Constitution of Companies

Approval of a firm or denomination request and presentation of the company's object and economic activities.


The constitution of the company, regulated by the Commercial Companies Code by Decree - Law No. 262/86 and by the Notary Code by Decree - Law No. 207/95, must start with the admissibility certificate.

It is the approval of an application for a firm or denomination and first presentation of the company's object and economic activities. Especially in relation to economic activities, there is a list of CAE (economic activity code) in which the company must indicate a main CAE and up to three secondary ones.

Once the admissibility certificate for the company name has been obtained, it will be necessary to open a bank account intended exclusively for the limited liability company. The company's share capital can be paid in at the time of incorporation or until the end of the fiscal year. At this moment, it is necessary to register the constitutive act (social pact) at the Commercial Registry Office.

The next step will be to open an activity in Finance. The limited liability company must be included in the organized accounting regime, requiring the support of an official accountant. Organized accounting is the most efficient tax regime for more complex activities and when the expenses with the activity are greater than 25% of income. It is important to note that under this regime it is possible to deduct a large part of professional expenses, such as fuel, subsistence, computer equipment, and to accurately calculate net income.

Finally, Social Security must be informed about the data of the partners, employees and managers of the company in order to determine the appropriate social contributions.

Branches and Branches:

A foreign company wishing to operate in Portugal may do so through a subsidiary or permanent representation, in the form of a branch.

A subsidiary is a company governed by Portuguese law which, like any other company incorporated in Portugal, is independent from the holders of the respective capital. Subsidiaries have their own legal personality, so they are legally distinct from the companies participating in them, just as their assets are autonomous from those companies.

This means, in practical terms, that in case of lawsuits or liability to third parties, the responsibility falls on the incorporated company (subsidiary) and not on its partners.

As a rule, in the subsidiary, the share capital is held mainly by the parent company, which allows it to exercise a dominant influence, either because it holds a majority stake in the capital, or because it has more than half the votes, or because they can designate more than half of the members of the management body.

The subsidiary based in Portuguese territory is considered a resident company, which is why it is applicable to commercial legislation, namely the Commercial Companies Code and the Commercial Registration Code, therefore there is no difference between the constitution of a subsidiary company of a company from another country, and the constitution of any other resident company and, with regard to tax matters, are subject to Corporate Income Tax, as well as to the other taxes to which all national companies are subject.

As a company incorporated along the lines of a regular national company, the subsidiary must comply with all stages of the constitution process: application for name admissibility, payment of capital and deposit of the charter, declaration of commencement of activity in Finance and declaration to Security Social.

It should be noted that, regardless of participation in the capital, the movements of money between the participating company and the investee, can only be verified in the following situations:

- Commercial activity between both that must comply with the transfer pricing discipline, provided for in the Corporate Income Tax Code (Corporate Income Tax);

- Distribution of results to the participating company (headquarters), subject to withholding tax at a rate of 25%. In this case, there is also an International Convention between Brazil and Portugal to avoid double taxation.

On the other hand, a branch of a foreign company does not have its own legal personality, being a legal extension of the entity it represents. It is a permanent establishment or a permanent representation, through which the same activity of the foreign company is developed, totally or partially, under the guidance of its management body, although there may be some autonomy, if any, with mandate for this, decided by the aforementioned management body.

In order to carry out the activity, the branch follows a different path from the branch. The company must proceed with its registration in the National Register of Legal Persons, which will assign a legal person identification number (NIPC) and, after that registration, it must request the commercial registration in the Commercial Registry Office of the respective area where they are going locate the company's facilities.

For the registration of the branch, it is necessary to present the certificate of the legal existence of the parent company, the respective updated social pacts (statutes) and a minute where not only the location of the establishment is found, but also the identification of the legal representative. The branch must also be registered with Finance and Social Security.

At the accounting level, all movements recorded in the branch's accounts must be reproduced in the parent company's accounts. At the tax level, it is worth mentioning that, to avoid double taxation, the International Convention between Portugal and Brazil should be used to define which State is responsible for taxing the different income generated, exempting what may be taxed in Brazil by already been discounted in Portugal.