Foreign Direct Investment in Portugal

Overview by

FDI in Figures

After several years of steady growth, the flow of foreign direct investments (FDI) started to decline since 2007, and they contracted more due to the global recession in 2009. Despite a slight recovery in 2010, foreign investments have decreased since the beginning of 2011, following the deterioration of public accounts. Investors fear a scenario similar to that of Greece.

The FDI in Portugal is considered as a priority to the government. The country has recently embarked on the development of renewable energies, specifically solar energy (the country has the second largest solar power station in the world) and wave energy (obtained from wave movements), sectors that could provide new opportunities to foreign investors. Portugal offers a diversified economy and benefits from its membership to the European Union; however, the bureaucratic and legal burdens can be a hindrance to FDI.


Country Comparison For the Protection of Investors

  Portugal OECD United States Germany
Index of Transaction Transparency* 6.0 6.0 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 7.0 6.8 9.0 5.0
Index of Investor Protection**** 6.0 6.0 8.3 5.0

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment 2007 2008 2009
FDI Inward Flow (million USD) 3,055 4,665 2,871
FDI Stock (million USD) 115,314 99,970 111,272
Performance Index*, Ranking on 141 Economies 126 106 106
Potential Index**, Ranking on 141 Economies 50 51 -
Number of Greenfield Investments*** 81 80 55
FDI Inwards (in % of GFCF****) 6.3 8.8 35.1
FDI Stock (in % of GDP) 51.7 41.0 48.9

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Portugal

Strong Points
Portugal's strong points are:
- The low labor costs;
- Its geographical situation. Portugal act as a bridge between 3 continents: Europe, Africa, America;
- its temperate climate;
- its socio-political stability and the non-existence of terrorism; and
- the stability of its currency.
You can consult the Ministry of the Economy website.
Weak Points
Portugal's weak points are its weak demography and a certain rigidity in the labor law.
Government Measures to Motivate or Restrict FDI
Government policies have followed the priority established by the Prime Minister, to promote the country's appeal to foreign investors. In order to do this, simple taxation procedures have been put in place, effective warehousing and transport logistics have been set up (especially the Sines terminal in the South-West of the country), as well as improvements in telecommunication infrastructures, etc. An agency for investment and foreign trade has been established: the AICEP.
Other measures have been implemented, including making the labor law more lenient in order to increase the workforce flexibility, and setting up a special aid regime for large projects (over 25 million EUR).
Bilateral Investment Conventions Signed By Portugal
Portugal has signed bilateral agreements with almost fifty countries (not including the EU).
To see the list of countries, click here.
To see the conventions, click here.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
Portuguese law allows a taking up of the capital or the acquisition of a Portuguese company up to 10% or more.
Obligation to Declare
Foreign investors may carry out all types of activities in the same conditions as a local investor. Foreign investment in Portugal is, on principle, free of all administrative control. The only formality that the foreign investor must comply with is registration, for statistical reasons, within 30 days of the investment.
Finally, investment projects "presenting a particular interest for the Portuguese economy" (projects over 4.9 million euros, especially those creating jobs, allowing industrial reconversion, ensuring the development of a priority region, or introducing new technologies) are subject to a particular procedure managed by the Institute for Investment, Trade and Tourism in a restructured Portugal "AICEP".
The agency for the promotion of foreign investment in the country can provide information about the authorizations necessary for setting up.
Competent Organization For the Declaration
Requests For Specific Authorizations
There are no restrictions on foreign investment in Portugal, but only an analysis of the legality of the project (applicable also to any project of national capital).
Consult the Guide for investors.
Find Investment Service Providers in Portugal on

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Investment Opportunities

Investment Aid Agency
Institute for support for SMEs and investment (IAPMEI)
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Portugal
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide
Other Useful Resources
Portuguese Tourist Institute

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