Portugal: liberalization of the eco-system  

Nuno Nogueira Pinto explores initiatives to simplify setting up a company or business activity in Portugal

Since Portugal's Zero Licensing initiative came into effect in 2011, the nation has seen further improvements that have facilitated and streamlined the formation of enterprises and corporations. The reforms have aimed to make the country more competitive and attractive to foreign investors while also reducing bureaucracy and increasing economic activity.

It would simplify the approach for business owners and entrepreneurs wishing to launch a venture in Portugal by cutting down on red tape and instead placing focus on adhering to the legal and regulatory requirements specific to each industry. Additionally, it would speed up the approval procedure from government bodies like city councils or regulators, granting more freedom to aspiring businesspeople inside or outside of the nation.

While the Zero Licensing program played a significant role in Portugal's economic eco-modernization, its implementation coincided with similar developments. One of the changes was the Simplex program, which was originally introduced in 2006 and was intended to enhance the Portuguese Public Administration's response capacity, minimize red tape, lower context costs for businesses, and leverage IT to provide better services. Despite this overhaul, it also aimed to defend consumer safety and business security.

As a result, these steps have been designed to speed up the formation of new businesses, the merger of existing ones, or the simplification of industrial operations. Entrepreneurs have also gained access to a wider information system during the past ten years, allowing them to file permission applications electronically and keep track of costs, regulations, and deadlines related to the activity they wish to launch.

Mechanisms for the dematerialization of the registration of industrial and real estate property as well as the concentration of compliance with corporate information responsibilities were developed concurrently. According to the World Bank, these reforms have made Portugal one of the nations with the quickest processes for registering the ownership of real estate.

We have seen reductions in administrative costs on citizens and businesses as a result of the elimination of licenses, authorisations, inspections, and previous conditions for certain activities within this broader environment of the Zero Licensing initiative. These have been replaced by organized a posteriori inspections and regulations, as well as a system of liability for businesses and entrepreneurs.

Business simplification

The Zero Licensing initiative enables businesses to take advantage of a streamlined process for the construction and renovation of commercial establishments as well as the expansion of a wide range of operations. A straightforward communication process through an electronic one-stop shop called the Balcão do Empreendedor (Entrepreneur's Desk) replaced the administrative authorization that was previously necessary for these business premises and activities.

For various business activities, there is no longer a need to contact each of the several interlocutors separately to obtain approval for various items connected to the exercise of the intended activity because all interactions between businesses and the relevant authorities are now handled electronically at this one-stop shop.

The one-stop shop serves as the company's point of contact with the government and municipalities. Therefore, the company just communicates on the one-stop shop, saving time and effort that can be spent on the business' plan and development, rather than waiting for the licenses to open the commercial premises or to start doing business.

Additionally, this one-stop shop offers businesses essential data they need to run their operations and understand their commitments. This information includes the relevant laws and regulations, the relevant criteria and requirements, the dates for each procedure, the required documents, the cost and validity of the service, and the contacts of the responsible bodies, including those at the local level.

When the regulator or the City Council levies a fee, it is important to authenticate and pay in order to complete the communication procedure. A reference is given for a payment that needs to be made in no more than five days.

If no fees are charged for the activity, the business may start operating after the period provided for by the law has elapsed (that is, upon tacit approval obtained from the competent authorities).

Compliance

An organisation that works within the Zero Licensing regime must assume responsibility for adhering to all regulations and making sure that its business is prepared and in compliance before it begins operations.

If the relevant authorities do not object, the company is given tacit approval to begin operations. The information is registered and shared with the appropriate authorities, specifically for the sake of later supervision and inspection, after being sent through the aforementioned one-stop shop procedure.

For those who want to run a business in Portugal, the Zero Licensing initiative and the one-stop shop's straightforward communication process have proven to be helpful resources. The decision to begin an activity or launch a business is not contingent on the express approval of regulators or City Councils, either because they combine all the services required for getting authorisation and commencing the activity in a single location.

However, it is imperative that the business makes sure it is properly adhering to all applicable legal and regulatory duties because the fines and sanctions are harsh, could result in the closure of the business and prohibition of carrying out its commercial activities.

Despite these possible pitfalls, it is also important to note that setting up a company in Portugal is a simple, inexpensive, and fast process. If all legal conditions are satisfied, it is feasible to form a business quickly and start expanding its operational activities.

To speed up the procedure even more, choosing a business name from a list of pre-approved company names provided by the registrar services is an option. You may also adopt pre-approved articles of association after making the necessary adaptions to the company that will be formed and its activities.

Additionally, the required share capital to be invested in the company can be as low as one euro. Although in some circumstances the managers or directors of the company may respond personally, as was the case, for example, in cases of obligations to the Tax Authority or the Social Security, or in cases of insolvency fraud, limited liability firms preserve the personal domain of the shareholders. Additionally, it is possible to complete almost all commercial registrations related to a company's activity online and save 15 per cent on registration fees. These registrations might involve the appointment or dismissal of members of governing bodies like managers or directors, amendments to the articles of association, or the assignment of shares.

Nuno Nogueira Pinto is a lawyer at Espanha Associados in Lisbon, Portugal espanhaassociados.pt