2023 Investment Climate Statements: Portugal

Policies Towards Foreign Direct Investment

The government of Portugal (GOP) maintains an open-door policy toward foreign direct investment (FDI) that completely lacks any national security screening of foreign investments. Portuguese law is based on non-discrimination principles, 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 exception of 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 attracting FDI, global promotion of Portuguese brands, and export of goods and services. It is the primary point of contact for investors with projects over € 25 million or companies with sales 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. Additionally, Portugal has introduced the website Simplex, designed to help navigate starting a business.

The Portuguese government maintains contact with investors through the Confederation of Portuguese Business (CIP), the Portuguese Commerce and Services Confederation (CCP), the Portuguese Chamber of Commerce and Industry (CCIP) and other industry associations.

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.

Non-resident shareholders must obtain a Portuguese taxpayer number for tax purposes. EU residents may obtain this number directly from 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.

Portugal enacted a national security investment review framework in 2014 which gave the Council of Ministers authority to block specific foreign investment transactions that would compromise national security. Reviews can be triggered on national security grounds in high-risk 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 registered in an EU member state. In such instances, the review process is overseen by the relevant Portuguese Ministry based on the assets in question. While Portugal has yet to activate its investment screening mechanism, the government has indicated that an interagency working group from the Ministry of Economy, Ministry of Foreign Affairs, and European Affairs will be reactivated to align the Portuguese investment screening law with the EU directive to yield concrete results.

Portuguese government approval is required in the following sensitive sectors: defense, water management, public telecommunications, railways, 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 production 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.

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 presence 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.

There are no local presence or nationality-based requirements for business governance or board representation.

Other Investment Policy Reviews

In the past five years, the government has not undergone any third-party investment policy reviews (IPRs) through a multilateral organization such as the OECD, WTO, UNCTAD, or UN Working Group on Business and Human Rights.

Business Facilitation

To combat the perception of a cumbersome regulatory environment, the government has created ‘cutting red tape’ measures described in the website Simplex  (simplex.gov.pt) that details steps taken since 2005 to reduce bureaucracy, and the “Business in an Hour” program that facilitates company incorporations by citizens and non-citizens.

Portuguese citizens can alternatively register a business online through the “Citizen’s Portal” available at Portal do Cidadão . 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 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. The Small- and Medium-Sized Enterprise (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 at AICEP’s website .

Established in 2012, Portugal’s “Golden Visa” program gave fast-track residence permits to foreign investors who meet certain conditions, such as making substantial capital transfers and creating certain real estate acquisitions. Between 2012 and February 2023, Portugal issued 11,758 ‘Golden Visas,’ representing €6.8 billion of investment, of which more than €6.1 billion went to real estate. Chinese nationals have been the main beneficiaries of the special program for residence permits, accounting for almost 50% (5,291) of the total, followed by Brazilians (1,187) and Russian (431). In February 2022, the government issued a visa suspension to Russian citizens due to Russia’s aggression against Ukraine. On March 28, 2022, the European Commission urged member states to immediately repeal such investor citizenship schemes, which the Commission views as posing inherent risks. On February 16, 2023, Prime Minister Antonio Costa announced plans to end Portugal’s Golden Visa as part of a larger government package aimed at addressing the lack of affordable housing in Portugal. Foreign real estate buyers who wish to renew their existing golden visas will only be eligible if their properties are used as their own homes, or if these units are placed in the long-term rental market.

Outward Investment

The Portuguese government does not restrict domestic investors from investing abroad and 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 for Portuguese companies, particularly SMEs.

Transparency of the Regulatory System

The government of Portugal employs transparent policies and effective laws to foster competition, and the legal system welcomes FDI on a non-discriminatory basis, establishing clear rules of the game. Legal, regulatory, and accounting systems are consistent with international norms. Public finances and debt obligations are transparent, with data regularly published by the Bank of Portugal, the IGCP debt management agency, and the Ministry of Finance. Regulations drafted by ministries or agencies must be approved by parliament and, in some cases, by European authorities. All proposed regulations are subject to a 20-to-30-day public consultation period during which the proposed measure is published on the relevant ministry or regulator’s website. Only after ministries or regulatory agencies have conducted an impact assessment of the proposed regulation can the text be enacted and published. The process can be monitored and consulted at the official websites of Parliament  and the Official Portuguese Republic Journal. Ministries or regulatory agencies report the results of the consultations through a consolidated response published on the website of the relevant ministry or regulator.

