Does the concept of a 'permanent establishment' apply when a foreign person invests in real estate and, if so, how much does it cost to set up such a permanent establishment, how long does it take and what corporate governance requirements apply?
Yes. Direct investment may be carried out in Portugal either through a permanent establishment (estabelecimento estável) or without a permanent establishment. Please note, however, that the direct holding of real estate may be deemed to be a permanent establishment in Portugal if the real estate qualifies as a fixed place of business through which an activity of a commercial, industrial or agricultural nature is carried out by the non-resident investor.
The existence of a permanent establishment for tax purposes is a question of fact. The formal establishment of a branch costs approximately EUR 1,000 and may take between two and three weeks.
Corporate governance requirements are limited to listed public limited companies and are not applicable to a permanent establishment. However, similar requirements can be implemented by companies by way of self-regulation and a best practice approach to business.
