5. Policy conclusions

Alongside an impressive economic rebound, foreign direct investment (FDI) in Portugal has grown rapidly over the last decade, resulting in one of the highest levels of inward FDI stocks among OECD countries. Yet, with overall investment levels remaining relatively low, Portugal would benefit from mobilising further FDI to respond to long-term structural challenges weighing on productivity growth and to accelerate the country’s digital and green transitions. Ensuring that Portugal continues to be an attractive destination for foreign investors is therefore essential.

Although foreign investors benefit from Portugal’s relatively open regulatory framework, previous chapters of this report have highlighted areas where further regulatory reforms could help Portugal build a more enabling and competitive environment for investment. This chapter outlines the key findings of the report in this regard and suggests policy actions to support Portugal’s efforts to attract and retain FDI. The first section of this chapter provides policy considerations regarding broader aspects that affect businesses across different sectors of the economy, while the second section outlines sector-specific considerations. The third section concludes by suggesting next steps for the implementation of investment climate reforms.

As discussed in Chapter 3, regulatory liberalisation is not an end in and of itself. Strict policy approaches to investment or business more broadly can sometimes be needed to serve important public interests. Nonetheless, regulation that is overly strict in proportion to its intended objectives may have the unintended consequence of increasing business costs. Drawing from best practice regulation and relatively less burdensome rules adopted in peer countries, as identified in previous chapters, this chapter proposes measures that could help Portugal achieve its policy objectives while improving operating conditions for foreign investors and domestic firms alike. The timing could not be more apt to consider alternative policy approaches, as structural reforms envisaged in Portugal’s Recovery and Resilience Plan are currently being scoped and in some instances implemented across many areas addressed in the present chapter.

Overall, Portugal has a relatively open regulatory environment for FDI, with only a few statutory limitations on foreign investment and more competition-friendly regulation than OECD countries on average. Yet, there is potential to further improve Portugal’s investment climate by undertaking reforms in several areas affecting a wide range of companies across different sectors of the economy. In addition to regulatory reforms, the policy considerations outlined in this section call more broadly for an increasingly service-oriented approach in the implementation of business regulation.

Foreign investors in Portugal, including investors from outside the European Economic Area (EEA), benefit from relatively open market entry. New domestic and foreign-owned firms also face a relatively light administrative burden in Portugal, compared to most benchmarked countries. Although policies related to starting a business and investment screening did not arise as a priority in the business consultation undertaken in the context of this report (see Chapter 4), a few targeted measures to further facilitate foreign investors’ establishment of new firms in Portugal and acquisitions of existing ones would be welcome.

Since 2005, Portugal has implemented simplified company incorporation procedures and electronic registration services to start a business, such as the Empresa na Hora and Empresa Online initiatives. However, despite Portugal’s impressive track record in improving digital government services, there is still room to improve the online availability and use of public services for entrepreneurs to start a business and conduct daily operations. Furthermore, even if Portugal has eliminated minimum capital requirements for private limited companies in 2011, it still maintains a stricter minimum capital requirement for public limited liability companies (EUR 50 000) than some peer countries and the minimum level required by European Union (EU) legislation (EUR 25 000).

  • Continue expanding the offer of online solutions for company incorporation, including for foreign nationals, as has been done in e.g. Estonia. Implement the planned “e-Residency” platform, which would allow foreign companies to incorporate in Portugal fully remotely. Invest in simplifying other online procedures adopted during the company lifecycle (such as licensing and permits, management and closure), as foreseen in the Recovery and Resilience Plan, and further encourage the use of online services by businesses and citizens.

  • Reduce the cost of incorporation by aligning the minimum capital requirement for public limited companies with peer countries, such as Estonia and the Slovak Republic, which maintain the minimum level required by EU law. As discussed in Chapter 2, minimum capital requirements have generally not had the intended effect of protecting creditors.

Certain non-EEA foreign acquisitions of strategic assets in Portugal are potentially subject to government review and may be blocked if they are deemed to jeopardise national defense and security or security of supply of essential services. Amendments to ensure transparency in the implementation of the foreign investment screening mechanism and to allow for tailored responses could be considered, should Portugal decide to modernise the current mechanism in the near future in line with reforms in other EU countries.

  • Promote transparency and accountability in the implementation of the screening mechanism by requiring the executive to periodically report to the parliament and/or the public (aggregated) information on screened transactions and outcomes, while ensuring confidentiality.

