Investment Climate Statements for 2016 - Portugal

Executive Summary

Portugal emerged from an extended economic crisis and successfully completed its European Union-IMF bailout program in 2014, registering moderate growth for 2014 and 2015 and decreasing, but still high, unemployment. The structural reforms implemented since 2011 have created an economic and regulatory climate that is favorable to foreign investment. Corporate taxes and unit labor costs have decreased, while new investment incentives have been established. The government has also taken important steps toward improving the efficiency of its judicial system, creating two specialized courts (for intellectual property and competition) and streamlining court districts and the Code of Civil Procedure.

Portugal’s economy is tightly coupled to the European Union (EU). Fellow EU member states remain Portugal’s biggest trading partners and its largest investors. Portugal complies with EU law for equal treatment of foreign and domestic investors. Outside of Europe, Portugal maintains significant links with former colonies Brazil, Angola, and Mozambique.

The European Central Bank (ECB) acts as central bank for the euro (€) and determines monetary policy for the 19 Eurozone member states, including Portugal. Portugal’s banking sector has faced a number of challenges over the past several years, including costly central bank-led restructuring of Banco Espirito Santo (succeeded by Novo Banco) in 2014 and Banif in 2015.

Following national legislative elections, a center-left Socialist government formed a minority government that has publicly promoted the importance of foreign investment and has projected an image of economic stability. However, recent events have generated negative press on the direction of the country’s investment climate. In one of its first actions, the Socialist government cancelled planned urban transportation concessions granted to British, Spanish, and French firms in the country’s two most populous cities, Lisbon and Porto. The current government also re-visited the privatization of the national airline TAP, completed under the previous administration. The parties eventually negotiated a deal to reduce the private purchaser’s stake in the company to a minority share with management control.

Actions of other government institutions have also raised questions regarding the country’s attitude toward foreign investment. In December 2015, the independent Bank of Portugal conducted a selective bail-in of certain bond issues of Novo Banco, imposing almost €2 billion in losses on mostly foreign investors, including several large U.S. investment funds. Fourteen international asset management firms affected by the decision filed suit in Portuguese courts in April 2016. Finally, in early 2016 Portugal’s newly elected president publicly expressed concerns against the alleged intensified foreign ownership of the country’s financial sector, which was broadly interpreted as an allusion to Spanish and Angolan controlling interests in several banks and reported Spanish interest in acquiring Novo Banco.

Table 1



Index or Rank

Website Address

TI Corruption Perceptions Index


31 of 175

World Bank’s Doing Business Report “Ease of Doing Business”


23 of 189

Global Innovation Index


30 of 143

U.S. FDI in partner country ($M USD, stock positions)



World Bank GNI per capita



1. Openness To, and Restrictions Upon, Foreign Investment

Attitude toward Foreign Direct Investment

The Government of Portugal recognizes the value of foreign investment and sees such investment as an important engine of economic growth. The country exited its three-year EU-IMF bailout program in May 2014, and has successfully regained access to international bond markets with yields approaching historic lows.

Other Investment Policy Reviews

Portugal has not undergone an OECD or UNCTAD Investment Policy Review in the last ten years. Current investment climate snapshots are available through the Economist Intelligence Unit and the World Bank’s Doing Business Report.

Laws/Regulations on Foreign Direct Investment

The Bank of Portugal (Portugal’s central bank) defines FDI as “an act or contract that obtains or increases enduring economic links with an existing Portuguese institution or one to be formed.” A non-resident who invests in at least 10% of a resident company’s equity and participates in the company’s decision-making is considered a foreign direct investor. The Portuguese legal system is based on non-discrimination with regard to the national origin of investment, and foreigners are generally permitted to invest in all economic sectors open to private enterprise, subject to a few exceptions (see below).

Business Registration

Citizens, Portuguese or otherwise, can register a business in person at one of 214 offices of the government’s “Empresa na Hora” registration service. More information is available at: Businesses can also be registered online through the “Citizen’s Portal” available at: A company must typically register with the Directorate General for Economic Activity (DGAE), with the Tax Authority (AT), and with Social Security. The online registration process can take as little as one to two days.

