1,250.75 (source: INE-Statistics Portugal, 2020)
Other Forms of Pay
  • Pay For Overtime
Under modification.
  • Pay For Rest Days Worked
According to collective agreements.
  • Pay For Night Hours
Under modification.
  • Pay For Overtime at Night
Under modification.
 

Social Security Costs

The Areas Covered
Health insurance (medical care, maternity, disability, death), retirement pensions, family allowances, unemployment benefits
Contributions
Contributions Paid By the Employer: 23.75% on the monthly gross remuneration of employees, and insurance premium to cover occupational accidents at a rate varying according to risks.
Contributions Paid By the Employee: 11% on the monthly gross remuneration of employees, and insurance premium to cover occupational accidents at a rate varying according to risks.
Competent Organization
Segurança Social

Management of Human Resources

 

Recruitment

Method of Recruitment
More and more applications are being made via Internet or the press. Recruitment in Portugal is mainly carried out by inviting candidates for a face-to-face interview.
Recruitment Agencies
The public institution is the IEFP.
There are several recruitment companies:Egor, Psicoteste, Hays.
 

The Contract

Type of Contract
The work contract is governed by legal provisions and, to a lesser extent, by collective agreements and individual negotiation. Work contracts and hiring/firing conditions are extremely rigid.

Breach of Contracts

  • Retirement
There are several ways of retiring: early retirement, automatic retirement and official retirement.
  • Dismissals
The employer initiates dismissals:
- redundancy comes in the form of either individual or mass redundancy
- dismissal for professional misconduct
  • Other Possible Methods
Resignation; this is initiated by the employee.
Labour Laws
Doing Business: Portugal, to obtain a summary of labour regulations that apply to local entreprises
 

Dispute Settlement

 

Conciliation Process

Cases of Dispute
Physical violence, moral harassment, sexual harassment, working conditions, etc.
  • Legal Framework
Before going to court, forms of conciliation are possible: mediation, arbitration (which may be compulsory or not, by ministerial decision). Arbitration produces results with the same power as collective contracts. If it fails, the following step will be the « Tribunal do trabalho » of the competent jurisdiction.
However, at this time, the settlement of disputes is also under discussion between the government and the unions (employers' and union confederations).
  • Procedure
The Labor Code
 

Judicial Structures

  • Legal Framework
Defined in the Labor Code.
  • Competent Legal Body
The Labor Tribunal.
To appeal: the Tribunal of 2nd instance, labor section.
 

Social Partners

Employer Associations
IAPMEI - Government Institution for SMEs Support
AEP - Business Association of Portugal
AIP - Portuguese Industrial Association
Social Dialogue and Involvement of Social Partners
There are two major union confederations: the CGTP (very close to the Communist Party) which is typically very critical of and eager to challenge government measures, and the UGT (close to the Socialist Party and the Social-Democrats), a more moderate group. While the UGT also criticises government measures, it often manages to come to a consensus with the government. Negotiations between Employers' Confederations, the Government and Union Confederations usually take place at the Conselho Económico e Social. These discussions take place systematically at the beginning of each year, but also when important dossiers about lab or law are discussed. In recent years, there have been many strikes and demonstrations against government austerity measures and economic policies.
Unionisation Rate
18.4%
Labour Unions
CGTP
UGT
Regulation Bodies
Confederation of Portuguese Agricultural Cooperatives (CONFAGRI)
Portuguese Agricultural Federation
 
 

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: FDI in Figures | What to consider if you invest in Portugal | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information

 

