Author: Cláudia Vasconcelos, Head of Business Development at NEWCO
Portugal is rapidly emerging as a pivotal hub for foreign investment, attracting a diverse spectrum of investors with its innovative policies and strategic advantages. This evolution is particularly pronounced in the technology sector and international business activities, where recent updates have made Portugal even more appealing.
Enhanced Incentives for Technology and International Business
The Portuguese government has made significant strides in enhancing its investment ecosystem, especially for startups and technology-focused companies. Recent updates include a preferential corporate income tax rate for certified startups: 12.5% in mainland Portugal and an even lower rate of 8.75% in Madeira on the first €50,000 of taxable income. Beyond these thresholds, rates remain competitive at 21% in the mainland and 14.7% in Madeira.
Moreover, companies licensed to operate at the Madeira International Business Centre can benefit from a special corporate income tax rate of 5%, the lowest in the European Union, showcasing Portugal’s commitment to fostering a business-friendly environment and attracting foreign investment.
Additionally, Portugal has introduced attractive taxation regimes for stock options and cryptoassets, further establishing itself as a forward-thinking investment destination. The fast-track residence permit procedure for non-EU employees and board members of startups underscores Portugal’s dedication to attracting international talent and simplifying bureaucratic processes.
Strategic Access and Legal Framework
Portugal’s EU membership offers invaluable advantages, providing seamless access to the single market. This strategic position is complemented by a robust legal and tax framework aligned with EU directives, offering stability and a predictable environment for cross-border operations. Additionally, Portugal’s unique position as a gateway to Portuguese-speaking countries opens up a myriad of opportunities in the Lusophone world, facilitating entry into markets with over 250 million consumers.
The country’s extensive network of double-tax treaties further enhances its attractiveness, minimizing the tax burden on foreign investors and ensuring fiscal efficiency. Special attention is given to startups and international companies, particularly those based in Madeira, which benefit from one of the lowest corporate tax rates in the EU (5%).
Advanced Infrastructure and Skilled Workforce
Portugal’s state-of-the-art telecommunications infrastructure and pool of qualified, English-speaking professionals make it an ideal setting for businesses, particularly in the tech and knowledge-driven sectors. The country’s commitment to education and technological advancement ensures a steady stream of talent and innovation.
Residence Permits and Golden Visa
The Portuguese residence permit programs offer a clear path to EU residency for entrepreneurs and investors, enhancing access to the EU market and the broader Schengen Area.
In its drive to attract global talent and investment, the country extends specific permits to entrepreneurs, highly qualified professionals, and those in the tech sector, through its Tech Visa and Startup Visa programs.
These initiatives are designed to simplify the entry and establishment of innovative entrepreneurs and skilled tech professionals in Portugal, bolstering the nation’s status as a tech-friendly hub.
Moreover, the revamped Golden Visa program grants residence permits to investments in funds, job creation, and company formation. This means that investors can leverage the best of both worlds: participating in Portugal’s growing economy through various investment channels while enjoying the benefits of Portuguese residency.
Diverse Investment Opportunities
Beyond the tech sector, Portugal has opportunities in renewable energy, tourism, agriculture, and more, driven by its commitment to sustainability and innovation. The country’s rich cultural heritage, natural landscapes, and focus on green energy position it as a versatile investment destination.
Tax incentives for Startup founders and workers – plus an interesting prospect for mid-2024
Founders and workers of certified startups who become tax residents of Portugal as of 2024 may be taxed at a special rate of 20% on employment or entrepreneurial income earned within the scope of the said activities for 10 consecutive years.
Eligible taxpayers will also be tax-exempt on foreign income from several categories of income, namely employment income performed abroad, self-employment income performed abroad, foreign rental income, and capital gains on foreign-based assets.
Under a regional decree expected to mid-2024, new tax residents who perform certain investments in Madeira may benefit from the same personal income tax benefits referred to above. The scope of beneficiaries of this regional decree is expected to be significantly broader than in mainland Portugal, positioning Madeira as a must-go for individuals seeking a competitive personal income tax regime.