In line with the EU, Portugal defines an enterprise as micro, small, and medium-sized based on its headcount, annual turnover, or the size of its balance sheet. To qualify as a micro-enterprise, a company must have less than 10 employees and no more than €2 million in revenues or €2 million in assets. Small enterprises must have less than 50 employees and no more than €10 million in revenues or €10 million in assets. Medium-sized enterprises must have less than 250 employees and no more than €50 million in revenues or €43 million in assets. The SME Support Institute (IAPMEI) offers financing, training, and other services for SMEs based in Portugal:

More information on laws, procedures, registration requirements, and investment incentives for foreign investors in Portugal is available here, at AICEP’s website:

Industrial Promotion

The Portuguese Agency for Foreign Investment and Commerce (AICEP) is the lead agency for promotion of trade and investment. AICEP is responsible for the promotion of global Portuguese trademarks, the export of goods and services, and attraction of foreign direct investment (FDI). It is the point of contact for investors with projects of more than €25 million or companies with a consolidated turnover of more than €75 million. For foreign investments not meeting these thresholds, AICEP will make a preliminary analysis and direct the investor to assistance agencies such as the Institute of Support to Small- and Medium Sized Enterprises and Innovation (IAPMEI), a public agency within the Ministry of Economy that provides technical support, or to AICEP Capital Global, which offers technology transfer, incubator programs and venture capital support.

AICEP does not favor specific sectors for investment promotion. It does, however, provide a “Prominent Clusters” guide on its website where it advocates investment in Portuguese companies by sector:

Limits on Foreign Control and Right to Private Ownership and Establishment

Portuguese law is based on a principle of non-discrimination. There are no requirements for mandatory Portuguese shareholders and no limitations on the repatriation of profits or dividends. Nonetheless, shareholders that are not resident in Portugal must obtain a Portuguese taxpayer number for tax purposes. EU residents may obtain this number directly with the tax administration (in person or by means of an appointed proxy); non-EU residents must appoint a Portuguese resident representative to handle matters with tax authorities.

The rules that apply to foreign investors are the same that rule national investment; foreign investment is not subject to any special registration or notification to any authority (without prejudice of mandatory registration obligations or compliance with regulatory obligations in specific activities).

However, there are limitations on both foreign and domestic investments with regard to certain economic activities. Portuguese government approval is required in the following strategic sectors: defense, water management, public telecommunications, railway, maritime transportation and air transport. Any economic activity that involves the exercise of public authority also requires government approval. Private sector companies can operate in these areas only through a concession contract.

Portugal limits foreign investment with respect to the production, transmission, and distribution of electricity, the manufacturing of gas, the pipeline transportation of fuels, wholesale services of electricity, retailing services of electricity and non-bottled gas, and services incidental to electricity and natural gas distribution. Any concessions for electricity and gas sectors are assigned only to limited companies with their headquarters and effective management in Portugal.

Portugal limits foreign investment in the provision of executive search services, placement services of office support personnel, and publicly-funded social services.

Investors wishing to establish new credit institutions or finance companies, acquire a controlling interest in such financial firms, and/or establish a subsidiary must have authorization from the Bank of Portugal (for EU firms) or the Ministry of Finance (for non- EU firms). In both cases, the authorities carefully consider the proposed transaction, but in the case of non-EU firms, the Ministry of Finance especially considers the impact on the efficiency of the financial system and the internationalization of the economy. Non- EU insurance companies seeking to establish an agency in Portugal must post a special deposit and financial guarantee and must have been authorized for such activity by the Ministry of Finance for at least five years.

Privatization Program

Portugal launched an aggressive privatization program in 2011 as part of its EU-IMF bailout, covering state-owned enterprises in the air transportation, land transportation, energy, communications, and insurance sectors.

The bidding process has been public, transparent, and non-discriminatory to foreign investors. Indeed, foreign companies have been among the most successful bidders since the beginning of the program. Chinese, Omani, and French companies have purchased large stakes in Portugal’s electricity utility (EDP), its electricity and natural gas grid operator (REN), its airport operator (ANA), and the insurance arm of the state-owned bank (Caixa Seguros). In addition, Portugal’s postal service (CTT) sold 70% of its shares to public investors on the Lisbon stock exchange in 2013. Most recently, the government sold a 66% stake in the national airline, TAP, in November 2015. However, the incoming government renegotiated the sale in February 2016, reducing the purchaser’s stake to 45% of capital, though with continued management control.

Screening of FDI

The government of Portugal does not screen, review, or approve foreign direct investments.

Competition Law

Law No. 18/2003, dated June 6, governs protection and promotion of competition in Portugal. It specifically prohibits collusion between companies to fix prices, limit supplies, share markets or sources of supply, discriminate in transactions, or force unrelated obligations on other parties. Similar prohibitions apply to any company or group with a dominant market position. The law also requires prior government notification of mergers or acquisitions that would give a company more than 30% market share in a sector, or mergers or acquisitions among entities that had total sales in excess of €150 million in the preceding financial year. The Competition Authority has 60 days to determine if the merger or acquisition can proceed. The European Commission may claim authority on cross-border competition issues or those involving entities large enough to have a significant EU market share.