FDI in Figures

According to UNCTAD's World Investment Report 2022, FDI flows to Portugal stood at USD 8 billion in 2021, marking a 3.4% increase over the previous year but still well below the pre-COVID level (USD 12.3 billion). In the same year, the total stock of FDI stood at USD 175.5 billion. According to EY's 2022 Attractiveness Survey, Portugal secured 200 FDI projects in 2021, ranking on the eighth position among the most attractive European economies for investment (3.4% of total FDI projects in Europe). The estimated number of jobs created by these projects is 28,000. Data by OECD show that the majority of investments are directed to the financial and insurance services (21%), professional, scientific and technical activities (18.1%), real estate (8.7% - as Lisbon has become a key destination for FDI in real estate), manufacturing (8.2%), and the wholesale and retail (6.9%) sectors. The main investing countries are Spain (21.2%), the Netherlands (20.3%), Luxembourg (17.3%), France (8.1%), and the UK (6.1%). Portugal’s metalworking, auto component, and machinery industries predominate the recent FDI trends, accounting for about 30% of inflows (government figures). The latest data available from OECD shows that in the first semester of 2022 FDI inflows to Portugal totalled USD 6.1 billion, compared to USD 2.5 billion in the same period one year earlier.

FDI is considered a priority by the Portuguese government. The country has recently launched the development of renewable energies, specifically solar energy (Portugal has the second largest solar power station in the world) and wave power (obtained from wave movements). These sectors could provide new opportunities to foreign investors, so as the IT and tourism sectors. Portugal also created "free zones" to strengthen technology-driven investments. Citizenship by Investment (ARI) via Portugal's Golden Visa programme offers a fast track for non-EU investors to gain citizenship. The government also launched the “Startup Visa” programme, a hosting program for foreign investors who wish to develop new projects in the Iberic country. Portugal offers a diversified economy and benefits from its EU member status, but bureaucratic and judicial burdens can discourage FDI. Government approval is required only in certain sensitive sectors, including defence, water management, public telecommunications, railways, maritime transportation, and air transport. The country should benefit from around EUR 16.6 billion in EU to 2026, to support its Recovery and Resilience Plan. Portugal ranks 31st out of 82 countries in the Economist Business Environment ranking.

 
Foreign Direct Investment202020212022
FDI Inward Flow (million USD)7,6839,6159,099
FDI Stock (million USD)176,301177,801177,329
Number of Greenfield Investments*115168278
Value of Greenfield Investments (million USD)4,0307,5915,535

Source: UNCTAD, Latest data available.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries2019, in %
Netherlands20.8
Spain20.1
Luxembourg19.2
France6.8
United Kingdom6.6
Germany3.5
Brazil2.0
Switzerland2.0
Main Invested Sectors2019, in %
Financial and insurance activities23.2
Professional, scientific and technical activities17.5
Wholesale and retail trade8.8
Real estate8.0
Manufacturing7.3
Information and communication4.6
Construction2.2

Source: OECD Statistics, Latest data available.

 
Form of Company Preferred By Foreign Investors
Public limited company, SA
Form of Establishment Preferred By Foreign Investors
Subsidiary
Main Foreign Companies
The leading case of successful foreign investment in Portugal is that of «Autoeuropa», a Volkswagen project in the Setúbal peninsula with an initial investment of 2 billion euros. Because it was so large, the State moderated the negotiations on salaries etc. It is also a pole for other companies making components for the automobile industry.
Foreign companies active in Portugal include: BMW, Volkswagen, Mercedes Benz, Google, Zalando, Vestas, McDonalds, etc.
Sources of Statistics
Banco de Portugal
Statistics Portugal (INE)

What to consider if you invest in Portugal

Strong Points

Portugal was one of the countries which was the most strongly hit by the economic crisis of the late 2000s. Thanks to a policy of rigor and the implementation of reforms of the banking sector, of pensions and of the labour market, the country has since regained an interesting economic competitiveness and has begun a deep diversification of its exports (both sectoral and geographical). Its economy has stabilised, with a GDP growth of 4% in 2022 (IMF forecasts) based on its main strengths:

  • A skilled and often multilingual workforce at a significantly lower cost than other Western European countries
  • A system promoting investment in innovation and R&D, which has enabled the country to attract new FDI, essential to its development. The large number of multinationals from all sectors testifies to it. 
  • Its strategic international relations with Europe, Africa and America, in addition to its membership of the European Union, allow Portugal to maintain close ties with its former colonies such as Brazil, Mozambique, Macao and Angola, and can serve as a gateway to other Portuguese-speaking markets
  • Early sectoral and geographical diversification of exports
  • Political stability and fluid governance
  • A good business environment (the country was ranked 39th on the World Bank's Doing Business 2020 report.
Weak Points

