Policies Towards Foreign Direct Investment

The Greek government continues to state its desire to increase foreign investment, though the country remains a challenging climate for investment, both foreign and domestic.  Despite the most recent EUR86 billion bailout agreement signed in August 2015 between the Greek government and its international creditors, under the auspices of the ESM, economic uncertainty remains widespread, though sentiment has been broadly improving since 2017.

Numerous additional structural reforms, undertaken as part of the country’s 2015-2018 international bailout program, aim to welcome and facilitate foreign investment, and the government has publicly messaged its dedication to attracting foreign investment.  The Trans Adriatic Pipeline (TAP) is one example of the government’s commitment in this area.  In November 2015, the Greek government and TAP investors agreed on measures and began construction on the largest investment project since the start of the financial crisis, with the pipeline set to begin operations in 2020.  Nevertheless, many structural reforms have created greater challenges to investors and established businesses in Greece.  The country has undergone one of the most significant fiscal consolidations in modern history, with broad and deep cuts to public expenditures and significant increases in labor and social security tax rates, which have offset improved labor market competitiveness achieved through significant wage devaluation.  Moreover, corruption and burdensome bureaucracy continue to create barriers to market entry for new firms, permitting incumbents to maintain oligopolies in different sectors, and creating scope for arbitrary decisions and rent seeking by public servants.

Limits on Foreign Control and Right to Private Ownership and Establishment

As a member of the EU and the European Monetary Union (the “Eurozone”), Greece is required to meet EU and Eurozone investment regulations.  Foreign and domestic private entities have the legal right to establish and own businesses in Greece; however, the country places restrictions on foreign equity ownership higher than the average imposed on the other 17 high-income OECD economies.  The government has undertaken EU-mandated reforms in its energy sector, opening much of it up to foreign equity ownership.  Restrictions exist on land purchases in border regions and on certain islands because of national security considerations.  Foreign investors can buy or sell shares on the Athens Stock Exchange on the same basis as local investors.

Other Investment Policy Reviews

The government has not undergone an investment policy review by the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), or United Nations Committee on Trade and Development (UNCTAD), or cooperated with any other international institution to produce a public report on the general investment climate.  Nonetheless, in March 2018, the OECD published an economic survey describing the state of the economy and addressing foreign direct investment concerns.  The government has sought the OECD’s counsel and technical assistance to carry out select reforms from the recommendations and develop additional reforms in line with the government’s emphasis on the social welfare state.

Business Facilitation

Greece’s business registration entity GEMI (General Commercial Register) has the basic responsibility for digitizing and automating the registration and monitoring procedures of commercial enterprises.  More information about GEMI can be found at http://www.businessportal.gr/home/index_en .  The online business registration process is relatively clear, and although foreign companies can use it, the registration steps are currently available only in Greek.  In general, a company must register with the business chamber, tax registry, social security, and local municipality.  Business creation without a notary can be done for specific cases (small/personal businesses, etc.).  For the establishment of larger companies, a notary is mandatory.

The country has investment promotion agencies to facilitate foreign investments.  “Enterprise Greece” is the official agency of the Greek state.  Under the supervision of the Ministry of Economy and Development, it is responsible for promoting investment in Greece, exports from Greece, and with making Greece more attractive as an international business partner.  Enterprise Greece provides the full spectrum of services related to international business relationships and domestic business development for the international market.  Enterprise Greece offers an Investor Ombudsman program for investment projects exceedingEUR2 million.  The Ombudsman is available to assist with specific bureaucratic obstacles, delays, disputes or other difficulties that impede an investment project.  As reported by some business, Enterprise Greece, even with its ombudsman service for investments, is not very effective at moving investments projects forward.

The General Secretariat for Strategic and Private Investments streamlines the licensing procedure for strategic investments, aiming to make the process easier and more attractive to investors.

Greece has adopted the following EU definition regarding micro, small, and medium size enterprises:

Micro Enterprises:  Fewer than 10 employees and an annual turnover or balance sheet belowEUR2 million.

Small Enterprises:  Fewer than 50 employees and an annual turnover or balance sheet belowEUR10 million.

Medium-Sized Enterprises:  Fewer than 250 employees and annual turnover belowEUR50 million or balance sheet belowEUR43 million.

Outward Investment

The Greek government does not have any known outward investment incentive programs.  Ongoing capital controls, though partially lifted, still impose restrictions or additional procedures for any entity seeking to remove pre-existing large sums of cash from Greek financial institutions.

Enterprise Greece supports the international expansion of Greek companies.  While no incentives are offered, Enterprise Greece has been supportive of Greek companies attending the U.S. Government’s Annual SelectUSA Investment Summit, which promotes inbound investment to the United States, and similar industry trade events internationally.

Policies Towards Foreign Direct Investment

The Government of Portugal recognizes the importance of foreign investment and sees it as a driver of economic growth.  Portuguese law is based on a principle of non-discrimination, meaning foreign and domestic investors are subject to the same rules.  Foreign investment is not subject to any special registration or notification to any authority, with exceptions for a few specific activities.

The Portuguese Agency for Foreign Investment and Commerce (AICEP) is the lead for promotion of trade and investment.  AICEP is responsible for the attraction of foreign direct investment (FDI), global promotion of Portuguese brands, and export of goods and services.  It is the primary point of contact for investors with projects over EUR 25 million or companies with a consolidated turnover of more than EUR 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: http://www.portugalglobal.pt/EN/SourceFromPortugal/prominent-clusters/Pages/prominent-clusters.aspx  .