2. Conversion and Transfer Policies

Foreign Exchange

Portugal is a member of the Eurozone and uses the euro. Portugal does not have exchange controls and there are no restrictions on the import or export of capital. Any party that transfers €10,000 or more outside of the country in foreign banknotes, gold, travelers’ checks, or bearer securities must declare it to the Portuguese customs authorities.

The Eurozone has a freely floating exchange rate.

Remittance Policies

There are no limitations on the repatriation of profits or dividends.

3. Expropriation and Compensation

Under Portugal’s Expropriation Code, the government may expropriate property and its associated rights if it is deemed to support the public interest, and upon payment of just compensation. The code outlines criteria for calculating fair compensation based on market values. The decision to expropriate as well as the fairness of compensation can be challenged in national courts.

In 2005, the Portuguese Parliament passed a Water Resources Law that required owners of properties bordering coasts, rivers, and reservoirs to present evidence of private ownership dating to at least 1864 by a deadline of January 2014, or otherwise face government seizure of the land. The law elicited public protests from property owners, including many British expatriates, which in turn pressed Parliament in May 2014 to establish broad exemptions and eliminate the deadline for presentation of evidence of ownership. To date, there have been no public cases of expropriation of such properties.

There have been no other cases of expropriation of foreign assets or companies in Portugal in recent history.

4. Dispute Settlement

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

The Portuguese legal system is a civil law system, based on Roman Law. The hierarchy among various sources of law is as follows: (i) Constitutional laws and amendments; (ii) the rules and principles of general or common international law and international agreements; (iii) ordinary laws enacted by the Parliament; (iv) instruments having an effect equivalent to that of laws, including approved international conventions or decisions of the Constitutional Court; (v) regulations used to supplement and implement laws. The country’s Commercial Company Law and Civil Code define Portugal’s legal treatment of corporations and contracts. Portugal has specialized family courts, labor courts, commercial courts, maritime courts, intellectual property courts, and competition courts. Portugal has been a party to the New York Convention since 1994.

The judicial system is independent of the executive branch. Indeed, adverse Constitutional Court rulings during the country’s bailout period served as a check on the government’s ability to implement many austerity measures, including pension cuts and tax increases.


The Insolvency and Corporate Recovery Code defines insolvency as a debtor’s inability to meet his commitments as they fall due. Corporations are also considered insolvent when their liabilities clearly exceed their assets. A debtor, creditor, or any person responsible for the debtor’s liabilities can initiate insolvency proceedings in a commercial court.

The court assumes the key role of ensuring compliance with legal rules governing insolvency proceedings, with particular responsibility for ruling on the legality of insolvency and payment plans approved by creditors.

After declaration of insolvency, creditors may submit their claims to the court-appointed insolvency administrator for a specific term set for this purpose, typically up to 30 days. Creditors must submit details regarding the amount, maturity, guarantees, and nature of their claims. Claims are ranked as follows: (i) claims over the insolvent’s estate, i.e. court fees related to insolvency proceedings; (ii) secured claims; (iii) privileged claims; (iv) common, unsecured claims; (v) subordinated claims, including those of shareholders.

Portugal ranked highly (10 of 189 countries) in the World Bank’s Doing Business Report “Resolving Insolvency” measure.

Investment Disputes

The UN Conference on Trade and Development (UNCTAD) database and the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) database show no cases of investment disputes, pending or concluded, between U.S. or other foreign investors against the Portuguese Republic.

International Arbitration

Portugal has ratified the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards, and in 2002 ratified the 1975 Inter-American Convention on International Commercial Arbitration.

The government promotes non-judicial dispute resolution through the Ministry of Justice’s Office for Alternative Dispute Resolution (GRAL), including conciliation, mediation, or arbitration.

More information is available in English at AICEP’s website:

The GRAL website, in Portuguese, is here:

Portugal’s Voluntary Arbitration Law enacted in 2011 is based on the UNCITRAL Model Law, and applies to all arbitration proceedings based in Portugal. The leading commercial arbitration institution is the Arbitration Centre of the Portuguese Chamber of Commerce and Industry:

ICSID Convention and New York Convention

Portugal has been a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention - also known as the Washington Convention) since 1965. Portugal has been a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since January 1995.

Duration of Dispute Resolution – Local Courts

Portugal’s judicial system has historically been inefficient, though the country has taken several important steps to increase the speed and quality of judicial proceedings. According to the World Bank’s 2015 Doing Business Report, enforcing a contract in Portugal takes an average of 547 days (the OECD average is 539.5 days), costs 13.8% of the value of the claim (OECD average 21.4%), and requires 34 procedures (OECD average 31.5).