Rule-making and regulatory authorities exist across sectors including energy, telecommunications, securities markets, financial, and health. Regulations are enforced at the local level through district courts, on the national level through the Court of Auditors, and at the supra-national level through EU mechanisms including the European Court of Justice, the European Commission, and the European Central Bank. The OECD, the European Commission, and the IMF also publish key regulatory actions and analysis. UTAO , the Parliamentary Technical Budget Support Unit, is a nonpartisan body composed of economic and legal experts that support parliamentary budget deliberations by providing the Budget Committee with quality analytical reports on the executive’s budget proposals. In addition, the Portuguese Public Finance Council  conducts an independent assessment of the consistency, compliance with stated objectives, and sustainability of public finances, while promoting fiscal transparency.

The legal, regulatory, and accounting systems are transparent and consistent with international norms. Since 2005, all listed companies must comply with International Financial Reporting Standards as adopted by the European Union (“IFRS”), which closely parallels the U.S. GAAP-Generally Accepted Accounting Principles. Portugal’s Competition Authority enforces adherence to domestic competition and public procurement rules. The European Commission further ensures adhesion to EU administrative processes among its member states.

Public finances are generally deemed transparent, closely scrutinized by Eurostat and monitored by an independent technical budget support unit, UTAO, and the Supreme Audit Institution ‘Tribunal de Contas.’ Portugal has also consolidated within the State accounts many state-owned enterprises, making budget analysis more accurate.

The government promotes companies’ voluntary environmental, social, and governance (ESG) disclosures to facilitate transparency. Under Portugal’s climate base law, state companies are asked to consider climate change in their corporate governance and incorporate a climate risk analysis in the decision-making process. The law asks companies to assess the carbon impact of their activity yearly and establish a total greenhouse gas emissions limit. Publicly listed companies are expected to disclose ESG information in their financial and non-financial statements to the Securities Markets Commission (CMVM). For non-listed companies, oversight of ESG aspects falls on the shareholders rather than a specific regulatory authority.

International Regulatory Considerations

Portugal has been a member of the EU since 1986, a member of the Schengen area since 1995, and joined the Eurozone in 1999. With the Treaty of Lisbon’s entry into force in 2009, trade policy and rules on foreign direct investment became mostly EU competencies, as part of the bloc’s common commercial policy. The European Central Bank is the central bank for the euro and determines monetary policy and conducts banking supervision for significant financial institutions in the 20 Eurozone member states, including Portugal. Portugal has been a member of the World Trade Organization since 1995.

Legal System and Judicial Independence

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 Parliament; (iv) instruments having an effective equivalent to that of laws, including approved international conventions or decisions of the Constitutional Court; and (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 a Supreme Court and specialized family courts, labor courts, commercial courts, maritime courts, intellectual property courts, and competition courts. Regulations or enforcement actions are appealable, and are adjudicated in national Appellate Courts, with the possibility to appeal to the European Court of Justice. The judicial system is independent of the executive branch and the judicial process procedurally competent, fair, and reliable. Regulations and enforcement actions are appealable.

Laws and Regulations on Foreign Direct Investment

The Bank of Portugal 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 percent of a resident company’s equity and participates in the company’s decision-making is considered a foreign direct investor. Current information on laws, procedures, registration requirements, and investment incentives for foreign investors in Portugal is available at AICEP’s website .

Competition and Antitrust Laws

The domestic agency that reviews transactions for competition-related concerns is the Portuguese Competition Authority and the international agency is the European Commission’s Directorate General for Competition. Portuguese law 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 percent market share in a sector, or mergers or acquisitions among entities whose total sales exceeded €150 million during 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.

Expropriation and Compensation

Under Portugal’s Expropriation Code, the government may expropriate property and its associated rights in the public interest, and upon payment of prompt, adequate, and effective 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.

Dispute Settlement

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. Portugal’s national arbitration law No. 63-2011 of December 14, 2011, enforces awards under the 1958 New York Convention and the ICSID Convention.

Investor-State Dispute Settlement

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.

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

The government promotes non-judicial dispute resolution through the Ministry of Justice’s Office for Alternative Dispute Resolution (GRAL) , including conciliation, mediation or arbitration. Portuguese courts recognize and enforce foreign arbitral awards issued against the government. There have been no recent extrajudicial actions against foreign investors.

International Commercial Arbitration and Foreign Courts

Arbitration is the preferred alternative dispute resolution mechanism in Portugal. The country has a long-standing tradition of arbitration in administrative and contract disputes. It has also become the standard mechanism for resolving tax disputes between private citizens or companies and tax authorities, as well as in pharmaceutical patent disputes.

