Doing business in Portugal: Portugal trade and export guide

Updated 15 July 2015

1. Portugal export overview

Portugal is located in the western part of the Iberian Peninsula and has strong ties with the UK. About 80,000 British citizens live and work in Portugal for some of the year. Around 2 million British nationals visit Portugal every year.

Contact a Department for International Trade (DIT) Portugal export adviser for a free consultation if you’re interested in exporting to Portugal.

Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Portugal.

Portugal is a gateway to a market of 250 million people worldwide thanks to its ties with its former colonies. These Portuguese speaking markets, namely Brazil, Angola and Mozambique are known as the Lusophone markets.

Portugal is ranked 25th in the World Bank’s ‘Ease of Doing Business’ report.

Benefits for UK businesses exporting to Portugal include:

  • entry route to Lusophone markets
  • English widely spoken and accepted as business language
  • same time zone as the UK
  • low cost flights to Lisbon, Oporto, Faro and Funchal
  • 25% of tourists visiting Portugal are from the UK
  • early adopter of new technologies

Strengths of the Portuguese market include:

  • one of the lowest operational costs in western Europe
  • competitively priced locations and facilities readily available
  • strong technology investment through hubs in local universities, particularly for healthcare and Information and Communications Technology (ICT)

Portugal means business

2. Challenges

Portugal is a member of the European Union (EU), and an old trading partner of the UK. It does not present major challenges to UK companies wishing to develop trade.

UK companies exporting to Portugal should consider the method of payment when negotiating contracts. Many Portuguese companies work on 90 to 120 days payment terms. This number can be longer for state or public administration payments.

3. Growth potential

3.1 Economic growth

After a difficult period, which included a 3-year bail-out programme, the Portuguese economy is now showing signs of recovery. This recovery results from a steady increase in domestic demand and a respectable export performance.

Portugal’s Gross Domestic Product (GDP) grew by 0.9% in 2014. Growth forecasts for 2015 and 2016 are 1.6% and 2% respectively.

The Portuguese government aims to strengthen its commercial links with markets in the Lusophone regions to boost the economy. Fiscal tightening will continue to guarantee the sustainability of public finances.

EU funds from the 2014 to 2020 multiannual financial framework will be mostly given over to competitiveness enhancing projects at firm level.

3.2 Privatisations

Portugal engaged in a EUR 5 billion privatisation programme as a result of the bailout agreement with the International Monetary Fund (IMF), European Central Bank (ECB) and EU. EUR 8 billion in contracts has been raised from privatisations of:

  • EDP (the power utility)
  • 40% of the national grid REN
  • the airports authority, ANA
  • CTT mail services
  • Viana do Castelo shipyard

The government is still finalising other contracts including:

  • TAP airline
  • Lisbon and Porto transport services
  • EMEF rail/rolling stock maintenance
  • CP rail freight transport

3.3 Future investment

The government is planning dozens of projects to be carried out by 2020. The biggest investment is planned for infrastructure, especially transport. Total investment is estimated at EUR 5.1 billion with over 61% coming from EU funding. Around 85% of funds are allocated to railways and ports:

  • EUR 2.8 billion into railways
  • EUR 1.5 billion into ports
  • EUR 800 million into roads and airports

The European Commission, under the ATLANTIS project is promoting the development of ‘Motorways of the Sea’. This aims to establish a network and develop ports in the Atlantic Corridor. Leixões port and its hinterland in the north west of Portugal includes the petrochemical industrial sites in Matosinhos and Estarreja. This offers opportunities for UK suppliers in the ports and other sectors, notably chemicals.

UK companies can benefit by:

  • participating in EU funded tenders
  • partnering with local companies

Contact the Senior Trade Adviser for more information on opportunities linked to privatisations and future projects.

3.4 Trade agreements

Portugal is a member of the EU, the World Trade Organisation (WTO) and other international bodies. Goods manufactured in the UK are exempt from import duties.

Contact the SOLVIT team if you have market access issues relating to the operation of the Single Market.

3.5 Platform into the Lusophone markets

Portuguese is one of the most widely spoken languages in the world, and the most spoken in the southern hemisphere. Historical ties, common language, and related legal systems make Portuguese speaking countries privileged trade and investment partners of Portugal.

Portugal has over EUR 5 billion in trade with Angola, its highest among the Portuguese speaking markets. More than 9,440 companies export to the country.

The best Portuguese companies are looking to grow through exports. They currently are delivering projects in a wide range of sectors in the Lusophone markets.

Identifying a Portuguese partner and choosing a route to these markets through Portugal offers:

  • added confidence to British companies
  • potential that goes way beyond Portugal’s borders

Portugal has bilateral investment promotion and protection agreements with Angola and Mozambique. It has a double taxation agreement with Brazil and is negotiating with Angola for a similar one.

Contact the Senior Trade Adviser for more information on opportunities in Lusophone markets.

4. UK and Portugal trade

Total UK exports to Portugal were EUR 3.1 billion in 2014, making it Portugal’s sixth largest supplier. This total included EUR 1.8 billion in goods and EUR 1.3 billion in services.

UK’s main goods exports were in the following sectors:

  • automotive
  • life sciences
  • information economy

Services exports were in travel, transport and other business services.

