Portugal offers a number of benefits that make it a choice destination for leading global companies and industries:
• Strategic location
• Gateway to wider markets
• Highly developed infrastructure and communications
• Business friendly environment
• Highly skilled workforce and flexible human resources
• Top destination for global multinationals
• Competitive tax system
Regarding the first factor, Portugal truly has a privileged geographic location. Located on Europe’s west coast and in the same time zone as London, Portugal is the nearest European country to the US and Brazil. This makes us a perfect entry point to the European Union.
The second factor: Portugal is a strategic platform for African and Portuguese-speaking countries, making it an effective gateway to wider markets. Portugal is an EU Member State and part of the Eurozone. As such it enjoys benefits including free trade, non-tariff barriers and free movement of labour and capital. Furthermore, Portuguese is the fifth most widely spoken language in the world, covering countries like Brazil, Angola, Mozambique, Cape Verde, São Tomé and Principe, Guinea-Bissau and East Timor. Portugal lies at the heart of this group of countries.
The third point reflects our highly developed infrastructure, logistics and communications networks. We have five main sea ports receiving international traffic. All have rail access and regular cargo lines linking Portugal to North, Central and South America, Asia, Africa, Europe and the Middle East. We have four international rail routes exiting Portugal that create a complete logistical chain, with rail-road-port terminals throughout the country. Portugal also has highly developed road systems with excellent national and international accessibility.
When it comes to technological communications, 90% of public services are online. Portugal has the broadest internet coverage in the EU and benefits from the second highest broadband speed among OECD countries.
The fourth factor is Portugal’s business friendly environment. This is a global nation which is open to foreign cultures, religions and beliefs. Last year Portugal ranked number two in the Migrant Integration Policy Index. Within this context it is worth mentioning the new golden visa scheme which gives non-EU individuals very favourable conditions to obtain a visa permit and, therefore, full access to the EU.
Regarding business itself, as we have said, all major public services are online and it is possible to set up a company using the Internet in less than an hour. Additionally, a number of legal obligations have been eliminated or simplified, allowing investors to focus on their key activities.
Our highly talented workforce and adaptable HR make up the fifth factor. 42% of Portuguese people speak a second language and the study of English, plus French, German or Spanish is mandatory from elementary school.
Portugal is a top destination for global multinationals - this is the sixth factor. Portugal has a competitive tax system in line with most of its European counterparts and it follows most OECD guidelines.
At the international level, Portugal is subject to all EU Directives regarding the elimination of double taxation and has signed more than 50 related conventions, including with all Portuguese-speaking countries except Angola, which has not yet entered into any treaties.
Another element worthy of consideration is that Portuguese tax legislation includes a specific rule preventing the double taxation of profits distributed by companies resident in Portuguese-speaking African countries and in East Timor.
At the domestic level, Portuguese tax legislation also provides a number of fiscal and financial benefits designed to encourage foreign investment which are worth mentioning.
An important factor is that capital gains made on the transfer of securities by foreign entities that are not domiciled in blacklisted jurisdictions, and which are not subject to indirect control of 25% or more by Portuguese residents, benefit from full tax exemption.
Portuguese legislation also features special debt securities tax rules under which investment income paid to non-resident beneficiaries, as well as capital gains deriving from the sale or other disposal of such debt securities, are exempt from Portuguese income tax and consequently from withholding tax. Other withholding tax exemptions on interest and rent payments made by public entities to foreign lenders may also apply under certain conditions.
Additionally, a special personal taxation framework has been established for non-habitual residents. In a nutshell, this regime applies to all individual taxpayers who become Portuguese tax residents provided they have not been taxed here as tax residents in the previous 5 years. Individuals are considered non-habitual residents upon registration with the local tax services. This new scheme is in effect for a 10-year period and taxes employment and self-employment income from high value added activities performed in Portugal at a standard 20% rate. However, provided certain conditions are met, foreign-sourced income such as employment income, self-employment income, rental income, investment income and capital gains may be tax exempt.
A range of tax incentives are also available for investment in business R&D, corporate restructuring and for investment projects deemed to be of interest to the country’s economic development and the reduction of regional imbalances.
Finally, it is worth noting that Portugal has implemented a tax arbitration system designed to achieve a quicker resolution of any tax disputes that may arise.