How to Do Business in Portugal
February 22, 2018
Europe has many opportunities for US businesses. Trade deals with the European Union, diverse and expansive markets, and easy access to neighboring nations are just a few of the incentives. Trade between EU member nations is so good that finding an entry point can be challenging for international small businesses.
Portugal can be your foot in Europe’s door.
The US and Portugal have a storied history and a strong relationship. In fact, Portugal is home to the US’ oldest continuously operating consulate, in Ponta Delgada. Pretty cool, we know.
The World Bank has ranked Portugal as the number one country in the world for cross-border trade, as the country’s economy heavily relies on imports and exports
Both countries are highly invested in each other, and international businesses are the glue that keeps them together.
The US is Portugal’s largest trading partner outside of the EU, but the statistics on that can be deceiving. Many EU countries trading with the US will market and sell those products to Portugal. These deals go the other way as well, as Portugal’s affiliation with the EU allows US businesses to market their goods to neighboring countries.
The World Bank has ranked Portugal as the number one country in the world for cross-border trade, as the country’s economy heavily relies on imports and exports. Thankfully, its coastal geography makes it perfect for transatlantic operations.
The Portuguese economy is still bouncing back from the 2011 financial crisis, and the government continues to promote foreign investment with countries like the US as a remedy.
Along with Portugal’s stable government and low corruption levels, international businesses can expect great returns on investments.
Introduction to Portugal
Portugal is a small country with an even smaller population. Around 10 million people reside there, a significantly lower number than most European countries.
That’s why Lisbon’s population of 2.7 million is so staggering. Lisbon is Portugal’s capital, economic center, and is the wealthiest region in the country. Talk about a vast market.
Lisbon is often ranked as one of the world’s most beautiful cities, mostly due to its ancient architectures, coastal geography, and iconic cobblestone streets. This also makes Lisbon a tourist hub, contributing to the economy and promoting local businesses.
The city is also home to the country’s largest port. The Port of Lisbon is one of Europe’s largest container ports along the Atlantic coast, making the city a center for transatlantic trade.
International businesses are surely aware of Lisbon’s potential and attractive qualities.
Portugal does have other cities, and many are unfortunately overshadowed by Lisbon’s popularity.
Porto, the county’s second largest city, is the only Portuguese city, besides the capital, to be recognized as a “global city.” While Lisbon is the home of financial centers and corporate headquarters, the heart of the Portuguese economy beats in Porto.
The city is the economic center of the heavily-industrialized northwest area of the country. Porto trades domestically across the country in manufacturing goods, but also contributes largely to international trade.
In fact, Porto’s municipal government is looking to increase its competitiveness in the global scene. The city is promoting an initiative to support companies looking to grow sustainably in the global economy.
Porto’s government hopes to develop a network of domestic and international business leaders to upscale the region’s economy, and promote local operations. So keep your eyes open.
Like all other EU nations, Portugal’s official currency is the euro.
The exchange between USD and euros favors European nations, with 1 euro equaling out to about 1.19USD. Though it might not sound like much, large sums reveal a major disparity. But think of it this way, your Portuguese business partners may be more inclined to work with you if they know they’re getting a good foreign exchange rate.
Trading in the euro is also beneficial for its versatility. The euro easily travels across European borders, which is especially important in Portuguese markets where cross-border trade is crucial
Trading in the euro is also beneficial for its versatility. The euro easily travels across European borders, which is especially important in Portuguese markets where cross-border trade is crucial.
Portugal’s most widely spoken official language is Portuguese, obviously. But what you probably didn’t know is that there’s a second official language in the books: Mirandese. Spoken only in two small municipalities in northeastern Portugal, Miradnese has less than 5,000 fluent speakers. So you probably won’t need to know that, but it’s interesting.
Portugal’s self-named language is literally everywhere. It’s the sixth most widely spoken language in the world, and truly highlights the expanse of the Portuguese colonial empire.
While you’re more likely to find an English speaker in Portugal than in Spain or France, you shouldn’t expect fluency, or even comprehension. Many tourist areas require English-speaking staff, but the further you go into Portugal, the less likely this will be.