  • Increase predictability for investors and flexibility in the implementation of the screening mechanism by introducing a possibility of negotiating or imposing obligations or conditions for the transaction to address security concerns, as an alternative to blocking the acquisition. In the peer group, the Czech Republic and the Slovak Republic’s screening legislation already foresees the use of such mitigation measures.

Public consultations on draft regulation proposed by the executive are open to all interested persons, including businesses, and an online consultation portal ConsultaLEX was launched in 2019 to facilitate stakeholder engagement in the drafting of secondary legislation proposed by the executive branch. Competition impact assessment has recently been introduced as a mandatory element of the executive’s proposals for new regulation. Yet, OECD indicators show that there remains room for Portugal to strengthen good regulatory practices in comparison with peer countries and the OECD average, particularly in terms of regulatory impact assessment (RIA) and stakeholder engagement in law-making (see Section 2.2.3).

Some of the foreign investors and chambers of commerce interviewed for this report also felt that the private sector was not consulted enough in the drafting of regulation, or was not consulted within an appropriate time frame, and business perspectives and realities were not sufficiently considered in law-making. The recent consultation process in preparation of an environmental licensing reform, however, was welcomed by a consulted chamber of commerce as a positive development in involving the private sector in law-making. Additionally, many investors identified difficulties understanding regulation and frequent changes in the legal framework as obstacles to their operations in Portugal.

  • Continue promoting RIA and stakeholder engagement practices in both domestic law-making and transposition of EU directives to ensure better understanding of the effects of new regulation on companies and further reduce unnecessary administrative burden. The process developed for the preparation of licensing reforms (see Section 4.4.2 in Chapter 4) is a step towards more active stakeholder involvement and the good practices implemented therein could be generalised to the drafting of other business regulation.

  • Broaden the use of ConsultaLEX to cover all levels of regulation and also non-legislative initiatives (e.g. strategy documents and action plans of relevant agencies), use RIA to support discussions with stakeholders, strengthen timely communication of regulation under preparation and engage with stakeholders in earlier stages of the drafting process to identify alternative policy options, and make more extensive use of ex post reviews of regulation to ensure that it fulfils its intended objectives (OECD, 2021[1]; 2022[2]). Follow the example of e.g. Estonia, Poland, the Slovak Republic and Spain and make RIA documents publicly available online.

  • Ensure sufficiently long transitional periods in new regulation to allow time for businesses to adapt to changing obligations. Improved transparency and more active stakeholder engagement in law-making, as described above, can also help firms anticipate forthcoming changes in regulation.

Large-scale business surveys indicate that firms in Portugal perceive obtaining operating licenses and permits as more time-consuming and to some extent more burdensome than in peer countries (see Box 4.1 in Chapter 4). Despite simplification measures implemented as part of systematic efforts to reduce administrative burden for companies, the foreign investors consulted in the context of this report also cited burdensome interactions with public administration in the context of obtaining the necessary operational licenses and permits to start or expand a business in Portugal, such as environmental licenses or construction permits. Sector-specific challenges were observed, for instance, in the authorisation of clinical trials in the pharmaceutical industry. Commonly perceived shortcomings in licensing and permitting included long delays, lack of transparency and predictability on process timelines, complex procedures and requirements, the discretion of the bureaucracy and uncertainty stemming from lack of standardised operating procedures.

  • Continue to simplify licensing procedures, following the example of recently streamlined environmental licensing and as foreseen in the Recovery and Resilience Plan, while preserving the capacity of institutions to make informed decisions and protect public interests more broadly. Consider introducing a single license to simplify the start and expansion of operations; for instance, in the Netherlands, building, planning and zoning, and environmental permissions are generally covered by an “all-in-one” permit.1

  • Ensure the capacity of institutions to issue licenses and permits within statutory deadlines, e.g. by strengthening human and/or financial resources and accelerating the digitalisation of both internal processes and interactions with businesses to further help expedite decisions. For instance, speeding up the approval of clinical trials could contribute to increasing Portugal’s competitiveness and attractiveness for investment in the pharmaceuticals sector.

  • Enforce tacit approval to increase legal certainty for investors when there is no timely response from authorities, without jeopardising monitoring and compliance standards, as contemplated in the scoped reform in relation to streamlining environmental licensing but also administrative processes more broadly.