Portugal has four domestic arbitration bodies: 1) The Arbitration Center of the Portuguese Chamber of Commerce and Industry (CAC); 2) CONCORDIA (Centro de Conciliacao, Mediacao, de Conflictos de Arbritragem); 3) Arbitrare (Centro de Arbitragem para a Propriedade Industrial, Nomes de Dominio, Firmas e Denominacoes); and 4) the Instituto de Arbitragem Commercial do Porto. Each arbitration body has its own regulations, but all comply with the Portuguese Arbitration Law 63/11, which came into force in March 2012. The Arbitration Council of the Centre for Commercial Arbitration also follows New York Convention, Washington Convention, and Panama Convention guidelines. Arbitration Law 63/11 follows the standard established by the UNCITRAL Model Law, but is not an exact copy of that text.

Under the Portuguese Constitution, the Civil Code of Procedure (CCP) and the New York Convention, applied in Portugal since 1995, awards rendered in a foreign country must be recognized by the Portuguese courts before they can be enforced in Portugal. There is no legal authority in Portugal on the enforceability of foreign awards set aside at the seat of the arbitration. The CCP sets forth the legal regime applicable to all judicial procedures related to arbitration, including appointment of arbitrators, determination of arbitrators’ fees, challenge of arbitrators, appeal (where admissible), setting aside, enforcement (and opposition to enforcement) and recognition of foreign arbitral awards.

While Portugal’s judicial system has historically been considered relatively slow and inefficient, the country has taken several important steps, including simplifying land registry procedures and increasing the portfolio of online services.

Bankruptcy Regulations

Portugal’s Insolvency and Corporate Recovery Code defines insolvency as a debtor’s inability to meet 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; and (v) subordinated claims, including those of shareholders.

Investment Incentives

The Portuguese government offers investment incentives that can be tailored to individual investors’ needs and capital, based on industry, investment size, and project sustainability, including grants, tax credits and deferrals, access to loans, and reduced cost of land. Investment agency AICEP actively recruits investors across the globe, intermediating the terms on a case-by-case basis for the larger investments. The Autonomous Regions of Madeira  and the Azores  also offer investment incentives. Since Portugal is an EU Member, potential investors may be able to access European funds, providing further incentives. Such support has been used by Portugal to co-finance key investments in the areas of research and development, information and communications technology, transport, water, solid waste, energy efficiency and renewable energy, urban regeneration, health, education, and culture.

In 2020, Portugal merged ‘PME Investimentos’ and the ‘Instituição Financeira de Desenvolvimento’ (IFD) to create Banco Português de Fomento. The IFD is a national promotion bank tasked with providing credit to companies, managing State-guarantee schemes and supporting companies by helping them strengthen their capital structure, exports, and internationalization. It manages a €200 million co-investment fund. Through Portugal Ventures, a state-financed private equity company, the government has a risk capital arm that finances the growth of the Portuguese entrepreneurship ecosystem. This entity is part of the public business sector, operating under the same terms and conditions that apply to private companies and subject to the general domestic and community competition rules. Its funds are under the supervision of the Portuguese Securities Market Commission, CMVM.

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 the International Business Centre of Madeira ’s corporate tax regime is authorized by 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/free port enjoy import- and export-related benefits, financial incentives, tax incentives for investors and companies.

Under EU rules, company profits benefitting from income tax reductions must originate exclusively from substantive activities carried out in Madeira and these companies must create and maintain jobs in Madeira, conditions the Commission is concerned Portuguese authorities may have failed to respect.

Performance and Data Localization Requirements

Portugal does not impose performance requirements or mandate specific local employment conditions for foreign investors. Qualification standards for investment incentives are applied uniformly to domestic and foreign investors. There is a high level of labor mobility between Portugal and other EU member states. To work in Portugal, non-EU foreign nationals must be sponsored for a work permit by a Portuguese employer. There are no nationality-related restrictions that affect a foreign national’s ability to serve in senior management or on a board of directors. Foreign or expatriate workers with appropriate work authorizations are entitled to the same rights and subject to the same laws as employees with Portuguese citizenship.

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 with the National Commission for Data Protection (CNPD). Data transfers outside the EU are only allowed if the recipient country or company ensures an adequate level of protection. Portugal is subject to new rules stipulated in the EU’s General Data Protection Regulation. 

There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption; the same rules apply to foreign IT providers as apply to national providers.