The main weaknesses of Portugal's economy include:

  • High unemployment rate
  • Economy is weakened by high levels of private and public debt
  • Small population
  • Low productivity
  • Underdeveloped manufacturing sector
  • Rigidity of labour law.
Government Measures to Motivate or Restrict FDI
In recent years, Government policies have prioritised the promotion of Portugal’s appeal to foreign investors. As a result, taxation procedures have been simplified, effective warehouse and transport logistics have been developed (especially in the Sines terminal located in the southwest of Portugal) and telecommunication infrastructure has been improved. The Government has also worked to establish the AICEP - an agency for investment and foreign trade. The Government adopted the golden visa residence programme, which is a simple and fast-track residence permit programme designed to attract foreign investment into the country. Other measures implemented to help draw investment include easing some labour regulations to increase workplace flexibility and creating a special aid regime for large products (over EUR 25 million).

To improve the business climate, the Government has created the "Simplex" website, an information repository containing all measures taken to reduce bureaucracy, and the 'Empresa na Hora' initiative (a company in one hour), which allows companies to incorporate in less than an hour.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Portugal
To see the list of investment treaties signed by Portugal, consult UNCTAD's International Investment Agreements Navigator.
International Controversies Registered By UNCTAD
Refer to UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement
ICSID, International Center for Settlement of Investment Disputes
ICCWBO, International Court of Arbitration, International Chamber of Commerce
Member of the Multilateral Investment Guarantee Agency
Portugal is a signatory of the MIGA convention.
 
Country Comparison For the Protection of InvestorsPortugal
Index of Transaction Transparency*6.0
Index of Manager’s Responsibility**5.0
Index of Shareholders’ Power***7.0

Source: The World Bank - Doing Business, Latest data available.

Procedures Relative to Foreign Investment

Freedom of Establishment
Foreign and domestic investors are subject to the same rules (except for certain sectors, see below).
Acquisition of Holdings
In general, there are no nationality requirements and no limitations on the repatriation of profits or dividends. Portugal limits foreign investment with respect to the production, transmission, and distribution of electricity, the production of gas, the pipeline transportation of fuels, wholesale services of electricity, retailing services of electricity and non-bottled gas, and services incidental to electricity and natural gas distribution. Furthermore, governmental approval is required in certain sectors, including: defense, water management, public telecommunications, railways, maritime transportation, and air transport.
Obligation to Declare
In principal, foreign investment in Portugal is free of administrative limitations. Foreign investors, by and large, may carry out activities under the same conditions as local investors.
To establish a new business, foreign investors must follow the same rules as domestic investors, including mandatory registration and compliance with regulatory obligations for specific activities.
Competent Organisation For the Declaration
AICEP
ePortugal
Requests For Specific Authorisations

Portugal enacted a national security investment review framework in 2014, giving the Council of Ministers authority to block specific foreign investment transactions that would compromise national security. 
Portuguese government approval is required in the following sectors: defense, water management, public telecommunications, railways, maritime transportation, and air transport, as well as any economic activity that involves the exercise of public authority.
Investors wishing to establish new credit institutions or finance companies, acquire a controlling interest in such financial firms, and/or establish a subsidiary must have authorization from the Bank of Portugal (for EU firms) or the Ministry of Finance (for non-EU firms). Non-EU insurance companies seeking to establish an agency in Portugal must post a special deposit and financial guarantee and must have been authorized for such activity by the Ministry of Finance for at least five years.

Office Real Estate and Land Ownership

Possible Temporary Solutions
Consult Instant Offices, CoWorker, Idealista, etc.
The Possibility of Buying Land and Industrial and Commercial Buildings
Foreign investors can become the owners of land which is necessary for their setting up. It is possible to buy freehold or leasehold, to build industrial and commercial premises or to buy through a real estate company.
Risk of Expropriation
According to Portuguese law, foreign investors are entitled to prompt, adequate, and effective compensation if they are victims of expropriation (which can only occur in case of public interest). However, there have been no cases of expropriation of foreign assets or companies in Portugal in recent history.

