Business Investment and Job Creation

Two different statutory routes

Article 3(1)(d)(ii) of Law No. 23/2007 provides a route based on creating at least 10 jobs. It does not state the €500,000 capital threshold that applies to the separate company-capital route. The cost of employing the required workforce nevertheless needs to be assessed over the relevant period.

Article 3(1)(d)(viii) combines a capital transfer of at least €500,000 with specific job requirements. The company must be headquartered in Portugal. The legal description differs according to whether a new company is incorporated or an existing company’s share capital is reinforced.

The company-capital conditions

For a new commercial company, the law combines incorporation with the creation of five permanent jobs. For reinforcement of an existing company’s share capital, it requires either the creation of at least five permanent jobs or maintenance of at least 10 jobs, including a minimum of five permanent jobs. The provision specifies a minimum period of three years.

That employment period must be read alongside the wider investment-residence framework, including the general five-year investment period. It should not be treated as permission to remove the qualifying investment after three years.

Low-density treatment

The 20% reduction is available for the standalone job-creation category where the activity is carried out in a qualifying low-density territory. It reduces the number to eight jobs. The statutory reduction does not apply to the €500,000 company-capital category or automatically alter its job conditions.

The geographic basis must be documented for the activity concerned. Obtain an assessment of the workplace arrangements and relevant territorial classification, especially where staff work across different sites or remotely.

Proving capital and employment

Article 65-D of Regulatory Decree No. 84/2007 identifies individual employment contracts as evidence for the job-creation category. For the company-capital category, corporate registry and investment information are relevant, with AIMA checking the social security position through official information.

At renewal, Article 65-E provides for verification of the required jobs and, for the company-capital route, continued existence of the company or ownership of the relevant interest. A company’s trading name, business plan or informal workforce list is not a substitute for consistent legal, payroll and registration records.

Examine the business independently

A residence objective does not remove the need for commercial and employment due diligence. Review the company’s liabilities, governance, financing needs and capacity to sustain the required workforce. Identify who controls recruitment, payroll, tax filings and access to records.

• For an existing business, distinguish a qualifying capital reinforcement from a payment to an exiting shareholder.
• Check the employment contracts, actual working arrangements and contribution records.
• Assess the effect of resignations, redundancies, restructuring or insolvency on continuing eligibility.
• Confirm that the capital is not directed, directly or indirectly, towards real-estate investment.

Keep the employment evidence usable

Agree a periodic reconciliation between the company’s employment contracts, payroll records and social security information. For each relevant role, the practical file should identify the employer, employment status, start date and any subsequent change. Ask the company to flag departures or contract changes early enough for their implications to be assessed.

When relying on maintenance of existing jobs, first establish the workforce position on which the proposed transaction relies. When relying on creation, identify which jobs are new. A total headcount presented without this distinction may not answer the relevant statutory test.

• A useful pre-transaction file includes the corporate record, proposed capital transaction, employment information and evidence of authority to complete it.
• A useful monitoring file records material workforce and capital changes, with the supporting documents and the adviser’s assessment.
• The investor should have a workable right to obtain information even if they do not manage daily operations.

Plan for continuing compliance

Create a reporting arrangement that allows the investor and legal adviser to monitor the relevant corporate and employment conditions. Practical records may include registry extracts, contracts, payroll reports, social security submissions and evidence of capital payments.

Material changes should be assessed before they occur whenever possible. A shareholder agreement or management mandate may help provide information rights, but contractual rights do not bind AIMA’s assessment. Any proposed change to the route or investment needs a separate legal review.