Why Your Small Business Should be Working With Portugal
February 27, 2018
Doing business in an entirely new continent can be challenging. Especially for small businesses, funding and time are always an issue. But still, international small business boasts many opportunities.
Europe in particular can be a difficult market to enter. The incentives for EU countries to trade with each other are massively enticing. However, following Brexit and other EU issues, countries like the US are finding new and exciting entry points.
One of these points is Portugal. Aside from an entrance to the European Union, Portugal may be the next great trading partner for US small businesses. We’re going to tell you why.
Here are the top three reasons why your business should be working with Portugal.
1. A Gateway to the European Union
We mentioned this above, but Portugal is often considered an entry point and trade facilitator for the EU. Portugal has a long and storied history with the US, and has been trading with us since gaining independence.
Though Portugal is a great market in itself, the country also cuts much of the red tape for small businesses looking to trade with the Union. Portugal is used by many EU countries as a connection to US small businesses, as the Schengen agreement eases trade between affiliated nations.
Portugal is often considered an entry point and trade facilitator for the EU
If an EU affiliated nation trades with a non-EU country, the importer must immediately pay the Value Added Tax for those goods in full. So, many businesses bypass this rule by sourcing US goods from EU countries that have imported them.
Portugal is a great market for this, as its VAT is fairly low. At 23%, their tax is on the lower end of the scale. But, one of the country’s two autonomous regions, Azores, boasts one of the lowest VATs in the Union at 18%. So, prices for importing are lower, and resell prices are as well.
This process makes US small business trading highly valued in Portugal. Coupled with the government’s plan for economic boosting through international trade, small businesses can expect much higher demand for their goods.
2. High-Tech Industries and Renewable Energies
Remember when we said Portugal was a lucrative market in itself? Well, this is one reason why.
Since the 2011 economic crisis, Portugal has slowly begun to invest in new technologies, most notably in renewable energies and tech startups. Mostly centered around Lisbon, creative spaces like Second Home and others are popping up. These centers are the beginnings of a new high-tech industry in Portugal which looks to international small businesses for manufacturing supplies.
Portugal has slowly begun to invest in new technologies, most notably in renewable energies and tech startups
Renewable energy is also pervading Portuguese infrastructure, which in turn requires international goods. In fact, 43% of Portuguese energy consumed comes from renewable sources, with the most coming from solar and hydroelectricity.
The government is officially advocating for this business development, as it performs a few functions for the economy. First, it entices international trade, as we’ve discussed. But, further, the government is interested in calling back its diaspora community.
After the 2011 crisis, many young Portuguese left for opportunities in other European nations. Jobs were nowhere to be found, and other countries were more promising career-wise.
These tech projects are enticing the return of diaspora Portuguese, and the government is continually incentivizing this return. Tax breaks, residency programs, and easier bureaucratic processes are to name just a few.
There’s a bit of a trend here.
Portugal’s government is priming its economy to be as lucrative as possible in response to the same economic crisis we’ve mentioned.
Many industries that were once government-funded or government run are being privatized. This means that many companies are now entering the Portuguese market, opening vast opportunities for small businesses.
Some of the country’s largest industries are finding small business investors from North America and Asia. Recently, Chinese companies have taken major stakes in Portugal’s largest utilities company, EDP, involved in power grid operations.
Many industries that were once government-funded or government run are being privatized. This means that many companies are now entering the Portuguese market
The country’s main airline, TAP, is also privatizing. It and other industries are hoping to find new life in the global market as they falter in the Portuguese economy. However, with money flowing back into the country, these companies will continue to grow, making for increasing opportunities.
Small businesses and suppliers have much to look forward to in Portugal. Portugal’s economy has a bright future, especially for small businesses.
But, if you’re trading abroad, you’ll need to think about money. Whether you’re paying a supplier or being paid yourself, transferring funds internationally can be expensive, slow, and fiscally irresponsible.
Veem is here to make the process easy, fast, and secure. Our global payments platform connects you directly to your international business partners, no bouncing from bank to bank.
No banks means no hidden fees, faster transfers, and payment tracking. With Veem, you can see where your payment is, where it’s going, and when it’ll get there. It’s as easy as tracking a package.
What’s not to love?
Start the application process, and bring your business payments to the next level.