Investment Aid

Forms of Aid
Investment aid may take the form of grants, tax credits and deferrals, access to loans and reduced cost of land. They may be tailored to the specific investment.

For further information, consult the website of the Institute for support for SMEs (IAPMEI) and that of AICEP Portugal Global - Trade & Investment Agency.

Privileged Domains
Relevant investment projects with a minimum investment of EUR 3 million that qualify for strategic economic interest and promote the creation of jobs are eligible for tax incentives granted on a case-by-case basis under a government contract for a period of up to ten years. Such incentives include a tax credit of 10% to 25% of the investment, as well as exemptions or reductions from property transfer tax, property tax, and stamp tax.

Under the Tax regime for investment promotion (Regime Fiscal de Apoio Ao Investimento - RFAI), companies that invest in certain regions can benefit from a deduction against corporate income tax otherwise payable (capped at 50% of the CIT due) of 25% (for qualified investments lower than EUR 15 million) or 10% (for the part of qualified investments exceeding that limit) of the qualified investment.
For further information, consult the website Portal dos Incentivos.

Privileged Geographical Zones
Fishing, agriculture, renewable energies, tourism and electronics. Furthermore, European aid programs have been used by Portugal to co-finance key investments in the areas of research and development, information and communications technology, transport, water, solid waste, energy efficiency and renewable energy, urban regeneration, health, education, and culture.
Free-trade zones
One of the institutions which is part of AICEP (the Portuguese Agency for Investment and Foreign Trade) is AICEP Global Parques which owns areas for setting up companies and industrial estates. They are located in areas which are economically disadvantaged (and in which apply the fiscal and social measures in favor of companies with the aim of stimulating employment) but which are strategically placed from a geographical point of view for easy access to road, rail and sea transport.

Portugal has one foreign trade zone (FTZ)/free port in the Autonomous Region of Madeira, with companies being able to enjoy import- and export-related benefits, financial and tax incentives. For additional information on Madeira’s tax regime, please visit the website of the International Business Centre of Madeira.

Public aid and funding organisations
The EU through the ERDF.
The institution created by the government is a venture capital company: Trade & Investment Agency (AICEP).
For SMEs, the Small and Medium-Sized Enterprise Support Institute (IAPMEI).
Furthermore, the state-financed private equity company Portugal Ventures may invest in the capital of startups.
 
 

Investment Opportunities

The Key Sectors of the National Economy
The Agency for Investment in Portugal (AICEP) regularly publishes investment opportunities on its website. Sectors with large potential include:
  • Tourist investment (especially in the Douro Valley and the Alentejo region)
  • Agrifood projects in the Alentejo region (biofuels, olive oil, fruit, flowers, etc.)
  • Forest investment projects all over the country

Other sectors attracting substantial foreign investment are:

  • Automotive sector
  • The chemical industry, which benefits from wide experience especially in sectors from extraction to petrochemical refining as well as manufacturing products from the most basic to solutions with high added value
  • The electric and electronic sectors have recently undergone considerable transformation with the setting up of several foreign groups
  • With more than 7,600 companies in ICT, the Portuguese information and communication technologies market has shown itself capable of rapid adaptation to and effective assimilation of new technologies
  • Biological industries bring together several international projects in domains such as pharmacy, biotechnologies (especially with renowned Portuguese universities) and R&D
  • Call centres. The country has a qualified workforce, which speaks several languages and is competitive, associated with modern telecommunication networks and property which is easily accessible and inexpensive
  • In the tourism sector Portugal is promoting more high-end products and services.

For further information, consult the "Prominent Clusters" page on the AICEP portal.

High Potential Sectors

The sectors which have been officially designated as top priorities to be developed are:

  • Biotechnologies (to create synergies with the American MIT project in Portugal)
  • Shared service centres (call centres and associated infrastructure)
  • The electric and electronic sectors (a big gamble on alternative energies)
  • High value added chemistry (eg. polymers, etc.)
  • The NICT (new information and communication technologies)
  • High end tourism.
Privatization Programmes
In 2011, Portugal launched an aggressive privatization program as part of its EU-IMF-ECB bailout, including state-owned enterprises in the air transportation (national airline company and airports), land transportation, energy, communications, the postal service (Correios), energy, sanitation, and insurance sectors. Current privatisations plans concern the energy and airlines sector.
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Portugal
Ted - Tenders Electronic Daily, Business Opportunities in the EU
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
No monopolistic sectors. Concessions in the electricity and gas sectors are assigned only to companies with headquarters and effective management in Portugal.

