Portugal vs Spain: The Ultimate Guide to Starting Your Business in Southern Europe
Techround8 months ago
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Portugal vs Spain: The Ultimate Guide to Starting Your Business in Southern Europe

Business
portugal
spain
business
startup
entrepreneurship
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Summary:

  • Portugal is emerging as a digital hub with initiatives like Startup Portugal to support tech entrepreneurs.

  • Spain offers a vibrant startup scene with a Startup Act providing resources for new businesses.

  • Work culture in both countries emphasizes a healthy work-life balance.

  • Cost of living is generally lower in Portugal, making it attractive for startups.

  • Tax structures differ: Portugal has a 21% corporate tax rate, while Spain has 25%, with benefits for new businesses.

When it comes to European destinations, Portugal and Spain are often at the top of the list for entrepreneurs looking to start a business. Both countries offer warm climates, stunning landscapes, and rich cultural heritage, but their business environments have unique characteristics. This article provides a detailed comparison of the two countries regarding business regulations, work culture, language barriers, and costs.

Are Portugal And Spain Startup-Friendly?

Portugal is gaining recognition as a digital hub, especially in Lisbon, where numerous tech entrepreneurs are setting up shop. The government has initiated programs like Startup Portugal that provide tax benefits and funding to encourage startup growth. Similarly, Spain is witnessing a rise in its startup scene, particularly in Barcelona and Madrid, supported by its Startup Act that offers mentorship, grants, and tax incentives.

Work Culture

Portugal: The work culture emphasizes family and leisure, resulting in a slower pace of life. The standard workweek is 40 hours with up to 22 days of annual leave.

Spain: Known for its laidback lifestyle, Spain has a similar workweek of 40 hours but is characterized by long lunches and social interactions, promoting a strong work-life balance.

Language

Portugal: The official language is Portuguese, but English is widely spoken, particularly in urban centers like Lisbon and Porto. Most business and government documents are available in English, making it easier for foreign entrepreneurs.

Spain: Spanish is the official language, and while English is spoken in major cities, it is less common elsewhere. This can be a challenge for non-Spanish speakers, as most local business documents are in Spanish.

Cost Of Living

Portugal: Generally more affordable than many Western European countries. A one-bedroom apartment in Lisbon starts around 1,200 euros, with average utility costs of 40-50 euros per month.

Spain: Slightly more expensive than Portugal, particularly in Barcelona and Madrid, where a one-bedroom apartment starts from 1,400 euros, with utilities around 120 euros. Dining out is also pricier, costing around 15-20 euros.

Taxes

Portugal: The corporate tax rate is 21%, with reduced rates for small and medium-sized enterprises (SMEs) earning less than 50,000 euros. The VAT rate is 23%.

Spain: The corporate tax rate is 25%, but new businesses enjoy a reduced rate of 15% for their first two profitable years. The VAT is 21% with lower rates for essential goods.

How To Set Up Your Business

Portugal: Entrepreneurs must determine their business structure, check the availability of their business name, obtain a tax identification number (NIF), and register with the Commercial Registry.

Spain: Similar to Portugal, entrepreneurs must choose a business structure, acquire a foreign identification number (NIE), register their company name, and open a bank account, with a minimum share capital of 3,000 euros for sole proprietors.

Where Should You Start Your Business?

Both countries present attractive options for entrepreneurs. Portugal is appealing for its affordability and booming tech sector, while Spain offers a larger market for products and services. Ultimately, the choice between the two will depend on individual preferences and the specific industry of interest.

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