  • Consider standardising licensing and permit procedures (e.g. applications and required documents), as well as other processes involving interaction with the authorities, across the relevant institutions in different parts of the country to improve the efficiency of processing requests and compliance monitoring by relevant authorities and increase predictability for investors.

  • Leverage foreign investors’ positive experiences with smaller municipalities’ dynamic approach to licensing and broader support to attract foreign investors outside the Lisbon and Porto areas. Sub-national offices of AICEP and IAPMEI could be leveraged to strengthen the investment promotion and support capabilities of municipalities and inter-municipal councils, for instance by encouraging the sharing of good practices (OECD, 2022[2]).

Although steps have been taken in recent years to simplify the tax system by eliminating several special provisions and Portugal has made available tax simplification measures, such as prefilled declarations and online services, taxation has consistently come out as an obstacle or relatively unattractive factor in surveys of Portuguese firms, with businesses spending more time on tax compliance in Portugal than in most of the peer countries (see Section 4.4.2 in Chapter 4). Investors consulted for this report also largely considered that Portuguese tax regulation is still relatively difficult to understand and burdensome to comply with. Investors also cited frequent changes in tax regulation and difficulties obtaining clarification on the interpretation of new rules as aspects contributing to uncertainty, difficulties planning long-term investment and increased time spent on tax compliance.

  • Continue efforts to implement a simpler and streamlined corporate tax regime to bring down tax compliance costs for foreign investors and domestic-owned firms alike (OECD, 2021[3]).

  • Ensure timely communication of changes to taxpayers and appropriate transitional periods for them to adjust to new obligations (IMF/OECD, 2017[4]). More extensive regulatory impact assessment and more actively involving business stakeholders in the drafting of new tax rules could help policy makers to pinpoint possible ambiguities at an earlier stage of drafting and companies to anticipate forthcoming changes and get accustomed to them ahead of their implementation.

  • Strengthen Portugal’s offering of tax information and assistance services to increase predictability and legal certainty for taxpayers and facilitate tax compliance. For instance, ensure timely issuance of guidance notes and rulings, adopt further digital assistance services (e.g. chatbots) and promote the use of software integrating tax services in the systems that corporate taxpayers use to run their business, such as payroll systems (OECD et al., 2022[5]; OECD, 2021[6]).2 Strengthening the tax authority’s capacity to issue guidance and binding rulings could also help prevent excessive tax litigation (IMF/OECD, 2017[4]).

Portugal has undertaken reforms in its justice system and improved the efficiency of its courts in recent years. Yet, the duration of court proceedings remains long compared to peer countries, particularly in administrative cases, which take more than eight times as long to resolve in first instance courts in Portugal than in the benchmark group’s best performer Lithuania (see Section 2.2.4 in Chapter 2). Long judicial proceedings may undermine Portugal’s FDI attractiveness while also affecting domestic investors.

The prevalence of late payments and difficulties in collecting them are also viewed by investors as a particular challenge in Portugal. Even with a declining number of cases, enforcement cases (including contract enforcement and insolvency) still account for much of the backlog in courts.

  • Continue efforts to further reduce the length of court proceedings in all branches of justice to tackle the backlog in courts and improve investors’ confidence in Portugal’s business environment. Speed up insolvency processes, increase digitalisation in courts and reform administrative and tax courts, as foreseen in Portugal’s Recovery and Resilience Plan. Strengthen human resources in court support functions to help address backlogs and improve efficiency (OECD, 2020[7]).

  • Make more extensive use of existing out-of-court mechanisms and create new ones, for instance for firm liquidation (OECD, 2020[7]). An assessment of businesses’ use and awareness of the current out-of-court mechanisms, including those for firm recovery, could be a first step towards improving the dissemination of information on such mechanisms and increasing their take-up.

Portugal’s highly skilled labour force is one of the leading drivers of foreign firms’ decision to invest or expand in the country, and the quality of Portugal’s higher education institutes is seen as an advantage in attracting FDI. At the same time, skill shortages (e.g. in information technology and engineering professionals, technicians and middle management) is one of the most important concerns for investors in some sectors.

Portugal’s Recovery and Resilience Plan and the Digital Transition Action Plan foresee reforms to increase the population’s educational and professional qualifications, as well as investment to increase the number of graduates in science, technology, engineering and mathematics, namely through the implementation of the Impulso Jovens STEAM and Impulso Adultos programmes. Boosting the domestic supply of skilled labour via the educational system is important to ensure that Portugal’s talent pool remains attractive for investors in the long term.

