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In recent years, Portugal has been welcoming anyone looking to set up a new business in a booming location that is full of opportunity, and hand-crafted gelato is just one example of a sector that is increasingly gaining momentum in the country.
Often regarded as the best European destination to live in, Portugal is a prime location for doing business, thanks in part to the incentives and opportunities it offers to foreigners.
For the past few years, it has experienced steady economic growth and a continuous rise in GDP, implementing a series of economic measures to attract foreign investors. In 2017, Portugal emerged from the infringement procedure imposed by the European Union for excessive deficit, and subsequently GDP grew by 2.6%, while unemployment stabilised at 8.5%.
Tax breaks and incentives
In addition to these issues, Portugal also provides tax breaks and incentives for start-ups, making conscious use of European funds earmarked specifically for attracting investors and entrepreneurs. If we add up all of the tax incentives and various funds available, we reach a figure of up to 26% support on the investment made.
The corporate income tax (IRC) rate is 17% for incomes of up to 15,000 euro and 23% above that, which is significantly lower taxation than in Italy, while VAT, in the restaurant business, stands at 13%.
Also of great importance is the trade agreement between Italy and Portugal, which, in order to avoid double taxation for anyone who transfers their tax residence to Portugal, allows them to obtain the status of a non-habitual resident and to tax only income received on Portuguese soil at a flat rate of 25%.
A foreign entrepreneur can get Portuguese citizenship after five years; to open a business, you have to apply for a residence permit and a visa for immigrant entrepreneurs, called the D2, and submit a detailed business plan with the administrative paperwork to a Portuguese Consulate in Italy.
Location and raw materials
However, as with any business idea, opening a gelato parlour in Portugal requires you to make a series of evaluations. First comes the question of where to open the new business, bearing in mind that there is a constant and ever-increasing flow of tourists to many cities in the region.
Next, you will need to open a gelato parlour that will come up with something new compared to the traditional ones already operating in the area: that means an innovative and appealing design, unique gelato flavours, high quality ingredients, and many other touches that help ensure it is seen as unique and innovative, even in a saturated environment.
Bureaucratic aspects and costs
Once the location has been chosen, you will have to deal with the bureaucratic aspects, which are very similar to Italian procedures. For tax, legal, social security, bureaucratic, administrative and commercial advice, you can turn to an accountant and a lawyer who operate on an international basis or request a Portuguese intermediary known as a "dispatcher": the Italian Chamber of Commerce in Portugal will be able to assist you in finding good consultants.
In addition to defining which legal status your business should take – Portugal has two types of companies: either sole proprietorships or else companies which can have unlimited, partially limited or limited liability – you will need to take several steps, such as:
- Choosing a business name and registration: registering the business name with the DGRN costs a total of about 100 euros and takes a maximum of 15 working days
- Compulsory company registration, available on the Ministry of the Interior website (which will set you back about 300 euro). You will need to submit your documents, i.e. identity card and tax code, to Empresa Na Hora, which will then register your company
- Registration of the company and employees with the social security department: to be carried out no later than 10 days after notification of start of business at the tax office. Companies with premises open to the general public must obtain an authorisation from the Ministry of Employment
- Cash payment to bank account: to be made within 5 working days of company registration
- Notification to the employment institution of such details as working hours, place of work, etc.
- Registration of company books with the tax office
- Registration of any shareholders
- Coverage under private insurance policies for any occupational accidents that the public social security system does not provide
In order to take these steps and move on to the next, you will need the company's articles of incorporation, the share capital deposit, certificate of eligibility, NIF - Portuguese tax identification number, company registration, social security registration, declaration of commencement of business, and the NIB bank number.
In addition to dealing with all of these bureaucratic issues, it will also be crucial to calculate all the costs involved in setting up and maintaining the business, such as:
- the cost of registering a business, ranging from 300 to 360 euros
- the share capital to deposit
- payments to accounting and legal consultants
- monthly taxes
- municipal tax and VAT
- rental of offices or premises and utility costs
- the various insurance policies
- employees' salaries if you have any
- the issuing of visas for immigrant entrepreneurs costing a few thousand euros
- advertising and publicity costs
However, it is important to bear in mind that while opening a business in Portugal has advantages, that does not mean it is all easy, so it is crucial to make informed choices, weigh up the risks involved, and only then set off on a new adventure in a land filled with so much to discover!
Significant progress in terms of development, not only in tourism but above all in trade, looks set to make this one of the fastest growing European nations in the near future.
In short, opening a gelato parlour in Portugal is a potentially sound and lucrative business venture: tourism on the rise, highly favourable market conditions, a streamlined bureaucracy and a healthy economy make this an excellent place to build and grow your business!
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