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Subsidiary vs. Branch in Portugal

Subsidiary vs. Branch in Portugal

Updated on Wednesday 26th July 2017

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Subsidiary-vs-Branch-in-Portugal.jpgInvestors who want to open a permanent establishment can choose between a branch and a subsidiary in Portugal. The main difference between the two business forms is their level of independence from the parent foreign company. 
 
The decision to open a subsidiary or a branch can depend on a number of factors such as the operations the company will undertake in Portugal, the available capital at the time of the incorporation as well as other business particularities.
 
One of our lawyers in Portugal is able to provide you with detailed information on the business options and the legislation for foreign investments.
 

The branch in Portugal

 
The Portuguese branch is essentially an extension of the parent company. It is a non-resident business without a separate legal personality in Portugal. The branch can only perform the same activities as the parent company and must share a common name. The foreign company controls its management.
 
An advantage of the branch is that it requires no minimum share capital at the time of the incorporation. However, the parent company will be fully liable for its debts and obligations in Portugal.
 
The branch is subject to taxation in Portugal: it pays the corporate income tax on profits derived from the country and VAT on sales.
 
The registration of the branch in Portugal is performed by means of a resolution from the parent company. One of our attorneys in Portugal can give you more information about this step.
 

The subsidiary in Portugal

 
The subsidiary is a separate legal form from its parent company abroad. It is a resident Portuguese company, most commonly a private limited liability company. The subsidiary is completely independent of the mother company. The connection between the two corporate entities is reflected in the shares ownership.
 
The limited liability company is registered with the Portuguese Commercial Registry. There are no mandatory minimum capital requirements for this type of company in Portugal; however, it must have at least two shareholders who will each deposit a quota of at least one euro.
 
For more information on company registration and the options for foreign investors please contact the experts at our law firm in Portugal.

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