However, fully leveraging existing and planned skills development initiatives and facilitating the entry of foreign talent can be an additional and prompter way to address skill shortages in the short term. Some firms use employee training with good results to address talent shortage, but many investors are either not aware of existing government support for training or do not find it effective. Businesses also see bottlenecks in the entry processes of third-country professionals, mainly from the Immigration and Border Service (SEF)’s long processing times and difficulties obtaining an appointment for the issuance of a residence permit. Recent amendments to the Foreigners Act, easing the entry conditions of foreign talent, are thus welcomed by foreign investors. The issuance of a “pre-residence authorisation” together with the residence visa, with provisional tax and social security numbers and information on obtaining a residence permit, can ease some of the administrative burden faced by foreign talent. However, taking further steps to cut waiting times for visas and residence permit appointments may still be needed to help businesses bring talent from third countries.

  • Continue investing in skill upgrading programmes and increase businesses’ awareness of government support for employee training, including in digital skills and technologies, for instance via ensuring clear and up-to-date incentive guidelines and targeted information campaigns. Strengthen the alignment of training programmes, as well as PhD degrees, with business needs and the objectives of Portugal’s smart specialisation, innovation and entrepreneurship strategies and ensure greater co-ordination between existing and planned initiatives (OECD, 2022[2]).

  • Evaluate the possibility of redesigning internal processes as part of the planned restructuring of SEF,3 better leveraging digital tools and/or allocating more resources to the processing of applications to speed up the entry of foreign talent from third countries.

  • Foreign nationals entering the country with the newly introduced job-seeker visa are automatically assigned an appointment with SEF for the issuance of a residence permit. Portugal could consider expanding this new approach of automatic residence permit appointment to other visa types, including residence visa on the grounds of employment (i.e. for those already having an employment contract or job offer when entering Portugal), to reduce the number of steps to obtaining a residence permit.

Workers in Portugal enjoy relatively high employment protection standards compared to peer countries. Labour market regulation came up as a relatively more important obstacle to investment in Portugal than in the EU on average in a recent large-scale business survey, and likely due to experiences with strict regulation of dismissals of employees with regular (permanent) contracts, the rules on hiring and firing are perceived by investors as one of the main challenges of Portugal’s business environment (see Section 4.4.4 in Chapter 4). Firms tend to mitigate the difficulty of dismissals of unperforming regular workers through, for instance, probationary periods, sub-contracting or temporary contracts.

Even if Portugal has highly guarded regular contracts, it continues to have relatively low protection of temporary contracts, i.e. fixed-term contracts and temporary work agency contracts, and the incidence of temporary employment is particularly high. Taking further steps to reduce labour market segmentation along the type of contracts is important to address Portugal’s productivity challenge and improve labour market conditions of more vulnerable workers (e.g. youth, women and low-skilled).

  • Continue efforts to address labour market segmentation by reducing the gap in the protection of workers with temporary contracts compared to relatively highly protected permanent contracts, in line with the recommendations of OECD (2021[3]; 2019[8]). Consider strengthening the framework to make performance-based dismissals of employees with permanent contracts an effective possibility, as in most benchmark economies, while continuing to ensure strong protection against unfair dismissals (OECD, 2022[2]). Implement the scoped reform, which would, among other proposals, further limit the renewal of fixed-term contracts, to improve the employment protection of workers under temporary contracts.

Portugal has put in place various funding opportunities, (fiscal) incentives and special regulatory regimes to promote investment. While two-in-five foreign investors consulted for this report had benefitted from Portugal’s research and development (R&D) tax incentive and many of them viewed it as effective, the business consultation, previous OECD analysis and a large-scale business survey suggest that there may be room to further refine other funding opportunities and incentives and raise investors’ awareness of some of these mechanisms to increase their take-up.

For instance, while some investors found Portugal’s special regulatory regimes for investment (such as Potencial Interesse Nacional status for large-scale projects) as effective in streamlining the licensing of eligible projects, others considered that the initiatives did not speed up licensing or offer sufficient follow-up and support in project implementation. As discussed elsewhere in this chapter, many investors are also not aware of existing government support for employee training (see Section 5.2.6 above) and firms’ digital and green transitions (see Section 5.2.9 below).