Finding Assistance For Further Information

Investment Aid Agency
AICEP - Portuguese Investment Agency
Institute for Support for SMEs and Investment (IAPMEI)
 
 
 
 

 

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Latest Update: January 2024

In this page: Passport and Visa Requirements | Taxes and Restrictions On Persons When Going Through Customs | Health Precautions | Safety Conditions

 

Passport and Visa Requirements

Passport and Visa Service
Consult the Website of the Portuguese Ministry of Foreign Affairs
Hotel reservation websites
 
Check IATA Travel Website for visa requirements and health advices.
 
 
 

Taxes and Restrictions On Persons When Going Through Customs

How to Refund Consumption Tax
Hand in the VAT refund documents when going through Customs. These can be obtained from the merchant when the purchase is made. For further information, consult the European Commission Taxation and Customs Union website.
Other Requirements
At the European level, transporting liquids in hand baggage in planes is subject to regulation. For further information, click here.

Health Precautions

Obligatory Vaccination and Other Recommendations
It is recommended that everyone 16 years of age and older should get fully vaccinated for COVID-19 before travel and present, if necessary, evidence of COVID-19 vaccination at the border. The updated information on all health entry requirements as well as on routine and recommended vaccines for Portugal are provided on the dedicated pages on TravelHealthPro and CDC websites.
While there are no official requirements for vaccination, the following are strongly recommended: tetanus, diphtheria, rabies, chickenpox, measles, hepatitis A and B, influenza and poliomyelitis.
Hotel reservation websites
Direção Geral de Alfândegas

Safety Conditions

Hotel reservation websites
The Advice of the Canadian Ministry of Foreign Affairs

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Accommodation | Eating Out | Getting Around | Time and Time Difference | Climate | Electrical Standards and Measurement Systems | Paying | Speaking | Emergency Numbers | Communications

 

Accommodation

Hotel reservation websites
Accommodation Guide
Visit Azores
Accommodation in Madeira

Eating Out

Rules For Eating Out
Prices displayed in restaurants and cafés have taxes and service included. A tip is not obligatory, but it is usual to leave some money on the table after paying the bill (between 5% and 10% of the bill).
 
Food Specialties
Some Portuguese specialities include: bacalhau (salt cod that is often boiled, grilled, put into fritters or served in a gratin), arroz de marisco (rice with seafood), caldeierada (fish soup) and pastel de nata (custard in puff pastry).
Drinks
Portugal is traditionally a wine producing country. To see the variety of different wines produced, visit the website of the Wines of Portugal.
Dietary Restrictions
No restrictions.
Table Manners
Before starting, you wish people « bom apetite ». If you are invited to dinner with a Portuguese family, wait to be shown your place before sitting down and avoid eating with just your fork.

Getting Around

 

Transportation From Airport to City Centre:


Airport

Distance

Taxi

Bus

Train

Car Rental
Lisbon (LIS) 10 km / 6 miles EUR 10 / 25-45 min EUR 1.20 / 20-45 min - Available
Porto (OPO) 16 km / 10 miles EUR 15-20 EUR1 / 40-55 min EUR 1.40 / 30 min Available
 

Means of Transport Recommended in the Rest of the Country

Train reservation services
C.P. Portuguese Railways
 

Major airlines

NameTypeDomestic FlightsInternational Flights
TAP AIR PORTUGALMajorYesYes
SATA Air AçoresMajorYesYes
EasyjetLow costNoYes
TransaviaLow costNoYes
RyanairLow costNoYes

You Can Consult The EU Air Safety List. Look Also at the rating of the United States Federal Aviation Administration (FAA).

