Practical notes on Portuguese law for international entrepreneurs and investors.
March 2026
One of the questions most frequently raised by foreign investors establishing businesses in Portugal concerns the extent to which a company manager — whether a gerente of a limited liability company (Lda.) or an administrador of a public limited company (S.A.) — may be held personally liable for the debts of the entity they manage.
The general principle under the Portuguese Commercial Companies Code (Código das Sociedades Comerciais, approved by Decree-Law No. 262/86) is clear: a company has its own legal personality and its own assets, separate from those of its members and managers. Creditors of the company should, in the first instance, pursue the company itself. The manager is not, as a rule, a guarantor of the company's obligations.
However, Portuguese law provides several mechanisms through which this separation may be pierced. Article 78 of the Commercial Companies Code allows creditors of the company to bring a direct action against managers whose wilful or negligent breach of legal or statutory provisions contributed to the insufficiency of the company's assets to meet its obligations. This is not an automatic liability — it requires proof that the manager acted unlawfully and that such conduct caused or aggravated the company's inability to pay.
A second and highly practical route arises in the context of tax and social security debts. Article 24 of the General Tax Law (Lei Geral Tributária) establishes a regime of subsidiary liability (responsabilidade subsidiária) under which managers may be called upon to pay the company's tax debts from their personal assets when the company's patrimony is insufficient. The burden of proof shifts depending on when the debts arose: if during the manager's tenure, it is presumed that the manager was at fault, and the manager must demonstrate that the insufficiency of assets was not attributable to their conduct. This reversal of burden is a powerful tool in the hands of the tax authorities and catches many foreign managers by surprise.
A third scenario involves insolvency. Under the Portuguese Insolvency Code (CIRE), the court may qualify an insolvency as culpable (insolvência culposa) where it finds that the managers, through wilful misconduct or serious negligence, created or aggravated the company's insolvency. In such cases, the affected managers may be ordered to compensate creditors for the unpaid claims up to the amount of the shortfall, and may also be prohibited from holding management positions for a period determined by the court.
The practical lesson for any entrepreneur or investor operating through a Portuguese company is that the limited liability shield, while robust, is not absolute. Maintaining proper accounting records, filing tax obligations on time, not extracting value from the company to the detriment of creditors, and acting within the bounds of the company's interest are not merely good practice — they are legal duties whose breach can expose the manager personally.
March 2026
Portugal has one of the more protective employment regimes in Europe, and the rules governing the termination of employment contracts are a frequent source of concern for international companies establishing operations in the country.
The Portuguese Labour Code (Código do Trabalho, Law No. 7/2009) does not recognise the concept of "at-will" employment. An employer may only terminate a permanent employment contract in a limited number of circumstances: disciplinary dismissal for cause, collective redundancy, extinction of the job position, or unsuitability of the worker. Each of these grounds is subject to detailed procedural requirements, and failure to comply with the prescribed procedure renders the dismissal unlawful regardless of whether substantive grounds existed.
Disciplinary dismissal, which is the most common form of employer-initiated termination, requires the employer to issue a formal written charge (nota de culpa), grant the employee a minimum period to respond in writing, and issue a reasoned final decision. The grounds must be sufficiently serious to make the continuation of the employment relationship immediately and practically impossible. Portuguese courts apply this standard rigorously, and dismissals based on minor infractions or on procedural shortcuts are routinely declared unlawful.
The consequences of an unlawful dismissal are significant. The employee is entitled to reinstatement or, alternatively, to compensation calculated on the basis of seniority, plus all wages from the date of dismissal to the date of the court's decision. For companies with long-serving employees, this exposure can be substantial.
Termination by mutual agreement (revogação por mútuo acordo) remains available and is widely used in practice. However, the agreement must be genuinely voluntary and properly documented, and the employee has a right to revoke the agreement within seven days of signing. Employers should ensure that the terms are clearly set out and that the process leaves no room for a subsequent claim that the employee's consent was vitiated.
For any foreign employer operating in Portugal, obtaining legal advice before initiating any termination process is essential. The cost of a properly managed dismissal is almost invariably lower than the cost of litigating an unlawful one.
March 2026
Foreign nationals who acquire property or establish businesses in Portugal often overlook a critical question: what happens to those assets upon their death? The answer is governed by a complex interplay between Portuguese domestic law and European Union private international law, and the consequences of inadequate planning can be severe.
Since August 2015, the European Succession Regulation (EU) No. 650/2012 applies in Portugal. Under this regulation, the law applicable to the entirety of a person's succession is, by default, the law of the State in which the deceased had their habitual residence at the time of death. A person may, however, choose the law of their nationality to govern their succession by making an express declaration to that effect, typically in a will.
This choice is particularly important because Portuguese succession law imposes a system of forced heirship (legítima). Under Articles 2156 to 2161 of the Portuguese Civil Code, certain family members — the spouse, descendants and, in the absence of descendants, the ascendants — are entitled to a mandatory share of the estate that cannot be freely disposed of by will. The forced share varies between one half and two thirds of the estate depending on the family composition. Any testamentary disposition that infringes the forced share is subject to reduction (redução por inoficiosidade).
For a foreign national whose own national law does not impose forced heirship — such as a citizen of the United Kingdom or the United States — making an express choice of their national law in a Portuguese will can preserve the freedom to distribute their Portuguese assets as they wish. Without that choice, Portuguese forced heirship rules may apply if Portugal is the habitual residence at the time of death, potentially overriding the deceased's intentions.
There are also practical considerations. Portuguese immovable property must be registered in the Land Registry (Conservatória do Registo Predial), and the transfer of property upon death requires a specific procedure — the habilitação de herdeiros — which can be conducted notarially or judicially. Where the deceased held shares in a Portuguese company, the articles of association may contain transmission clauses that restrict or condition the transfer of shares to heirs. These clauses must be carefully reviewed as part of any succession planning exercise.
Early and informed planning, ideally at the time of acquiring assets in Portugal, avoids unnecessary litigation and ensures that the investor's wishes are respected across jurisdictions.