Executive Summary
The Portuguese Republic is located on the Iberian Peninsula on the South-Western Europe. The Atlantic Ocean is to the West and South of Portugal, while Spain is located to the North and East from the country. Azores and Madeira are a part of Portugal, but have a relatively high level of autonomy. Portugal covers a total area of 92, 345 sq km. Lisbon is the capital of Portugal; Portuguese is its official language. Mirandese is a recognized regional language used on the territory of the country. The Major part of the country’s population follows the Roman Catholic religion.

Portugal is a democratic republic headed by the President. Legislative power belongs to the parliament – Assembly of the Republic, executive power is in the hands of the government headed by the Prime Minister.

Portugal has a diversified developed economy based on services and industry. It is no longer specialized only in producing textiles, clothes, shoes, wood products and beverages, it also is an important producer of software and automobiles. The country exports a significant part of its products. Its services sector, mainly tourism, is a rapidly developing economic segment. Agriculture and fishing industry bring only approximately 4% to the GDP. It has a high quality of life rate, but has a relatively low purchasing power in comparison to other Western European countries.

The Euro is the currency used on the territory of Portugal.

Portugal has a diversified landscape – it has large plains and mountains, some territories are of a volcanic origin and have active volcanoes. Serra de Estrela is the highest point of the mainland of Portugal, rising at 1,993 metres above the sea level. The country has many forests on its territory as well, which are home to a big diversity of animal species. It also possesses a big number of freshwater and marine fish species.

Portugal has a Mediterranean climate, the temperature may vary in different zones of the country during the year, but Portugal is one of the warmest countries of Europe.

Map, Flag and Coat of Arm

Types of Company

Please see Madeira types of company, as all the companies incorporated there are Portuguese companies governed by Portuguese law. Thos companies which are licensed to operate under Madeira Free Trade Zone legislation benefit from significant tax concessions, other companies which operate under a standard Portuguese legislation are applied with normal taxes.

Tax year of Portugal starts on 1st January and ends on 31st December, thus coinciding with a calendar year.

Generally, a person who spends at least 183 days in Portugal is considered to be a resident there and is liable to pay taxes in the country on his world-wide income. Non-residents are liable to pay income tax only on profits deriving from activities conducted or assets held within the territory of Portugal. Income tax has a scalable nature and is taxed at varying rates, starting from 10.5% and reaching a maximum of 42%. Employers and employees are liable to pay social security contributions. Gifts and inheritance taxes are levied.

Corporation tax is levied at a rate of 25%, and capital gains are taxed as corporate income. Capital transfer tax on purchase of a real estate property is generally taxed at rates ranging between 8%-10%. The standard VAT rate is 21%. Withholding taxes are payable at different rates on various occasions.

Companies registered and licensed under the Free Trade Zone have significant tax incentives and exemptions.

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