There are special reasons that make Portugal the natural destination of many international citizens, either to live or to establish business.
Security, the weather, the food and market opportunities create the conditions for foreigners to become residents, nationals and entrepreneurs in this beautiful country.
Portugal is a latin country and this historical fact contributes to an undesirable amount of bureaucracy.
In the last 20 years, the Portuguese authorities made substantial efforts towards the simplicity of procedures. New law and new IT tools allowed to speed up the incorporation of companies and to improve their operations.
Before becoming a lawyer, I used to work in the IT business. When I started to study law, I went deep into the theoretical mechanisms that bind the Portuguese economy. Law exists to solve problems and so does IT. I thought on making things easy for my organisations, based on these systems. Had two jobs and studied at night. Loved it. Some things wouldn’t work and most of the times that happened because the solution on the book or in the law was made for a society that no longer existed. Test/error results and success fused are called knowledge.
While studying the Law of Administrative Efficiency (Lei da Modernização Administrativa, in force since 1999), I learned that the national authorities were forced to accept applications by e-mail, the same way they were accepting it in paper. That said, according to the Portuguese law, there is hardly the need to go to a public department, namely to the Finanças (Tax authority) to the Segurança Social (Social Security authority), to SEF (Border Control authority) etc., excluding the legally mandatory acts to be done before a public officer.
Around the year 2014, I remember sending a written defence by e-mail to the Road Traffic authority and getting a funny answer, saying that I would need to post the physical documents. I replied saying that, according to the law, since 1999, I didn’t need to. The defence was accepted. Was I the first one to do it? I’ll never know, but I do know that it was not common practice. Like that, there are lots of other useful tools there to be used. I don’t remember the last time I posted a letter.
The system called Empresa na Hora (Company Incorporation in One Hour) was quite a rupture with the old system. Portugal has one of the fastest systems in the world to incorporate a company and have it ready to trade. It needs to be done properly though, otherwise it may become a nightmare. Lawyers can prevent a lot of frustration on this matter. After the approval, there are legal obligations to fulfil as well. Nowadays, pretty much all the Portuguese authorities provide a digital platform.
How can we improve even more
There are some simple steps that can successfully improve the productivity of the national companies.
The company director doesn’t need to know how to read complex accountancy reports, but he sure does need to know in real time the costs and the revenue of the company, as well as some results such as profit, profit margin and tax to pay. Otherwise, there will be surprises at the end of the year. This can be done the old way by calling the accountant, or the new way, by using software. I always preferred custom made software. It takes a bit longer to implement, but it comes out with better results. It is the same as buying an off-the-rack suit or a custom-made suit. The last one will always fit better. All the money the company spends on these applications will have an enormous return.
Basic Portuguese accounting training
The company director must have sufficient knowledge about the accountancy rules in force, so they can decide about expenses, investment opportunities and tax advantages. A lot of saving comes out of this awareness, like the CRÉDITO FISCAL EXTRAORDINÁRIO AO INVESTIMENTO 2 in force, which will allow a 20% corporate tax credit based on the amount of operational assets purchased between 1st of July of 2020 and 30th June 2021. This may represent a few years without paying corporate tax. But without requesting it at the end of this year, the opportunity is lost.
Basic training on legal obligations
The beneficial owner registration, complaints book, the mandatory acts registration and other legal demands will come with penalties, if not addressed correctly.
Human resources recruitment
Machines can only optimize human work. Before hiring it is essential to understand if the candidate shares the same vision. The most advanced techniques of the business and management science will only work where there is a collective mindset. If employees frequently come and go, efficiency is lost.
Management software and photo professional scanners combined are one of the ways to convert your phone into your office. If you can’t process and control the information you have to deal, there is a big problem in the company.
I’ve been applying these principles and techniques for the last 20 years and it has been as challenging as rewarding. SUBPRIME and COVID-19 showed us how close we are to the dinosaurs, if we can use the analogy towards this sick economy.
One thing I know: Entrepreneurs will never quit!
AG INTERNATIONAL | Law Firm
Corporate Lawyer | Business Intelligence & Tax Management
Published on The Portugal News on the 18th June 2021