For business meetings, you may need a translator or interpreter to avoid miscommunications. To get around, Google Translate or Siri will be a big help for reading road signs and ordering food.
You might also just want to pick up a few Portuguese words, especially if you’re from the US. South Americans speak Portuguese more than any other language. Easing talks with our southern neighbors is always a good idea.
Holidays and Traditions
Many Portuguese holidays will be familiar to you. Religious holidays are exclusively Christian, with national holidays celebrated throughout the year.
The only hiccup is Portugal’s two autonomous regions: Azores and Madeira. Much like Puerto Rico for the US, these two islands are under the Portugal administrative umbrella, but get some of their own holidays and traditions. We’re going to list the country-wide holidays, and make a note of which ones are region specific.
|New Year’s Day||January 1st||Nationwide|
|Carnival||Last Day Before Fast for Lent||Some Businesses May Not be Affected|
|Good Friday||The Friday before Easter Sunday||Nationwide|
|Freedom Day||April 25th||Nationwide|
|Labor Day||May 1st||Nationwide|
|Corpus Christi||Date Varies||Nationwide|
|Azores Day||June 1st||Only in Azores|
|Portugal Day||June 10th||Nationwide|
|Madeira Day||July 1st||Only in Madeira|
|Assumption Day||August 15th||Nationwide|
|Republic Day||October 15th||Nationwide|
|All Saints’ Day||November 1st||Nationwide|
|Restoration of Independence||December 1st||Nationwide|
|Immaculate Conception||December 8th||Nationwide|
|Christmas Day||December 25th||Nationwide|
|Boxing Day||December 26th||Only in Madeira, Banking Holiday|
Communication from the US
To call your Portuguese business partner, you must first add the Portuguese phone code, +351 before the area code. After using the US exit code, just punch in the number.
Portuguese business people prefer to meet face to face. Though this isn’t an option for some, you may have a hard time getting through to your supplier or vendor otherwise
Portuguese business people prefer to meet face to face. Though this isn’t an option for some, you may have a hard time getting through to your supplier or vendor otherwise.
Portuguese business culture doesn’t care much for writing. Whether it’s contracts or emails, getting something written down seems to imply distrust. More than that, the preference is practical. Administratively, paperwork can take a long time to process through the Portuguese system. This has left a bad taste in the mouths of many business people.
At the very least, call your Portuguese counterpart if you can’t make it there. But honestly, you may have to go.
Finding a Supplier
The relative lack of native English speakers in Portugal can make it hard to find a reliable supplier. Fortunately, the country’s focus on overseas and EU trade extends to international businesses.
AICEP Portugal Global is an independent entity of the Portuguese government. The group works to boost international trade by promoting domestic companies into the global space. Their website is chock-full of great resources and related pages to help businesses from around the world. The best part is, it’s in English.
The site provides a supplier directory, how to source from Portugal, how to invest in Portugal, and even a “digital library” that offers businesses free white-papers on Portugal’s economic status and other relevant info.
International businesses can rest assured that the suppliers and info here are reliable and secure.
Traveling to Portugal
The protocol for traveling from the US to Portugal is the same as most other EU nations. If you’re staying in country for up to 90 days, you don’t need a visa. As long as you’re a US citizen with a valid passport, you’ll have no issues booking your stay. But it does need to be valid for 3 months after the end of your trip.
As per EU regulations, you can acquire a Schengen visa. This visa allows you to travel between all EU member nations without any issues. It helps to promote trade between countries, but it helps you see the sights, and makes it easy to travel to suppliers in other EU countries. Check out this website for more information on how to apply.
Using a Cell Phone
Your US cell phone service provider probably won’t work in Portugal. The frequencies in Europe are different than in the US, and even if they do work, you’ll be charged enormous roaming fees.
You’re better off buying a SIM from a Portugal-based provider.
The most popular and most widely-connected provider is MEO. The company’s website allows you to buy any SIM plan you want. You can choose how much data you want, which device size you need, and you aren’t charged any roaming fees.