As part of its 2011 bailout program, Portugal committed to reforms to restructure its court system and reduce the number of backlogged cases. The country has since established new specialized courts for intellectual property and for competition, reduced the number of court districts, closed underutilized courts, and modified the Code of Civil Procedure to streamline judicial proceedings. Since the fourth quarter of 2012, the number of resolved cases has exceeded the number of new cases, and the speed of resolution has doubled from 2011 to 2013. Portugal also created a new government agency in 2014, the Commission to Supervise Court Officers (CAAJ), to supervise and monitor the work of court officers and judicial administrators.

5. Performance Requirements and Investment Incentives


Portugal is a member of the World Trade Organization (WTO), though with the entry into force of the 2009 Treaty of Lisbon, trade policy and rules on foreign direct investment are exclusive EU competencies, forming part of the common commercial policy.

Of the 41 disputes on Trade-Related Investment Measures (TRIMs) catalogued by the WTO, the EU has been accused of violating TRIMs in six cases, and has been the complainant in nine cases:

Investment Incentives

The Portuguese government offers investment incentives which can be tailored to individual investors’ needs and capital based on industry, investment size, and project sustainability. For example, for smaller investors, 20% of investments up to a maximum of €5 million may be deducted from future tax obligations. More information on investment incentives is available at:

Research and Development

U.S. and other foreign institutions participating in research and development projects in Portugal may not receive funding from the Portuguese government or from the European Regional Development Funds, except when there is an international agreement or reciprocity mechanism in effect with Portugal’s Science and Technology Foundation (FCT). Government funds may be used, however, to reimburse foreign scientists for travel, lodging, and consulting services provided. More information on the regulation of access to funding is available at:

Performance Requirements

Portugal does not mandate local employment for foreign investors. As a member country of the EU, there is a high level of labor mobility between Portugal and other member states. To work in Portugal, non-EU foreign nationals must be sponsored for a work permit by a Portuguese employer. Alternatively, non-EU foreign nationals may apply for residency through the “Golden Visa” program launched in 2012 by: (i) acquiring property worth €500,000 or more; (ii) transferring funds of €1,000,000 or more; or (iii) creating at least 10 jobs in Portugal. More information on this program is available at:

Data Storage

While Portugal does not force data localization, according to the Portuguese Data Protection Law (pursuant to the EU’s 1995 Data Protection Directive) “data controllers,” i.e., people or corporations that process personal data, must register in Portuguese with the national Data Protection Authority (CNPD). Data transfers outside of the EU are only allowed if the recipient country or company ensures an adequate level of protection.

The EU-U.S. Privacy Shield, announced in February 2016, will replace the previous Safe Harbor framework for data transfers between the United States and member states of the EU. In addition, Portugal will be subject to new rules stipulated in the EU’s General Data Protection Regulation when it enters into force in coming years:

6. Protection of Property Rights

Real Property

The Portuguese Constitution provides for the right to private property and grants Parliament the power to establish rules on the renting of property, the determination of property in the public domain, and the rules of land management and urban planning. The Civil Code of 1967, modelled after the Bürgerliches Gesetzbuch, provides for the right to absolute and full ownership, which can be restricted by mortgage, liens, or other security interests. Apart from the Civil Code, additional laws have established or modified rules on time-sharing, condominiums, and land registration.

Property registration is fairly easy in Portugal, and can be done quickly online ( According to the World Bank’s 2015 Doing Business Report, registration is faster and simpler than in most other OECD countries, taking one day to complete one process. The cost, however, is slightly higher than the OECD average at 7.3% of the property value.

Intellectual Property Rights

The government adopted the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and provisions of the General Agreement on Tariffs and Trade (GATT) in 2003. Portuguese legislation for the protection of intellectual property rights has been consistent with WTO rules and EU directives since 2004. The Arbitration Centre for Industrial Property, Domain Names, and Company Names (ARBITRARE) was established in 2009 to facilitate voluntary arbitration of intellectual property disputes in English or Portuguese, and in 2012, the government created an intellectual property court with two judges.

It is fairly easy for investors to register copyrights, industrial property, patents, and designs with Portugal’s Institute of Industrial Property (INPI) and the Inspectorate-General of Cultural Activities (IGAC). Intellectual property can be registered online for a small fee.