  • Assess existing funding opportunities and incentives, including tax benefits, regularly with a view to revising and possibly streamlining the available incentives and ensuring that they reach their intended objectives while keeping added complexity to e.g. the tax system at a minimum (OECD, 2022[2]; Grupo de Trabalho para o Estudo dos Benefícios Fiscais, 2019[9]). For instance, ensure through systematic reviews that incentives remain effective, in terms of their benefits outweighing administration costs and the scope of R&D and innovation incentives following the development of new technologies (OECD, 2022[10]). Clarity on how the different schemes meet the needs of investors can help Portugal to ensure policy coherence (i.e. to avoid potential inconsistencies and redundancies arising from operating too many incentives at too small a scale in different parts of the government) and develop more targeted and differentiated financial and technical support for specific types of investors (e.g. for firms of different sizes) (OECD, 2022[2]; 2022[10]).

  • Promote a greater take-up of existing incentives among investors by increasing transparency and investors’ awareness of incentives, for instance by ensuring clear and up-to-date information on the eligibility criteria and awarding process and promoting support mechanisms via incentives guides (including in English), consolidated information on incentives dispersed across different pieces of legislation and information campaigns (Dayan, 2021[11]). Consider simplifying application procedures for funding, grants and subsidies to the extent possible. The R&D tax incentive scheme (SIFIDE II) was viewed by investors as relatively easy to apply for and could thus serve as a benchmark for the design or reformulation of other tax incentives.

Foreign investors are already contributing to accelerate Portugal’s green and digital transitions, with considerable FDI interest in Portugal’s renewable energies, digital technologies and infrastructure in recent years. However, many consulted investors were either not aware of Portugal’s various existing support mechanisms for companies’ digital and green transitions, or perceived shortcomings in, for instance, the application procedures, scope of support and effectiveness of different mechanisms. Ensuring that support mechanisms match business needs and that they are effectively promoted to firms already present in Portugal and prospective foreign investors can help to further leverage FDI in Portugal’s transition towards a carbon-neutral and digital economy. Further strengthening climate policies may also be beneficial for attracting more FDI in renewable energies (Knutsson and Ibarlucea Flores, 2022[12]).

  • Raise awareness and evaluate, in particular, the effectiveness of current incentives in supporting companies’ digital transition and promoting investment in renewable energy development and the adoption of more energy-efficient technologies and practices in companies’ business operations and infrastructure management.

  • Where possible, simplify application procedures to encourage firms’ use of existing mechanisms and adjust the scope of support to better respond to business needs, for instance by strengthening the support for energy efficiency measures.

Portugal has a relatively open market compared to the benchmark group in several services sectors, but foreign investors and domestic firms alike could benefit from further aligning the regulatory framework with the more liberal rules in place in peer economies in certain sectors. This section offers policy considerations to address key regulatory obstacles to investment in selected sectors – professional services, transports, logistics and digitally enabled services. Portugal would benefit from facilitating market entry and lowering barriers to competition in these sectors, as they provide strategic support to the country’s priority sectors for investment, as well as inputs into other sectors of the economy.

Among professional services, there is room to lower regulatory barriers compared to peer economies with more open regulatory set-ups in accounting and auditing, legal, and engineering services. While regulation of these activities serves the legitimate public interests of ensuring consumer protection, proper qualification of professionals and quality of services, such objectives can be balanced with relatively less stringent rules, for instance on non-licensed professionals’ equity participation in professional services firms, as it is the case in most peer countries (see Section 2.3.1 in Chapter 2). Ownership restrictions for non-licensed professionals, combined with rules restricting access to the profession for foreign practitioners, currently limit possibilities for foreign investment in Portugal’s professional services sectors, particularly in auditing and accounting.

However, as envisaged in Portugal’s Recovery and Resilience Plan and in line with the recommendations of OECD (2018[13]), the parliament recently approved a bill amending access conditions to regulated professions (see Section 2.3.1).4 The approved amendments will open the ownership and management of professional firms to non-licensed professionals once the amending Act takes effect and the statutes of the relevant professional associations are amended accordingly.5 This is a welcome development, as the expected positive impact of lifting regulatory barriers, in terms of increase in FDI projects, is particularly significant in professional services (see Chapter 3).

  • Proceed with a swift implementation of the reform of regulated professions’ legislation to open investment in these firms by non-licensed professionals, including foreign investors. The revision of the statutes of the relevant professional associations as part of the implementation process provides an opportunity to address also other barriers to competition and entry of foreign professionals not covered by the reform.

