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Synopsis

Portugal lies in the south-western part of Europe, bordering the North Atlantic ocean, to the west of Spain. The area of Portugal is about 92 000 sq km, including Madeira and Azores Islands. The population is approximately 9,9 million people (July 1998 est.). The ethnic groups comprise homogenous Mediterranean stock in mainland, Azores, Madeira Islands; citizens of black descent who immigrated to mainland during decolonization number less than 100 000. The official language is Portuguese. Portugal is a parliamentary democratic republic. Map

Portuguese legislation on foreign investment was significantly liberalized at the time of accession to the European Community and, apart from some sectors such as defence and public services, there are no restrictions on the percentage of foreign ownership allowed, it thus being possible to form a company which is totally owned by non-resident investors, whether corporate or individual.

There are various ways of establishing oneself in business in Portugal but in principle if one wishes to do business within Portugal then it is advisable to incorporate there. Indeed, resident entities normally receive more favorable treatment tax-wise than non-resident, especially with regard to withholding tax. Also, in practical terms and from a point of view of control it is advisable to have a permanent presence within the country. One further point is that if the commercial enterprise is part of an overall plan to establish residency, then such a residency request will only be considered if a permanent presence in Portugal is established.

Probably the best way of doing business in Portugal is through a Portuguese limited company. As opposed to operating in one's own name, a company has the advantage of limited liability, meaning that should the company incur debts only the share capital of the company is available to meet them. If one trades in one's own name then obviously all personal assets can be seized and used to meet debts.