Portugal is a participant in the eMAGE and eMARKS projects, which provide multilingual access to databases of trademarks and industrial designs. These international efforts assist participating customs authorities in combating sales of counterfeit goods. Other participating countries include France, Austria, Hungary and Spain. Portugal’s Food and Economic Security Authority (ASAE), in partnership with other national law enforcement agencies, provides statistics on seizures of counterfeit goods at:

Portugal has not been listed in the USTR’s Special 301 or Notorious Markets reports, though it was nominated for inclusion in the 2013 Special 301 report by the Pharmaceutical Research and Manufacturers of America (PhRMA), who claimed the country had “ineffective mechanisms to enforce patents,” “unrealistic pharmaceutical budgets,” and inefficient pricing and reimbursement policies. The country has since established a mandatory arbitration process to more efficiently handle pharmaceutical patent disputes.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at:

Resources for Rights Holders

Megan Ihrie
Economic Officer
+351 21-770-2000

American Chamber of Commerce

7. Transparency of the Regulatory System

As part of its bailout program, Portugal updated its competition law in 2012 to align it with EU competition law. Among many changes, the 2012 law allowed the Portuguese Competition Authority to prioritize cases, and granted new powers of investigation. The new law also revamped merger control rules, modifying market share/turnover thresholds for mandatory filings and eliminating a previous deadline of seven business days to submit a merger filing to the Competition Authority. Finally, in a move to increase transparency, the law mandates that the Competition Authority publish its final decisions in antitrust cases. In parallel with the new law, the government also established a specialized competition court to speed up judicial proceedings. These changes should help foster competition and establish more clear rules for foreign investors, consistent with those of the EU.

According to an IMF review published in October 2014, Portugal’s fiscal practices meet most principles of transparency at good or advanced levels. Fiscal reporting is consistent with EU standards, and forecasting and budgeting have improved significantly since the beginning of the bailout. The government regularly publishes budget proposals and execution reports online, and created a user-friendly web application to explain the 2015 budget, available here:

Parliament publishes draft bills on its website,, allowing public review of proposals before they become law.

8. Efficient Capital Markets and Portfolio Investment

The Portuguese Securities Market Commission (CMVM) supervises and regulates securities markets, and is a member of the Committee of European Securities Regulators and the International Organization of Securities Commissions.

The Portuguese stock exchange is managed by Euronext Lisbon, part of the NYSE Euronext Group, which allows a listed company access to a global and diversified pool of investors. The Portuguese Stock Index-20 (PSI20), launched in 1993, is Portugal’s benchmark index representing the twenty largest and most liquid companies listed on the exchange.

The Portuguese government returned to the bond market in 2013, and has taken advantage of favorable monetary policies from the ECB to secure financing at record-low yields. In March 2016, Portugal issued €500 million of 5-year bonds at 3.85%, and €621 million of 10-year bonds at 2.875%.

Many debt issuances by Portuguese corporations have also been successful over the last two years. For example, Energias de Portugal, the electricity utility, issued €600 million in 7-year bonds at 2.375% in March 2016, while Galp, Portugal’s oil and gas champion, issued €500 million in 6.5-year bonds at 3% in July 2014.

Money and Banking System, Hostile Takeovers

The Bank of Portugal is the country’s central bank, and a member bank of the European System of Central Banks. As a member of the Eurozone, Portugal’s monetary policy is managed by the ECB, with the sole mandate of maintaining price stability.

Thirty-five banks and 15 credit institutions are registered with the Bank of Portugal. Total bank assets stood at €413 billion in December 2015, representing a steady decrease from €430 billion in 2014 and €460 billion in 2013. Caixa Geral de Depositos (CGD), the largest bank by assets, is state-owned.

In August 2014, the Portuguese government forced Banco Espirito Santo (BES) – one of the country’s largest banks – into resolution after the announcement of record losses for the second quarter of 2014. Following the rules outlined in the EU’s Bank Resolution and Recovery Directive, the Bank of Portugal announced BES would be split into “good bank” Novo Banco, holding healthy assets and €4.9 billion in new capital from the Portuguese Resolution Fund, and a “bad bank” left with BES equity and potentially unrecoverable loans. An effort to return Novo Banco to private ownership failed in September 2015 when the Bank of Portugal determined that submitted offers were undervalued.

The Bank of Portugal originally announced that senior creditors and uninsured depositors would be transferred in full to Novo Banco and fully protected from losses. However, in December 2015, in order to fill a €1.4 billion capital shortfall revealed by ECB stress tests, the Bank of Portugal decided to extend the 2014 BES resolution and to transfer five of 52 senior bond issues from Novo Banco to the “bad bank.” The move reinforced Novo Banco’s capital by €1.985 billion while imposing significant losses on the holders of these five bonds. U.S. institutional investors BlackRock and Pimco were among the hardest hit, and are pursuing legal action against Portugal’s central bank for violation of the pari passu principle of equal treatment for all senior bondholders, highlighting the fact that only foreign-owned bonds were selected for losses.

Also in December 2015, the government and Bank of Portugal sold loss-making state-owned bank Banif to the local subsidiary of Spain’s Santander Group for €150 million. In the deal, Santander acquired Banif’s banking operations and secured its depositors and senior bondholders, while more toxic assets were transferred to a separate asset management vehicle managed by the Portuguese Resolution Fund. Future losses related to these impaired assets would be borne by the government of Portugal (up to €1.766 billion) and the Resolution Fund (up to €489 million).