Data transfers to other countries within the EU do not require prior authorization from the CNPD. However, data transfers to countries outside the EU can only take place in compliance with the Data Protection Law, meaning the receiving state must also provide an adequate level of protection to personal data. If the receiving state does not ensure an adequate level of protection, the CNPD can authorize the transfer under specific conditions, as outlined in Act 67/98. CNPD can also authorize a transfer or a set of transfers of personal data to a receiving state that does not provide an adequate level of protection only if the controller provides adequate safeguards to protect the privacy and fundamental rights and freedoms of individuals. As members of the EU, business entities operating in Portugal are asked to comply with the bloc’s General Data Protection Regulation (GDPR).

CNPD issued a set of orders for private firms to halt or refrain from data transfers to the United States, implying that U.S. technology companies subject to sending data to the United States may risk being non-compliant with EU General Data Protection Regulation (GDPR), justifying the enforcement with a narrow interpretation of the Schrems II decision and Privacy Shield invalidation.

Generally, there are no excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility of foreign investors and their employees.

Real Property

Portugal reliably enforces property rights and interests. The Portuguese Constitution ensures 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 provides the right to absolute and full ownership, which can be restricted by mortgage, liens, or other security interests. Additional laws have established or modified rules on time-sharing, condominiums, and land registration.

Property registration can be undertaken online at Predial Online . Foreign investors can directly own/purchase property freehold or leasehold, to build industrial and commercial premises or can purchase through a real estate company.

If legally purchased property is unoccupied, Portuguese law allows ownership to revert to other owners, including squatters, through an adverse domain process set out in Chapter VI of the Portuguese Civil Code (CCP), Article 1287.

Intellectual Property Rights

Portugal is not included in the U.S. Trade Representative’s (USTR’s) Special 301 Report or Notorious Markets List.

Intellectual property rights (IPR) infringement and theft are uncommon in Portugal. 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. For more details, consult: https://inpi.justica.gov.pt/Servicos  and https://www.igac.gov.pt/ .

The Portuguese government became party to the World Trade Organization’s (WTO’s) 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 IPR 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 IPR disputes in English or Portuguese, and in 2012, the government created an IPR court with two judges. In 2019, Portugal brought into force a new industrial property package of legislation, enhancing the protection of a wide range of IPR, including patents, geographical indications, trademarks and designs. See more at https://wipolex.wipo.int/en/members/profile/PT  .

Portugal is a participant in the eMAGE and eMARKS projects, which provide multilingual access to databases of trademarks and industrial designs. Portugal’s Food and Economic Security Authority (ASAE), in partnership with other national law enforcement agencies, provides statistics on seizures of counterfeit goods at: https://www.asae.gov.pt/inspecao-fiscalizacao/resultados-operacionais.aspx  .

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/. 

For additional information about national laws and points of contact at local IPR offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The Portuguese stock exchange is managed by Euronext Lisbon, part of the NYSE Euronext Group, which grants listed companies access to a global and diversified pool of investors. The Portuguese Stock Index (PSI) is the benchmark representing the largest and most liquid companies listed on the exchange. The Portuguese stock exchange offers a diverse product portfolio: shares, funds, exchange traded funds, bonds, and structured products, including warrants and futures.

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. Additional information on CMVM can be found here: http://www.cmvm.pt/en/Pages/homepage.aspx  .

Portugal respects IMF Article VIII by refraining from placing restrictions on payments and transfers for current international transactions. Credit is allocated on market terms, and foreign investors are eligible for local market financing. Private sector companies have access to a variety of credit instruments, including bonds.

Money and Banking System

Portugal has 146 credit institutions, of which 62 are banks. Portugal’s banking assets totaled €454 billion at the end of June 2022. Total loans stood at around €221 billion in mid-2022, 3.4% of which constitute non-performing loans, above the Eurozone average of around 1.8% percent.

Banks’ return on equity was 8.8% in the first half of 2022 versus 4.6% the year before. In terms of capital buffers, the Common Equity Tier 1 ratio stabilized at 15% as of June 2022.

Foreign banks are allowed to establish operations in Portugal. In terms of decision-making policy, a general ‘four-eyes policy,’ with two individuals approving actions, must be in place at all banks and branches operating in the country, irrespective of whether they qualify as international subsidiaries of foreign banks or local banks. Foreign branches operating in Portugal are required to have such decision-making powers that enable them to operate in the country, but this requirement generally does not prevent them from having internal control and rules governing risk exposure and decision-making processes, as customary in international financial groups.

No restrictions exist on a foreigners’ ability to establish a bank account and both residents and non-residents may hold bank accounts in any currency. However, any transfers of €10,000 or more must be declared to Portuguese customs authorities. See more at: https://www.bportugal.pt/ 

Foreign Exchange and Remittances

Foreign Exchange

Portugal has no exchange controls and there are no restrictions on the import or export of capital. Funds associated with any form of investment can be freely converted into any world currency.

