Inversió estrangera directa (IED) a Portugal

FDI in Figures

According to UNCTAD's World Investment Report 2024, FDI flows to Portugal stood at USD 7.2 billion in 2023, down from the USD 9.7 billion recorded one year earlier. At the end of the same period, the total stock of FDI stood at USD 195.3 billion. In 2023, Portugal had 10,705 foreign affiliates (+2.9 % vs. 2022), representing 2.1 % of non-financial companies. They employed 682,000 people and generated EUR 154 billion in turnover and EUR 38 billion in GVA, accounting for 18.5 % of employment, 29.0 % of turnover, and 27.8 % of GVA in the non-financial sector (+6.7 %, +5.2 %, and +11.3 % vs. 2022, respectively – data INE). Figures from the Portuguese Trade & Investment Agency show that the majority of investments are directed to the services sector, followed by manufacturing and energy. The main investing countries are Spain (20.2%), the Netherlands (19.3%), Luxembourg (17.7%), France (7.5%), and the UK (7%). Overall, 87% of the total FDI stock was held by EU countries at the end of 2023 (Bank of Portugal). Portugal’s metalworking, auto component, and machinery industries predominate the recent FDI trends, accounting for about 30% of inflows (government figures). The latest data available from the OECD shows that in the first semester of 2024, FDI inflows to Portugal totalled USD 4.1 billion, compared to USD 1.8 billion in the same period one year earlier.

The governmental agency AICEP, which provides tax breaks and incentives for exports and investment, attracted EUR 420 million (USD 437.22 million) in investments in 2024, up from EUR 41 million in 2023. New projects included investments from U.S. semiconductor packaging firm Amkor Technology, German engineering giant Bosch, and powertrain producer Horse, a Renault-Geely joint venture manufacturing gearboxes and mechanical components in Portugal.
FDI is considered a priority by the Portuguese government. The country has recently launched the development of renewable energies, specifically solar energy (Portugal has the second-largest solar power station in the world) and wave power (obtained from wave movements). These sectors could provide new opportunities to foreign investors, so as the IT and tourism sectors. Portugal offers a diverse economy and benefits from its EU member status, but bureaucratic and judicial burdens can discourage FDI. The country imposes no legal restrictions on foreign investment, except in sensitive sectors. Foreign investors follow the same rules as domestic ones, including registration and regulatory compliance. There are no nationality requirements or limits on profit repatriation. The Council of Ministers can block investments that threaten national security, with reviews possible in sensitive sectors, including defence, water management, public telecommunications, railways, maritime transportation, and air transport, especially if the buyer is from outside the EU. The Portuguese government provides investment incentives customized to industry, investment size, and sustainability, including grants, tax credits, loan access, and reduced land costs. AICEP actively attracts global investors and negotiates terms for major projects on a case-by-case basis. Portugal signed investment agreements with more than 100 countries and ranks 43rd among the 180 economies on the 2024 Corruption Perception Index and 29th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Portugal

Strong Points

Portugal was one of the countries which was the most strongly hit by the economic crisis of the late 2000s. Thanks to a policy of rigor and the implementation of reforms of the banking sector, of pensions and of the labour market, the country has since regained an interesting economic competitiveness and has begun a deep diversification of its exports (both sectoral and geographical). Its economy has stabilised, with a GDP growth of 4% in 2022 (IMF forecasts) based on its main strengths:

• A skilled and often multilingual workforce at a significantly lower cost than other Western European countries
• A system promoting investment in innovation and R&D, which has enabled the country to attract new FDI, essential to its development. The large number of multinationals from all sectors testifies to it. 
• Its strategic international relations with Europe, Africa and America, in addition to its membership of the European Union, allow Portugal to maintain close ties with its former colonies such as Brazil, Mozambique, Macao and Angola, and can serve as a gateway to other Portuguese-speaking markets
• Early sectoral and geographical diversification of exports
• Political stability and fluid governance
• A good business environment (the country was ranked 39th on the World Bank's Doing Business 2020 report.

Weak Points

The main weaknesses of Portugal's economy include:

• High unemployment rate
• Economy is weakened by high levels of private and public debt
• Small population
• Low productivity
• Underdeveloped manufacturing sector
• Rigidity of labour law.

Government Measures to Motivate or Restrict FDI

In recent years, Government policies have prioritised the promotion of Portugal’s appeal to foreign investors. As a result, taxation procedures have been simplified, effective warehouse and transport logistics have been developed (especially in the Sines terminal located in the southwest of Portugal) and telecommunication infrastructure has been improved. The Government has also worked to establish the AICEP - an agency for investment and foreign trade. The Government adopted the golden visa residence programme, which is a simple and fast-track residence permit programme designed to attract foreign investment into the country. Other measures implemented to help draw investment include easing some labour regulations to increase workplace flexibility and creating a special aid regime for large products (over EUR 25 million).

To improve the business climate, the Government has created the "Simplex" website, an information repository containing all measures taken to reduce bureaucracy, and the 'Empresa na Hora' initiative (a company in one hour), which allows companies to incorporate in less than an hour.

Bilateral investment conventions signed by Portugal

To see the list of investment treaties signed by Portugal, consult UNCTAD's International Investment Agreements Navigator.