At the end of 2015, the Portuguese banking system’s Tier 1 Capital ratio and Common Equity Tier 1 (CET 1) ratio stood at 7.6% and 12.4%, respectively. The European Banking Authority estimated that 16.3% of total gross loans in Portugal were nonperforming exposures as of June 2015. In a February 2016 post-bailout program monitoring report, the IMF warned that the Portuguese banking system’s balance sheets needed “to be strengthened to avoid further negative surprise and protect taxpayers.” Banks would also need to further reduce their debt burden, which was “holding back the economy’s growth potential.”

Takeovers in Portugal are regulated by the Portuguese Security Code, which follows the EU Directive on Takeover Bids (Directive 2004/25/EC). The CMVM is the competent authority to supervise takeover bids when target securities are listed in a regulated market located or operating in Portugal, and the issuing company is headquartered in Portugal. More information is available here:

9. Competition from State-Owned Enterprises

Portuguese law defines an SOE as any company in which the State, or other public entities, can directly or indirectly exercise a dominant influence. Further, a dominant influence is defined as ownership of the majority of share capital, the control of a majority of voting rights, the capacity to designate a majority of the board of directors or management, or the possession of any other special rights that grant a determinant influence on decision-making. State-owned enterprises (SOEs) are active in the banking, healthcare, transportation, and media & entertainment sectors. The Ministry of Finance publishes an annual report on SOEs, presenting annual performance data by company and sector, through a specialized monitoring unit (UTAM):

In sectors that are open to private competition, SOEs often hold dominant market share. In the Portuguese banking sector, state-owned Caixa Geral de Depositos has the largest market share in customer deposits, commercial loans, mortgages, and many other banking services. Similarly, 50% state-owned airline TAP is the leading European carrier to Brazil. On the other hand, RTP, which held a monopoly on television until 1992, currently controls less than 20% of the market, behind private broadcasters TVI and SIC.

According to Law No. 133/2013, dated October 3, SOEs must compete under the same terms and conditions as private enterprises, subject to Portuguese and EU competition laws. Still, SOEs often receive preferential financing terms from private banks.

Through its membership in the EU, Portugal is a party to the Agreement on Government Procurement (GPA).

OECD Guidelines on Corporate Governance of SOEs

Even before entering the bailout program, the OECD’s 2011 SOE Governance Reform lauded Portugal as “one of the most active jurisdictions” in introducing new legislation. In March 2008, Portugal’s Council of Ministers approved resolution no. 49/2007 which defined the Principles of Good Governance for SOEs according to OECD Guidelines. The resolution requires SOEs to have a governance model that ensures the segregation of executive management and supervisory roles, to have their accounts audited by independent entities, to observe the same standards as those for companies publicly listed on stock markets, and to establish an ethics code for employees, customers, suppliers, and the public. The resolution also requires the Ministry of Finance’s Directorate-General of the Treasury and Finances to publish annual reports on SOEs’ compliance with the Principles of Good Governance.

As mentioned in the prior section, Law No. 133/2013 requires SOEs to compete under the same terms and conditions as private enterprises, subject to Portuguese and EU competition law. Credit and equity analysts generally criticize SOEs’ over-indebtedness and inefficiency, rather than poor governance and ties to government.

Sovereign Wealth Funds

The Ministry of Labor, Solidarity, and Social Security manages the Social Security Financial Stabilization Fund (FEFSS), with total assets of around €13.5 billion. Among other restrictions, the law requires that at least 50% of assets are invested in Portuguese public debt, and limits FEFSS investment in equity instruments to that of EU or OECD members. FEFSS acts as a passive investor and does not take an active role in the management of portfolio companies.

10. Responsible Business Conduct

There is strong awareness of responsible business conduct in Portugal and broad acceptance of the need to consider the community among the key stakeholders of any company. Group of Reflection and Support for Business Citizenship (GRACE) was founded in 2000 by a group of companies, primarily multinational corporations, to expand the role of the Portuguese business community in social development. It was the first non-profit organization in Portugal dedicated to corporate social responsibility.

Since its founding, GRACE has engaged in various community projects, participating in the International Day of Volunteers and partnering with local civic groups to rehabilitate public spaces and facilities, create community gardens, and improve the environment. GRACE’s GIRO project, the largest corporate volunteer project in Portugal, has organized over 3100 volunteers to the benefit of more than 50 institutions and 13,000 people throughout Portugal. There are several other prominent organizations, such as the Portuguese Business Ethics Association, dedicated to corporate social responsibility in collaboration the Ministry of Economy’s Directorate-General of Economic Activities.

