A Portugal Private Limited Company (Lda) is popular with foreign investors wishing to do business in Portugal. Foreigners may own all of the shares in an Lda.
In Portuguese their private limited companies are called “Sociedad por Quotas” (Lda) who are equivalent to Private Limited Companies in other countries. Lda’s are the most popular form of companies in Portugal for residents and foreigners.
Portugal is located in southwestern Europe on the Iberian Peninsula which is the most western point in Europe. It is bordered to the east and north by Spain and to the south and west by the Atlantic Ocean.
Portugal is a sovereign state. Its political structure is a “unitary semi-presidential republic” with an elected one house legislature, a prime minister and a president.
Private Limited Company (Lda) Benefits
A Portugal Private Limited Company (Lda) offers these types of benefits:
• Complete Foreign Ownership: All of the quota (shareholders) can be owned by foreigners.
• One Shareholder and One Director: Only one shareholder (quota holder) is required who can become the only required director for total control of the Lda.
• Low Share Capital: The minimum requirement is 5,000 Euro share capital.
• EU Member: Portugal is a member of the European Union (EU) allowing for easier access for business with other EU members.
Private Limited Company (Lda) Name
The “Registo Nacional de Pessoas Colectivas” (National Registry of Companies) handles the certification of company names.
Every Lda must choose a unique name not resembling any other company name in Portugal. Company formation experts recommend submitting three proposed company names for approval of one when applying. Company names must indicate the company’s proposed business activities. A free available names check can be performed prior to registration.
Company names may be in languages other than Portuguese utilizing the Latin alphabet.
Either the words “Sociedad por Quotas” must appear at the end of the company name or its abbreviation of “Lda”. A sole shareholder company who is also the sole director requires adding this word “unipessoal” at the end of its company name.
Type of Business Activities
The Lda can engage in a variety of business activities. While the Memorandum of Association can describe specific business activities, the standard practice is to have the Memorandum provide a broader description such as: “The types of business engagements include commercial, industrial and investment activities”.
The government Registry handles all applications for new companies.
The Articles of Association along with a “Sale and Transfer Agreement” regarding the quota (shares) must be signed in front of a notary. If the founders are foreigners unable to visit Portugal, they may issue a Power of Attorney certified by internationally recognized Apostille or by a foreign notary allowing the formation company to sign these two legal documents.
Once approved, the Registry issues a Certificate of Registration and a provisional Tax Registration card. After that, a Public Registry Deed will be issued which must be signed in front of a notary. Once that is completed, registration is made with the “Direcção-Geral dos Impostos” (Government tax office).
Only one shareholder is required to form the Lda. The shareholder can be a foreigner from any country residing anywhere. Individuals and corporate bodies can become shareholders. There is no maximum number of shareholders.
The Lda has quotas rather than shares which are described in the Articles of Association. Quotas can only be transferred by executing a Public Deed.
Similar to the shareholder, only one director is required for the Lda. The sole shareholder may become the only director to better manage and control the Lda. Natural persons and corporate bodies may become directors. Directors can be citizens of any country and reside anywhere in or outside of Portugal.
When a company has a sole shareholder who is the only director, the company name must include the word “unipessoal” at the end of its name.
Every Lda must have a registered office address to receive important notices and tax forms. All of the company’s accounting records and registers are maintained at the registered office. The Portuguese company forming the Lda should be able to provide their office address as the registered office.
A Registry of Directors must be kept at the registered office which is private and not available for public inspection.
The required minimum share capital is 5,000 Euro which must be paid up in full before registration.
A reserve capital must be set up to pay third parties for any losses with 5% of the profits added to the reserve every year.
Annual financial statements must be filed with the Finance Ministry which can be filed by internet. The deadline is the end of June from the previous fiscal year. Audits are not required unless the company is categorized as a “large” company.
The Portugal corporate tax rate is 21%. However, the first 15,000 Euro is taxed at a 17% rate while the remainder is taxed at the normal 21% rate.
However, U.S. taxpayers and all other subject to taxation on their global income must report all income to their tax authorities.
Annual General Meeting
An annual general meeting of the shareholders is required. However, the meeting can take place anywhere if the Articles of Association states as such.
Time for Formation
It may take up to two weeks for all required documents to be prepared, filed with the Registry, and approval.
Shelf companies are available for purchase in Portugal.
A Portugal Private Limited Company (Lda) has these benefits: foreigners can own all of the shares, low share capital, EU membership, and one shareholder can be the only director for greater control.