MEO isn’t in every airport though, and you may need to go into the city to find a store. Vodafone is more popular in the airport, but you might not find as good of a deal or connection. It’s ultimately your choice, but MEO is probably the best you’ll get for what you spend.
Public wifi is easy to find, especially in big tourist cities like Lisbon. Cafés, hotels, and even some monuments will have wifi connection, however slow.
The most popular method of wifi connection for tourists, though, is to rent a portable hotspot device. These portable routers fit easily into a pocket or purse, and can connect to up to five or ten devices, depending on the model.
The best mobile hotspots available in Portugal can provide 4G LTE with unlimited data. Multiple companies offer this service, and prices range from 18 euros (21.35USD) for 3 days, to 56 (66.50USD) for two weeks.
You won’t be able to find these in the airport, but shops that rent these aren’t far. Especially in big cities.
The Portuguese are a warm, welcoming people. You may find yourself comfortable at a trade show there, but you might also unintentionally offend if you aren’t careful. With that in mind, here are a few tips for attending Portuguese trade shows.
1. Use Reserved Gestures and Speech: While friendly, the Portuguese are known to be a reserved, quiet people. Over excitement and lots of gestures can be a turn off for the relatively collected Portuguese. Keep your cool, and try not to get too emotional.
2. Try Titles: Titles are important for Portuguese business people, especially in the first meeting. Mr. and Mrs. will suffice, but adding a Senhor or Senhorita can cement your commitment to their business culture.
3. Don’t Question It: Don’t put your potential Portuguese business partners into an embarrassing position. As we’ve said, the Portuguese are reserved, and don’t like to be called-out in public. So, avoid hard questioning or revealing possible flaws in public.
|Concreta||Mod’tissimo||Fall Every Two Years||Construction, Materials, Building|
|Exponoivos Lisbon||Lisbon||Winter||Fashion, Fitness, Weddings|
|Sibab Portugal||Lisbon||Winter||Food and Beverage|
|Mod’tissimo||Mod’tissimo||Fall and Winter||Fabrics, Accessories, and Clothing|
|Frutitec / Hortitec||Batalha||Winter||Agriculture, Horticulture Equipment|
|Interdecoração||Porto||Winter||Decorations, Gifts, Accessories|
Portugal’s geography can be misleading. Though bordering Spain and just southwest of France, Portuguese business people are culturally distinct. International businesses shouldn’t think of Portugal as Western Spain. But there are some similarities. You might get beat up for that.
Though bordering Spain and just southwest of France, Portuguese business people are culturally distinct
As always, politeness is the best option. Being reserved and well-mannered will take you miles in Portuguese business. People say, “be yourself,” but don’t. Portugal is a great place to do business, but international partners need to respect the specifics of their culture.
Doing so isn’t only respectful, but it could even get you a better deal, get a deal done faster, and ultimately establish a fruitful, long-term business relationship.
Portuguese businesses are top-down in structure. Business may be conducted by lower-level employees, but all decisions are made by the head of the company. This can be frustrating for some, as there is little-need for consensus amongst other employees.
This makes decision making long, and sometimes drawn out. Especially if the head of the company or business isn’t present, and the details of the meeting need to be relayed back. This structure is reflected in family life, and may stem from Catholic power structures.
For international businesses, even if you don’t follow this structure, it’s best to make like you do. Portuguese business partners may be unwilling to discuss matters with lower-level employees. Bring your highest-ranking person. If that’s you, (first of all, congratulations) be ready to talk a ton.
Time is flexible in Portugal. It’s common for business partners to show up late for a meeting, and decisions can take a long time to make. This is related to the last point, but it isn’t just a result of company structure.
Plans and deals need to be meticulously taken apart, analyzed, and represented to ensure the best outcome for both side
Portuguese business people are very thorough and detail oriented. Plans and deals need to be meticulously taken apart, analyzed, and represented to ensure the best outcome for both sides. Time doesn’t matter much as long as the deal is the best it can be.
Be aware, you’ll be working out a deal for a long time in Portugal. Respect the process, and try not to get frustrated. The longer you work with a supplier or vendor, the better and faster this process will become.