Other non-government organizations promote awareness of environmental and good governance issues in business. These include Quercus Portugal, which publishes guidelines and organizes events to promote environmental responsibility in business practices, and Transparencia e Integridade Associação Civica (TIAC), which produces reports on corruption on everything from football match-fixing to conflicts of interest in public and private enterprise. TIAC also allows whistle-blowers to anonymously submit reports of corruption through their website.

As an OECD member, Portugal adheres to the OECD Guidelines for Multinational Enterprises. The Ministry of Economy and AICEP maintain a National Contact Point (NCP) for the promotion of these guidelines; the NCP can be located through this link:

11. Political Violence

Since the 1974 Carnation Revolution, Portugal has had a long history of peaceful social protest. Portugal experienced its largest political rally since its revolution in response to proposed budgetary measures in 2012. Subsequent demonstrations against government austerity measures and economic policies have resulted in isolated and low levels of vandalism, generally directed at parliamentary facilities. Public workers, including nurses, doctors, teachers, aviation professionals, and public transportation workers have organized peaceful demonstrations periodically in protest of salary cuts and other austerity measures throughout 2015.

12. Corruption

The administration has made recent legislative strides toward further criminalizing corruption. The government’s Council for the Prevention of Corruption, formed in 2008, is an independent administrative body that works closely with the Court of Auditors to prevent corruption in public and private organizations that use public funds. Transparencia e Integridade Associação Civica, the local affiliate of Transparency International, also actively publishes reports on corruption and supports would-be whistleblowers in Portugal. In 2010, the country adopted a law that criminalized violation of urban planning rules and increased transparency in political party funding. In 2015, Parliament unanimously approved a revision to existing anti-corruption laws that extended the statute of limitations for the crime of trading in influence to 15 years and criminalized embezzlement by employees of state-owned enterprises with a prison term of up to eight years.

Still, according to a 2016 report by the Council of Europe’s Group of States Against Corruption (GRECO), Portugal’s anti-corruption legal framework is “fragmented, sometimes incoherent, and has not always been sufficiently thought through. … Above all, there is very little focus on corruption prevention [emphasis in original].” The report highlights a conflicts of interest regime that is “too permissive” to Parliamentarians, allowing them to simultaneously practice as lawyers and engage in other private employment. GRECO also noted a lack of accountability for judges and prosecutors due to the concealing of the outcomes of internal disciplinary procedures. The full report is available at:

The European Commission raised similar issues in its 2014 Anti-Corruption Report on Portugal, and also noted an extremely prevalent perception of corruption among the Portuguese populace. According to a 2013 survey, 90% of Portuguese respondents stated that “corruption is a widespread problem in their country” (vs. an EU average of 76%), while 36% of Portuguese respondents said that they “are personally affected by corruption in their daily life” (vs. an EU average of 26%). The report is available at:

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Portugal has ratified and complies with both the UN Convention Against Corruption and the OECD Anti-Bribery Convention.

Resources to Report Corruption

Jose Tavares
Director General
Council for the Prevention of Corruption
Avenida da Republica, 65, 1050-189, Lisbon, Portugal
+351 21 794 5138

Luis de Sousa
Transparency International – Transparencia e Integridade Associação Civica
Rua Leopoldo de Almeida, 9B, 1750-137, Lisbon, Portugal
+351 21 752 2075

13. Bilateral Investment Agreements

Bilateral Taxation Treaties

Portugal has bilateral investment treaties with Albania, Algeria, Angola, Argentina, Bosnia and Herzegovina, Brazil, Bulgaria, Cape Verde, Chile, China, Democratic Republic of Congo, Congo, Croatia, Cuba, Czech Republic, Egypt, Equatorial Guinea, Gabon, Germany, Guinea-Bissau, Hungary, India, Jordan, South Korea, Kuwait, Latvia, Libya, Lithuania, Macao, Mauritius, Mexico, Morocco, Mozambique, Pakistan, Paraguay, Peru, Philippines, Poland, Qatar, Romania, Russia, Sao Tome and Principe, Senegal, Serbia, Slovakia, Slovenia, Timor-Leste, Tunisia, Turkey, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, and Zimbabwe.

Portugal does not share a bilateral investment treaty or free trade agreement with the United States. With the entry into force of the Lisbon Treaty in 2009, the EU has exclusive competence to negotiate trade and investment agreements and is currently in negotiations with the United States for the Transatlantic Trade and Investment Partnership.

Portugal signed an Income Tax Treaty with the United States in 1994 to prevent double taxation and tax evasion. In 2015, Portugal signed an agreement with the United States to improve international tax compliance and implement the U.S. Foreign Account Tax Compliance Act (FATCA).

14. OPIC and Other Investment Insurance Programs

Portugal is a country with low political risk, and the potential for significant OPIC insurance programs in Portugal is limited. Portugal is a member of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank.