Portugal is a member of the European Monetary Union (Eurozone) and uses the euro, a floating exchange rate currency controlled by the European Central Bank (ECB). The Bank of Portugal is the country’s central bank; the Governor of the Bank of Portugal participates on the board of the ECB.

Remittance Policies

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

Sovereign Wealth Funds

The Ministry of Labor, Solidarity, and Social Security manages Portugal’s Social Security Financial Stabilization Fund (FEFSS), with total assets of around €22 billion. It is not a Sovereign Wealth Fund (SWF) and does not subscribe to the voluntary code of good practices (Santiago Principles), or participate in the IMF-hosted International Working Group on SWFs. Among other restrictions, Portuguese law requires that at least 25 percent of the fund’s assets be 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.

7. State-Owned Enterprises

There are currently over 40 major state-owned enterprises (SOEs) operating in Portugal in the banking, health care, transportation, water, and agriculture sectors. Caixa Geral de Depositos (CGD) has revenues greater than one percent of GDP. The bank has the largest market share in customer deposits, commercial loans, mortgages, and many other banking services in the Portuguese market.

Parpublica is a government holding company for several smaller SOEs, providing audits and reports on these. More information can be found at: http://www.parpublica.pt/ . The activities and accounts of Parpublica are fully disclosed in budget documents and audited annual reports. In addition, the Ministry of Finance publishes an annual report on SOEs through a specialized monitoring unit (UTAM) that presents annual performance data by company and sector: In mid- 2022, Parpublica  managed assets totaling €10.6 billion, employs 4,600 workers and the net income of the holding in the first half of 2022 was €81 million.

When SOEs are wholly owned, the government appoints the board, although when SOEs are majority-owned the board of executives and non-executives’ nomination depends on the negotiations between government and the remaining shareholders, and in some cases on negotiations with EU authorities as well.

According to Law No. 133/2013, 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.

In 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. Credit and equity analysts generally tend to criticize SOEs’ over-indebtedness and inefficiency, rather than any poor governance or ties to government.

Privatization Program

Portugal is currently conducting the privatization of a controlling stake in electric mobility manufacturer and energy sector firm EFACEC, which has five interested candidates. The government also intends to privatize flagship airline TAP. Minister of Finance Fernando Medina said in March 2023 that the government would soon approve the privatization package of the airline. Privatization processes have traditionally complied with public bidding rules and are open to foreign investors.

Climate Issues

Portugal is progressing and accelerating its national climate strategy aims to reach net zero emissions by 2050. In its 2021-2030 National Energy and Climate plan, Portugal sets out goals for decarbonization, energy efficiency, energy security, internal energy markets and research, innovation, and competitiveness. Portugal’s installed solar capacity is now about 7% of the energy mix and is expected to reach 8 GW of solar capacity, or 27% of the energy mix by 2030.  The government is promoting significant investments in wind and solar energy development to meet its target of 47% energy from renewables by 2030. Portugal reduced its external energy dependence by 9.1 percentage points in 2021 versus 2005, increasing domestic energy generation and reducing the consumption of primary energy by 17%, ensuring greater supply security. The government of Portugal’s renewables deployment plan by 2030 of 3.4 GW in wind capacity, 6.5GW in photovoltaic and 10GW of offshore wind would amount to over €40 billion in investments.  Portugal’s path to a carbon neutral economy includes incentives for energy efficiency; promoting diversification of energy sources; increasing electrification; reinforcement and modernization of infrastructure; development of interconnections; market stability for investors; reconfiguration and digitalization of the market; incentives for research and innovation, promotion of low-carbon processes, products and services; and improved energy services and information for consumers.

Portugal is using around €16.6 billion in European Union (EU) pandemic response funds expected to flow to state coffers between 2021 and 2026 to support its Recovery and Resilience Plan (RRP), of which the government will allocate 47% to efforts that help climate objectives. Public procurement and investment policies dictate that large infrastructure, industrial, mining, and other environmentally sensitive initiatives require the approval of impact assessment studies, supervised and assessed by the Portuguese Agency for the Environment (APA), before moving forward.

Resources to Report Corruption

Council for the Prevention of Corruption
Avenida da Republica,
651050-189, Lisbon, Portugal
+351 21 794 5138
Email: cp-corrupcao@tcontas.pt

Contact at “watchdog” organization:

Transparency International –
Transparencia e Integridade Associacao Civica
Rua dos Fanqueiros,
65-3º A1100-226,
Lisbon, Portugal
+351 21 8873412
Email: secretariado@transparencia.pt