Like many cultures, establishing a personal relationship with business partners is considered vital. For most, these relationships develop from continued business operations, multiple dealings, and eventually establishing a rapport or mutual respect.
However, Portuguese business values these personal connections even higher. Portuguese business people prefer to have small talk before and after business is conducted. Once again, this lengthens the process. But it’s considered disrespectful to avoid it, and can come off as disinterest to your partners.
However, it also establishes trust, a rapport, and lets your Portuguese partners know that you’re genuinely invested in the deal. Once again, play along. Ask how they are, how their family is, and don’t be surprised if you’re answering these questions yourself.
Portuguese business starts with small talk. It’s important for establishing a rapport, and for your partners to get to know you personally, and whether or not they see a future in your dealings.
But this doesn’t mean you can slack off. A good rapport may seem like friendship at first, but don’t be too friendly. The Portuguese value formal communication in business, and unless invited to do so, it’s wise to be as cordial as possible.
This results in the reserved nature of Portuguese communication. The Portuguese aren’t boisterous, they don’t gesture too much, and their emotions are generally kept on the down-low. Formality in speech means formality in overall communication. Even the nonverbal can’t be too loud.
But once you’ve established yourself as a viable and trustworthy business partner, your relationship will grow. Communication lines and protocols will loosen, and you’ll find yourself joking and gesturing all over the place once again.
Things take time in Portuguese business, and the communication style reflects that. Be self aware, cautious, and, above all, nice. Aggressive communication tactics won’t speed the process up, but will alienate your Portuguese partners and may even breakdown negotiations. For more on that, check out the “Business Negotiations” section of this guide.
Business Etiquette: Do’s and Don’ts
If you don’t have time to read the entire guide (it’s okay, we understand), these are a few need-to-knows for your first meeting in Portugal. Here’s a quick rapid-fire.
- Dress Sharply: The Portuguese are aware of fashion trends. Practically sandwiched between France and Spain, Portugal is a heavy-hitter in the world of dress. Go conservative, but not cheap. Your partners will see low-quality from miles away.
- Arrive on Time: Time is flexible in Portuguese business, but not for you. Even arriving five minutes late is considered rude, so avoid this at all costs. Meetings should also be scheduled two weeks in advance.
- Avoid the Agenda: Related to time, schedules aren’t very important here. There may be an agenda or itinerary, but these are generally guidelines and are often disregarded. Don’t be offended. Let the meeting go where it needs to.
- Keep Small Talking: Patience is key. Small talk is huge in Portuguese business, and participation is vital. But don’t ever try to end small talk yourself. Your partners will initiate business talks, and you doing so will come off as rude.
- Cards Can Wait: Exchange business cards at the end of meetings. Though this seems odd, as these are often considered as a way to introduce yourself, Portuguese business people believe it distracts from the essential small talk and dives into business too soon.
- Respect the Bubble: You’ll probably see Portuguese business people touching, hugging, and kissing their friends or long-time business partners. This may be obvious, but don’t do this, especially in a first meeting. Would you want a stranger to kiss you?
After the conversation dies down, business will begin. Keeping these tips in mind can optimize negotiations, avoid offending, and speed up the famously slow Portuguese business process.
Don’t Put it in Writing
This might sound odd at first, but it makes sense in the context of Portuguese business culture. Writing anything down or insisting on a contractual agreement is not recommended in Portuguese business. Many business people consider this a slight against their reputation and trustworthiness. This will stall, and potentially stop, negotiations entirely.
Writing anything down or insisting on a contractual agreement is not recommended in Portuguese business. Many business people consider this a slight against their reputation and trustworthiness
Again, this makes sense in terms of Portuguese business culture largely, as establishing personal, long-term relationships is highly valued. So, oral agreements and “words” are considered binding agreements among Portuguese business people. If you must write something down, keep it for, and to, yourself for potential legal purposes.
Don’t be Pushy
The reserved communication style of Portuguese business extends to negotiations. Aggressiveness, over-confidence, and pushiness are highly frowned upon in Portuguese business.