The Portuguese government maintains regular contact with investors through the Confederation of Portuguese Business (CIP), the Portuguese Chamber of Commerce and Industry and AICEP.  More information can be found at these websites:

• http://cip.org.pt/en/  ;
• http://www.portugalglobal.pt/EN/Pages/Index.aspx  ;
• http://www.ccip.pt/en/  .

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no legal restrictions in Portugal on foreign investment.  To establish a new business, foreign investors must follow the same rules as domestic investors, including mandatory registration and compliance with regulatory obligations for specific activities.  There are no nationality requirements and no limitations on the repatriation of profits or dividends.

Shareholders 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.

There are national security limitations on both foreign and domestic investments with regard to certain economic activities.  Portuguese government approval is required in the following 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 additionally 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.  Concessions in the electricity and gas sectors are assigned only to companies with headquarters and effective management in Portugal.

Portugal also 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).  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.

Portugal enacted a national security investment review framework in 2014, giving the Council of Ministers authority to block specific foreign investment transactions.  Reviews can be triggered on national security grounds in strategic industries like energy, transportation and communication. Investment reviews can be conducted in cases where the purchaser acquiring control is an individual or entity not belonging to the European Union.  In such instances, the review process is overseen by the relevant Portuguese ministry according to the assets in question.

Other Investment Policy Reviews

The OECD presented in February 2019 its latest Economic Survey of Portugal, including an updated macro overview and a set of policy recommendations.  The report can be found at: http://www.oecd.org/economy/surveys/Portugal-2019-economic-survey-overview.pdf 

Business Facilitation

Since 2010, the Portuguese Government has prioritized policies to increase the country’s appeal as a destination for foreign investment.  In 2007, the Government established AICEP, a promotion agency for investment and foreign trade that also, through its subsidiary AICEP Global Parques, manages industrial parks and provides business location solutions for investors.

The government has developed effective warehouse and transport logistics, especially at the Sines Port terminal southwest of Lisbon, and telecommunications infrastructure has improved.  In March 2018, construction began on an 80-kilometer railway line between Evora and Elvas, which will improve commercial transportation between the Portuguese ports of Sines and Lisbon, and the Southwestern European Logistics Platform (PLSWE) in Badajoz, Spain, reducing freight transportation times to the rest of Europe.  On January 11, the Portuguese Government launched a EUR 22 billion infrastructure investment plan for 2019 to 2030, listing 72 projects across transportation, energy and water.

Established in 2012, Portugal’s “Golden Visa” program gives fast-track residence permits to foreign investors meeting certain conditions, including making a capital transfer of at least EUR 1 million, creating at least 10 jobs in Portugal, or acquisition of real estate worth at least EUR 500 million.  Since 2012, Portugal has issued 7,208 golden visas to investors. Visa programs such as Portugal’s “Golden Visa” initiative have recently come under scrutiny in the European Union.

Other measures implemented to help attract foreign investment include the easing of some labor regulations to increase workplace flexibility and the creation of a special EU-funded program, Portugal 2020, for projects above EUR 25 million.  Finally, to combat the perception of a cumbersome regulatory climate, the Government has created a “Cutting Red Tape” website detailing measures taken since 2005 to reduce bureaucracy, and the Empresa na Hora (“Business in an Hour”) program that facilitates company incorporation by citizens and non-citizens in less than 60 minutes.  More information is available at http://www.empresanahora.pt/ENH/sections/EN_homepage   and http://www.cuttingredtape.mj.pt/uk/asp/default.asp  .

Portuguese citizens can alternatively register a business online through the “Citizen’s Portal” available at: https://bde.portaldocidadao.pt/evo/landingpage.aspx  .  Companies must also register with the Directorate General for Economic Activity (DGAE), the Tax Authority (AT), and with the Social Security administration.  The government’s service standard for online business registration is a two to three day turnaround but the online registration process can take as little as one day.

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 EUR 2 million in revenues or EUR 2 million in assets.  Small enterprises must have less than 50 employees and no more than EUR 10 million in revenues or EUR 10 million in assets. Medium-sized enterprises must have less than 250 employees and no more than EUR 50 million in revenues or EUR 43 million in assets.  The Small- and Medium-Sized Enterprise (SME) Support Institute (IAPMEI) offers financing, training, and other services for SMEs based in Portugal: http://www.iapmei.pt/  .

More information on laws, procedures, registration requirements, and investment incentives for foreign investors in Portugal is available on AICEP’s website: http://www.portugalglobal.pt/  
EN/InvestInPortugal/investorsguide2/
howtosetupacompany/Paginas/ForeignInvestment.aspx  .

Outward Investment

The Portuguese government does not restrict domestic investors from investing abroad.  On the contrary, it promotes outward investment through AICEP’s Customer Managers, Export Stores and its External Commercial Network that, in cooperation with the diplomatic and consular network, are operating in about 80 markets.  AICEP provides support and advisory services on the best way of approaching foreign markets, identifying international business opportunities of Portuguese companies, particularly SMEs. See more at: http://www.portugalglobal.pt/PT/sobre-nos/
Paginas/sobre-nos.aspx#sthash.aifdjkOs.dpuf  .