- Portugal tries to encourage investments from foreign investors.
- The following are among the reasons that foreign investors are attracted to Portugal:
- A democratic form of government that encourages overseas investments and allows investments and profits to be withdrawn by foreign residents.
- A technically competent and skilled labor force with low labor costs.
- Similarly the population is among the youngest in Europe.
- Massive infrastructure developments particularly in rural areas, thanks to the huge EU budget, some Euro 23 Billion between the years 2000- 2006.
- Good command of English as a second language in the business world and in industry.
- Friendly population, pleasant climatic conditions and crime rates that are among the lowest in Europe.
Restrictions on Foreign Ownership in Portugal
- As a general rule, there is no discrimination in Portugal between overseas investors and local investors. Foreign investors in Portugal itself are bound to report to the investment authorities, the ICEP, within 30 days of the date of the investment. As regards an investment in Madeira or the Azores, a foreign investor must register with the Planning and Finances Ministry.
- Investments that are connected with security or public health matters must obtain prior approval.
- Investments of overseas residents that are not EU residents in an aviation company are limited to 49%. A foreign investment in television services is limited to 15% for an individual investor who is not an EU resident.
- Investments of foreign residents in the banking and insurance sector must be approved by the central bank for EU residents or by the Ministry of Finance for investors who are not EU residents.
Portugal Investment Incentives
- Portugal grants investors, including foreign investors, an incentive.
- The type and amount of the incentive is influenced by factors such as the size of the investment, the contribution of the investment to development areas, creation of jobs, training for employees, etc.
- For investment creating employment of young employess, aged under 30 years, there is an increased salary tax deduction for corporate tax purpose of 50% of the actual salay expense.
- For companies resident in areas eligible for benefits, the corporate tax is reduced to 15%. When establishing new entities the corporate tax rate for the first 5 years is 10%.
- Companies creating permanent jobs in such areas can deduct additional 50% of social security payments.
- Contracts for NATO infrastructure are exempt from corporate tax.
Portugal Free Trade Zones (FTZ)
- Portugal has 2 free trade zones in Madeira and the Azores.
- The activity permitted in these areas includes industrial and commercial activity, including setting up trust companies.
- The benefits that will remain in force until the end of 2011 include corporate tax exemption. The benefits are for qualifying firms licensed before 31.12.2000.
Portugal R&D Incentives
For additional info about Portugal investment incentives please visit www.investinportugal.pt
- Expenses of R&D and start ups can be depreciated over 3 years.
- There is a 20% tax credit for fixed assets purchased.
- Companies can also deduct 50% of their additional R&D investments for investments exceeding the average investment in the previous 2 years, up to EUR 750.000.