Portugal has become a prime destination for entrepreneurs and investors looking to start a business in Europe, thanks to its strategic location, favorable tax environment, and streamlined company formation process. However, choosing the right legal structure is a critical first step that impacts everything from liability and taxation to investment potential and day-to-day operations. Whether you're launching a startup, managing investments, or expanding an international company, understanding the different types of companies available in Portugal will help you make the right decision from the outset.

1. Private Limited Liability Company (Sociedade por Quotas – LDA)

The LDA is the most popular and versatile company type in Portugal. It is a separate legal entity that protects shareholders’ personal assets and is ideal for small to medium-sized businesses. It’s easy to set up, cost-effective, and accessible to both local and foreign entrepreneurs.

Key Features:

• Minimum share capital: €1 per shareholder

• Requires at least 1 shareholder (individual or company)

• Liability limited to capital invested

• Requires certified accountant

• Annual financial reporting obligations

Best for: Startups, freelancers forming companies, small to mid-sized businesses, foreign investors.

2. Single-Member Limited Liability Company (Sociedade Unipessoal por Quotas – Unipessoal LDA)

A Unipessoal LDA is a subtype of the LDA but owned by a single shareholder. It offers the same benefits and legal protections, making it perfect for solo entrepreneurs who want limited liability and a formal company structure.

Key Features:

• One-person ownership

• Limited liability

• Same rules and tax obligations as LDA

• Requires certified accountant

Best for: Solo entrepreneurs, freelancers, consultants looking to protect personal assets.

3. Public Limited Company (Sociedade Anónima – SA)

The SA is designed for larger-scale companies and those seeking investment through the issuance of shares. It requires a higher capital investment and more complex governance but offers strong credibility and expansion potential.

Key Features:

• Minimum share capital: €50,000

• Requires at least 5 shareholders

• Shares can be traded publicly

• Requires a board of directors

• Annual audit mandatory

Best for: Large corporations, investment firms, businesses seeking public or private funding.

4. Sole Proprietorship (Empresário em Nome Individual – ENI)

The ENI is the simplest form of business in Portugal. It’s a non-incorporated entity owned by one individual who is personally liable for the business’s debts and obligations. It is fast to set up and has low operational costs.

Key Features:

• Owned and managed by one individual

• No minimum capital required

• Unlimited personal liability

• Simplified accounting rules

Best for: Freelancers, tradespeople, professionals testing a business idea with low risk.

5. Branch of a Foreign Company (Sucursal)

A branch allows a foreign company to operate in Portugal without incorporating a separate legal entity. It is subject to local laws but remains legally tied to its parent company. This is a common choice for international businesses expanding to Portugal.

Key Features:

• Not a separate legal entity

• Must appoint a Portuguese representative

• Requires registration with the Commercial Registry

• Subject to Portuguese taxation and labor laws

Best for: Multinational companies expanding into the Portuguese or EU market.

6. Holding Company (Sociedade Gestora de Participações Sociais – SGPS)

The SGPS is a special type of company created solely to hold and manage shares in other companies. It does not engage in commercial activity directly but benefits from favorable tax conditions under certain circumstances.

Key Features:

• Exists to manage shareholdings in other companies

• Cannot conduct commercial or operational business

• May benefit from tax exemptions on dividends and capital gains

• Requires proper structure and accounting oversight

Best for: Investors, corporate groups, or entrepreneurs managing multiple business interests in Portugal and beyond.

Final Thoughts
Choosing the right company type in Portugal depends on your business goals, risk tolerance, and long-term vision. For most small to medium ventures, the LDA or Unipessoal LDA is the best starting point. Larger firms or investors may benefit from setting up a SA, Branch, or SGPS.

For expert help setting up and managing your business in Portugal, FreeAcing offers tailored support in Company Creation, Accounting, Administration, and HR.