 
 
 

Travelling By Yourself

Car rental agencies
Hertz
Europcar
 

Rules of the Road

National Roads Organizations
Brisa (private motorways)

Time and Time Difference

Summer Time
Summer time from March to October
 

Climate

 
Type of Climate
Average temperatures in Lisbon are 8°C in January and 28°C in June. The best times to visit the country are: spring (between April and June), the end of summer (August) and the beginning of autumn (between September and October). For swimming and visiting the beach, it is better to visit the country during July, August and September, or even October (in the south of Portugal and in Madeira).
 

Electrical Standards and Measurement Systems

System of Measurement Used
Metric system
Unit of Measurement of Temperature
Degrees Celsius
 
 
Electricity
 
  • Voltage
230 V
  • Frequency
50 Hz
Type of Electric Socket
type E, C, F.
Type of Telephone Socket
US RJ-11 (called Rita), Portuguese, Danish.
DVD Zoning
Zone 2

Paying

Domestic Currency
Euro
ISO Code
EUR
To Obtain Domestic Currency
A foreigner in Portugal can easily withdraw money at ATMs, which are called 'Caixas Multibanco' and designated with blue 'MB' signs. In recent years, the network of ATMs in Portugal has multiplied rapidly, increased the range of services offered and has created a deep network. Some services offered at ATMs include: withdrawing money, paying utility bills (water, electricity, gas, telephone, etc.), paying taxes, paying fines, transferring money, recharging a mobile phone (if the chip is Portuguese), buying train tickets, buying concert tickets and signing up electronically for standing orders.
Possible Means of Payment
Cash or credit cards are widely accepted in shops, restaurants, hotels and cafes. However, American Express cards are not widely accepted.
 

To Find a Cash Machine Where You Need, Use the ATM locator

 

Speaking

Official Language
Portuguese
Other Languages Spoken
Spanish, French and English are the foreign languages best known and utilised in business relations.
Business Language
The language utilised depends on the age of your business contact. Typically, those under 40 will also speak English. Those over 40 tend to speak French. That being said, Spanish is gaining ground within the Portuguese business scene.

 

Emergency Numbers

ambulances and medical emergencies and police112

Communications

Telephone Codes
To Make a Call From Portugal, Dial 00
To Make a Call to in Portugal, Dial +351
Mobile Telephone Standards
GSM, GPRS, PTT, UMTS, WCDMA, EDGE.
National Mobile Phone Operators
Vodaphone, TMN (Portugal Telecom Group), Optimus (Sonae and France Telecom Group), Phone-IX (Portuguese Post)
 

Availability of Internet

Internet Suffix
.pt
National Internet Access Providers
Sapo, Netcabo, Clix, Optimus/kanguru, Vodafone

 

© eexpand, All Rights Reserved.
Latest Update: January 2024

In this page: Communities of Expatriates | Ranking of Cities | Renting an Apartment | School System | Health System | Tourism and Culture | Individual and Civic Freedoms | Religion

 

Communities of Expatriates

The Number of Expatriates
There are 250 000 expatriates.
Hotel reservation websites
Portal for citizens
 
 

Ranking of Cities

Cost of Living
According to the latest available edition of the Cost of Living Worldwide City Rankings Survey by Mercer, Lisbon is ranked 117th out of 227 cities worldwide in terms of cost of living.
Quality of Life
According to the latest available edition of the Quality of Living Worldwide City Rankings Survey by Mercer, Lisbon is ranked 37th out of 231 cities worldwide in terms of quality of living.
Hotel reservation websites
Quality of Living Worldwide City Rankings (Survey by Mercer)
Cost of Living Worldwide City Rankings (Survey by Mercer)

Renting an Apartment

Average Lease Term
3 years, renewable by tacit agreement.
Notice of leaving: 3 months.
Average Rental Costs
A deposit (given back when you leave the apartment) equal to 2 months' rent is required. At the beginning of the rental period, a third party is often required to stand guarantor.
Rental Agency Websites
In´s: Lisbon and the surrounding area
Hotel reservation websites
Official Portuguese tourist website

School System

The Education System
There are five levels of education: "pré-escolar" from age 3; "básica" school (elementary) from age 6 (4 years); the "secundário" (8 years); then higher education (3 to 8 years).
International Schools
There are private educational establishments at "básico"and"secundário" level in: English, French and German. To see the list of foreign educational establishments in Lisbon, click here. For foreign establishments in the country in general, click here.