The Portuguese take a while to negotiate, and don’t appreciate being pressured to make a decision. So, negotiation tactics that work well in the US will have little effectiveness here. Highballing, or other tactics that work to speed up the process, are not recommended.
Your best bet is to follow the tactical lead of your potential partners. They know what style they appreciate and will respond to, and you would benefit from reflecting it.
People, Not Companies
Portuguese business people, as we’ve said many times, prefer to develop personal relationships before business is conducted. In this way, many say that the Portuguese negotiate with people, not companies.
In fact, if you start the negotiations with one employee, and want to switch it up, you may have to start the process all over again. Establishing trust and rapport is vital.
Though your company is important, negotiations are about selling yourself. Why are you right for this deal, and how will you benefit your Portuguese partners? These are the kinds of questions you need to answer.
This is probably pretty obvious by now, but it’s insulting to rush a negotiation. Be patient, and don’t use pushy sales tactics. Methods are very different in Portugal than in the US, and it can easily frustrate the unprepared business leader.
Decisions aren’t even made at negotiation tables. You can leave a negotiation feeling like you’ve gotten nowhere, and get a call that night with an offer. Don’t let it discourage you. Portugal is more than a worthwhile place to do business. Here, you can establish lifelong supplier and vendor relationships that boost your business.
Regulations and Permits
As part of the European Union, Portugal doesn’t impose any national regulations or require any permits from any nation, including the US.
However, the EU does. Thankfully, the average EU tariff is just 3%, so imports for US businesses are relatively cheap. However, there may be specific rules that businesses need to know, depending on the imported good. For accurate, up-to-date information, check out the EU’s Combined Nomanclature (CN) to be sure you aren’t missing any payments.
Thankfully, the average EU tariff is just 3%, so imports for US businesses are relatively cheap. However, there may be specific rules that businesses need to know, depending on the imported good
The EU also uses the “Integrated Tariff of the Community” to identify certain products licensing requirements. For more info, check the TARIC.
Your Portuguese buyer will have to pay the VAT (Value Added Tax) for Portugal in full at the time of importation. These taxes range across the EU, but Portugal’s comes out to about 23%. For more information on this, check out the “Payments” section of this guide.
Now, there are a couple of things that US businesses need to do to comply with EU regulations.
The SAD (Single Administrative Document) describes the goods being imported from both EU and non-EU countries.
You’ll need to apply for an EORI number if you don’t have one already. The Economic Operator Registration and Identification Number is used for customs clearances. With this number, you can import into any EU-affiliated country. So, it’s more than worth your time.
Your Portuguese partners will need to fill out a Summary Declaration. Customs authorities provide them.
Aside from pickpockets and other tourist scammers, you don’t have much to worry about in Portugal. At least, nothing that’s preventable. The real issues with doing business in Portugal are much larger than the average scam, and stem from an almost decade long-economic crisis that the country has yet to fully recover from.
Between 2011 and 2014, Portugal experienced what many have called “the Great Recession.” The country became unable to repay debts to other nations, needing assistance from third parties. This produced a cyclical economic downturn that lasted at least three years.
While it seems the government has stopped the hemorrhaging, Portugal is still reeling from what was the worst economic crisis in many years. Since then, Portugal’s buying power hasn’t been the same, and reliance on third parties is still a major concern.
International businesses need to consider the instability of the Portuguese economy when looking to invest there. However, the way that Portugal will come out of this crisis is through trade. Businesses around the world are being coaxed by the Portuguese government to work with them, import goods, and find domestic suppliers.
In more ways than one, Portugal is working to stabilize the economy with globalization, not austerity. With the help of international businesses, the future looks brighter than ever.
Paying suppliers in Portugal can be a bit challenging. The echoes of the economic crisis affect payment processing and other funds. Sending money into the Portuguese banking system takes a long time, and once it’s there, it’s not exactly reliable. Payments can be lost, especially when traveling across the Atlantic.
That’s where Veem comes in handy.
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Veem’s dashboard tracking system lets businesses see where their payments were, where they’re going, and when they’ll arrive at the destination.
Not convinced? Veem will even verify the intended payments receiver. That means no fraud, and no missing payments.
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