The UK is the fourth largest investor in Portugal after Netherlands, Spain and Luxembourg.

There are over 100 Portuguese investors in the UK. The top Portuguese economic groups have invested in a range of industries and sectors in the UK.

5. Opportunities for UK business in Portugal

DIT provides free international export sales leads from its worldwide network. Search for export opportunities.

Access high value public procurement notices via Tenders Electronic Daily (TED). TED contains all procurement notices above a certain threshold from the EU and European Economic Area (EEA).

All major public projects in Portugal are:

  • put out to tender
  • published in Diário da República, the Portuguese Official Government Gazette
  • usually published in the Portuguese language only

Reponses must also be in Portuguese so a local partner is usually required, unless a UK company is in a position to bid directly.

5.1 Innovative technologies

Many Portuguese companies are looking to buy or invest in technologies such as:

  • ICT / telecoms
  • smart cities
  • environmental
  • advanced engineering
  • retail (e-exporting)
  • life sciences
  • fintech
  • digital technology
  • agritech

Portugal can be an excellent test market for Small and Medium Sized Enterprises (SMEs).

Contact the Senior Trade Adviser for more information on opportunities in the agritech sector.

Contact the Senior Trade Adviser for more information on opportunities in the ICT, advanced engineering and life sciences sectors.

Contact the Senior Trade Adviser for more information on opportunities in the security sector.

Contact the Senior Trade Adviser for more information on opportunities in the smart cities and environment sector.

5.2 Experience economy

The Portuguese government focuses on the tourism sector as a national economic priority. The government, tourism stakeholders and private investors are making a major commitment to develop the visitor attraction sector.

Museums, heritage and theme and amusement parks are investing more and more to provide their visitors with new experiences. This includes both upgrades of existing attractions, and new attractions and shows. There is also an increase in the number of special events, concerts and exhibitions.

Currently there are projects around:

  • new museums
  • theme parks
  • attractions
  • the cruise industry
  • image and branding

Contact the Senior Trade Adviser for more information on opportunities in the creative industries sector.

6. Start-up considerations

You can approach the Portuguese market in several ways:

  • export directly
  • set up an agency
  • appoint a distributor
  • form a joint venture
  • manufacture under licence
  • acquire all or part of a Portuguese company

In the case of direct exports, you are advised to have a local representative either on a commission basis, or as an importer or distributor.

Portugal is a small market so personal acquaintances are important. Personal contact with potential and existing clients, and regular visits to the market are vital.

Many foreign companies choose joint venture partnerships and acquisition options when seeking a market share. The success in this form of relationship will depend on the nature of the product or service, and the level of domestic competition.

There are 2 ways to set up a company in Portugal:

  • ‘On the spot firm’ (Empresa na Hora) allows you to set up a company in several hours at one of the desks of ‘On the Spot Firm’ anywhere in Portugal
  • online (Empresa Online) allows you to set up a company online in 1 to 2 days

Trial periods of between 6 months and 1 year are recommended before signing lengthy agency contracts. Despite recent reforms, the legal system is still complex and slow.

Contact the DIT team in Portugal to help find tax and legal advisers before entering into agreements.

7.1 Standards and technical regulations

Products and packaging should meet EU standards.

The Food and Economic Security Authority (Autoridade de Segurança Alimentar e Económica) is the authority specialised in securing food safety and for conducting inspections.

When exporting to Portugal, you must provide all transport documents, commercial invoices, and certificates of compliance relating to quality and sanitary measures.

7.2 Intellectual property (IP)

Trademarks, designs, patents and copyright are the principal forms of IP protection available to companies and individuals.

IP law, especially for patent protection, is not totally harmonised within the EU.

If you wish to protect your invention, design or sign in Portugal, you have to do it through Portuguese Institute of Industrial Property (INPI).

Other Intellectual Protection (IPR) bodies with authority in Portugal are:

8. Tax and customs considerations

Portugal and the UK have a double taxation agreement which limits taxation for companies with a presence in both jurisdictions.

The Portuguese Ministry of Finance provides information on the Portuguese tax system and the conventions for the avoidance of double taxation.

8.1 Value Added Tax (VAT)

VAT is known as IVA in Portugal and the standard rate is currently 23%. Rates of 6% and 13% can also apply.

The VAT rate for goods imported into Madeira and the Azores are 22% and 16% respectively.

The Portuguese VAT Division provides further information on VAT payments.

Check with HM Revenue and Customs (HMRC) regarding VAT refund of business expenses incurred in Portugal.

8.2 Income and corporate taxes

The statutory corporate income tax rate for Portugal is 25%. The effective corporate tax rate is 29.5% to 31.5%.

8.3 Customs

The internal market of the EU is a single market which allows the free movement of goods and services. Therefore, no import duties are applicable.

The tax and customs authority in Portugal is Autoridade Tributária e Aduaneira.

9. Entry requirements

You only need a valid passport or other acceptable travel document in order to visit Portugal.

9.1 Travel advice

If you are travelling to Portugal for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand.

10. Contacts

Contact the DIT team in Portugal for more information and advice on opportunities for doing business in Portugal.