On the spot:
- most international language schools offer à la carte Portuguese lessons for foreigners.
- less flexible (the timetables are set) but more economical, the University of Lisbon has summer classes for foreigners (Faculdade de Letras da Universidade Clássica de Lisboa).

Health System

The Healthcare System
There is the "Serviço Nacional de Saúde" (National health service) with a national network of public hospitals, and the "Serviços de Atendimento Permanente" (permanent service units) with family doctors and specialized personnel. This service is practically free. The disadvantage is the waiting time. In some border regions, there are agreements with Spanish healthcare units (especially maternity hospitals).
International Hospitals
International hospitals in Portugal include: the British Hospital and S. Louis Hospital. Large private hospitals, belonging to Portugese financial/banking groups, have agreements with some health insurance companies. Hospitals of this nature include: Hospital CUF Descobertas, Hospital da Luz, SAMS. The personnel speaks English and often French.

Tourism and Culture

Different Forms of Tourism

Historical
Traditionally Portugal's main tourist destinations were: Lisbon and the surrounding area (Estoril, Cascais, Arrábida south of the Tagus), Madeira and the Algarve. But local and foreign tourist itineraries have widely diversified in recent years. Portugal is one of the oldest states, with nine centuries of history. Its monuments bear witness to this historic past: the Romanesque cathedrals of Coimbra and Porto, the monasteries of Alcobaça and Batalha from the second part of the Middle Ages, the Tower of Belém, the Monastery of 'Jerónimos' and the Convent of Christ in Tomar from the ‘manueline’ epoch (King Manuel 1, 15th and 16th centuries) or the Palácio Nacional at Mafra from the 17th century.
Cultural
In addition to monuments and castles, some recommendations for cultural tourism include:
- Admiring the cobblestones (especially in Lisbon and the south) and the azulejos which cover the façades of buildings and churches (such as the Madre de Deus Convent or the Palácio Marquês de Fronteira)
- Listening to Fado, the national
- Visiting the valley of the Douro (World Heritage Site);
- And, of course, enjoying some famous port wine.
Nature
There are abundant ways to enjoy the natural beauty of Portugal. Walking on the island of Madeira, along the 'levadas' (canal side walks), the trails in the Serra da Estrela and in the centre of the country are popular options. If one wants to get closer to the water, fishing and water sports are common in the Azores.
Religious
In 2007, the new Basilica at Fatima opened its doors. Believers tend to flock to the Basilica on 13 May and 13 October.
Thermal
Portugal has a wealth of spring waters. Some establishments have been converted into luxury spa and health hotels, while others are being modernised with the help of public funds. For further information consult the Termas de Portugal (sectorial association) website.
Beach
The Algarve Coast is one of the most popular destination for visitors, especially in the summer. That being said, it is very crowded in August and it is recommended to visit other alternatives. Additional quality beaches can be located at: Alentejo (especially the Tróia Peninsula), the island of Porto Santo and the Cascais shoreline. Beaches for surfing include: Ericeira, Guincho and Peniche (all of which are national/international championship venues).
Winter Sports
Due to limited snow accumulation, there is not a strong winter sports tradition. However, the activity is slowly beginning to start up.
Outdoor Activities
Hiking, mountain biking, climbing, mountain climbing, rafting.
Shopping
Portuguese products are rapidly attracting interest among expatriates. Two fine examples are Portuguese wine and cheese. There are more than 30 appellations d'origine (DOC), with wine from Porto receiving the first appellation d'origine in the world. The Viniportugal institution is in charge of distribution. The king of Portuguese cheeses is the 'queijo da serra', a melt-in-the-mouth ewe's milk cheese.
 
 
Tourism Organisations
Portuguese Tourist Office
Cultural Organizations
Fundação Serralves
CCB

Individual and Civic Freedoms

Civil Liberty
1/7
World Ranking of Freedom of the Press According to "Reporters sans Frontières", 2021 report : 9/180

Religion

Beliefs
Catholics: 95%

 

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