15. Labor

Numerous labor reform packages aimed at improving the productivity of Portugal’s workforce have been implemented in recent years. A package of labor reform laws took effect in 2003 permitting greater geographic and functional mobility for employees. The Labor Code limits the role of unions and makes it more difficult for workers to strike. It also addresses absenteeism and fraudulent leave. Additional changes were implemented in 2009 clarifying rules concerning intermittent and seasonal employment, specifying leave flexibility regarding parenthood and family support, and other issues.

However, low productivity and difficulty in firing workers have hampered Portugal's ability to attract foreign investment. In 2012, Portugal enacted a series of labor market reforms geared at increasing productivity and flexibility in the Portuguese workforce. Notable reforms include reduced unemployment benefits, severance pay decreases, flexible work-time arrangements, and restrictions on collective bargaining practices.

Unemployment remains high in Portugal, registering at 12.2% in January 2016, though it has improved steadily since peaking at nearly 18% in 2013. Youth unemployment stood at 29.9% in January 2016.

The Labor Code caps the work schedule at eight hours per day, and 40 hours per week. Public sector employees’ work week will be capped at 35 hours starting in July 2016. Overtime must be paid at the hourly rate of pay plus an additional 25% for the first hour and 37.5% for each subsequent hour, in the case of workdays, or 50% for each hour in the case of weekends or holidays. Portugal’s minimum wage increased in 2015 to €530 per month. Employees are entitled to at least 22 days of annual leave per year. In addition, the employer must pay employees a Christmas bonus and vacation bonus, both equivalent to one month’s salary.

Employers are allowed to conduct collective dismissals due to adverse market or economic conditions, or due to technological advancement, but must provide advance notice and severance pay. Depending on the seniority of each employee, an employer must provide between 15 to 75 days of advance notice, and pay severance ranging from 12 days’ to one month’s salary per year worked. Employees may challenge termination decisions before a Labor Court.

The Labor Code also allows employees to establish unions, workers’ committees, and other collective structures. Labor unions are independent from the state, political parties, and religious institutions. Such associations are prohibited from directing or providing financial support to labor unions. The Portuguese Constitution establishes the right to strike as a worker’s inalienable right. Unions must communicate their intention to strike with a minimum notice of five business days. For those employed by companies or organizations deemed to provide indispensable social services, the striking entity must provide at least ten business days’ notice to the employer or the sector-specific government ministry, including a proposal to maintain a minimum level of service. During a strike, the employer generally may not hire others to perform the employees’ tasks, but is also not obligated to pay salaries of striking employees.

Labor strikes are more common than in the United States, but are nonviolent and of short duration. In recent years, work stoppages have been more common among public sector workers, including transportation workers, teachers, and nurses.

Portugal is a member of the International Labor Organization (ILO), and has ratified all eight Fundamental Conventions as well as all four Governance (Priority) Conventions.

16. Foreign Trade Zones/Free Ports/Trade Facilitation

Portugal has one foreign trade zone (FTZ)/free port in the Autonomous Region of Madeira, established in 1987. Continued operation of this foreign trade zone/free port was authorized in accordance with EU rules on incentives granted to member states. Industrial and commercial activities, international service activities, trust and trust management companies, and offshore financial branches are all eligible. Companies established in the foreign trade zone enjoy import- and export-related benefits, financial incentives, tax incentives for investors, and tax incentives for companies.

Under the terms of Portugal's agreements with the EU, companies incorporated in the Madeira FTZ can take advantage of a reduced corporate tax rate of 5% until 2020.

17. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy


Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data






Host Country Gross Domestic Product (GDP) ($M USD)





Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)





Host country’s FDI in the United States ($M USD, stock positions)





Total inbound stock of FDI as % host GDP






* National Statistics Agency, Bank of Portugal, AICEP. Figures only provided in local currency.

Table 3: Sources and Destination of FDI

EU member states, namely Spain and the Netherlands, remain Portugal’s primary sources of inward direct investment. IMF figures coincide with data from the Bank of Portugal and Portugal’s National Statistics Agency. Angola lost its place in the top five destinations for Portuguese investment abroad this year.

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward



Total Outward





















United Kingdom












"0" reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

IMF figures coincide with data from the Bank of Portugal and Portugal’s National Statistics Agency.

Portfolio Investment Assets

Top Five Partners (Millions, US Dollars)


Equity Securities

Total Debt Securities

All Countries



All Countries



All Countries
























United States


















United Kingdom






18. Contact for More Information

Ben Rockwell
Economic Unit Chief
Embassy of the United States
Avenida das Forcas Armadas
1649-044 Lisbon, Portugal
+351 21-770-2000