Portugal’s regulatory framework for transport and logistics services is relatively liberal compared to some peer countries. Yet, addressing remaining domestic regulatory barriers to competition and investment in these sectors and improving the efficiency of customs procedures could benefit a wide range of foreign and domestic-owned firms.

In road freight transport, domestic legislation imposes limitations on the activity of transport manager and additional minimum capital requirements to transport undertakings compared to EU-level requirements. In maritime freight transport, foreign-flagged vessels have limited possibilities of providing cabotage services, which in principle are reserved for EU-flagged ships. Rules for the award of port service concession contracts (such as cargo-handling, pilotage and towage) restrict competition in Portugal’s ports, and consulted investors called for improved port services in terms of operating hours. Finally, although outside of Portugal’s domestic policy making space, the EU-level prohibition on the cross-border use of so-called gigaliners or mega-trucks may hamper firms’ efforts to reduce transport costs and emissions.

  • Eliminate additional domestic limitations and requirements for transport managers and undertakings in the road freight transport sector to align the regulatory framework with other, more open EU countries (OECD, 2018[14]).

  • Open the maritime cabotage market to foreign-flagged vessels, as is the case in several EU countries (e.g. Denmark, Ireland, Latvia, the Netherlands and Norway), to promote competition in the sector.

  • Adopt more competition-friendly rules for the award of contracts for the provision of port services, whereby objective and transparent criteria determine the length of the concession based on the level of investment by the concessionaire and new tenders must be held for the renewal of concessions (OECD, 2018[14]).

  • Expand port operating hours to better correspond with business needs to support the day-to-day operations of firms engaging in trade.

  • Portugal may also have an interest in co-ordinating with Spain to address at the EU level the cross-border use of gigaliners with a view to possibly authorise cross-border traffic in the Iberian peninsula.

In logistics, foreign investors’ ability to own shares in customs brokerage firms is limited due to restrictions on equity participation by non-licensed professionals, combined with a reciprocity requirement for third-country nationals to access the customs broker profession. Individual licensing requirements on warehousing and freight forwarding limit the ability of logistic services providers to integrate their activities. International surveys and the business consultation for this report indicate that there is still room to improve Portugal’s customs regime for the benefit of firms in transport, logistics, courier and distribution services.

  • As in professional services (see Section 5.3.1 above), implement amendments to eliminate barriers to the ownership and management of customs brokerage firms to open investment in these firms by non-licensed professionals, including foreign investors.

  • Consider lifting licensing requirements in warehousing and freight forwarding and replacing them by a lighter notification procedure and risk-based inspections, if necessary. In the peer group, the Czech Republic and Estonia do not require a license for either activity. Alternatively, introduce a single operating license covering the provision of both types of services to make it easier for providers to integrate their activities.6

  • Promote the efficiency of customs procedures: improve information availability by making a minimal set of information available online in English, extend opening hours of customs in ports to better correspond with user needs and adapt digital solutions to improve the customer experience, such as to allow for electronic payment of all duties, taxes, fees and charges.

Portugal has a comprehensive regulatory environment for trade in digitally enabled services, but regulatory barriers to digital trade are slightly higher than in most peer economies. Addressing the few remaining barriers in this area can help Portugal strengthen its regulatory framework for digital trade and complement efforts to support the development and access to technology-based innovations, promoting the country’s digital transformation. As discussed in Chapter 3, liberalising Portugal’s regulatory set-up for digital trade to align with the level of openness observed in the Single Market’s best performer Estonia could result in 7% more cross-border M&A deals and 2% more greenfield projects. The regulatory set-up for digital trade is particularly relevant for sectors such as distribution, audio-visual, telecommunications and financial services, among others.

  • Lift the requirement for foreign companies, exercising activities for more than one year in the country, to designate a permanent representative in Portugal to ease cross-border digital sales for firms established abroad, in cases not covered by the EU-wide requirement for e.g., online marketplaces to designate a representative in the Union.

  • Consider also to what extent divergence from approaches taken in other EU countries in the national transposition of certain Digital Single Market directives, such as the Electronic Communications Code, is necessary in Portugal’s domestic context. As indicated in Chapter 3, further reducing regulatory hurdles for EEA investors and strengthening regulatory coherence with EEA countries could stimulate FDI from these countries.

This report has highlighted areas where further regulatory and policy reforms could contribute towards a more attractive environment for foreign investment in Portugal. The policy considerations outlined in this chapter are intended to inform domestic reform efforts and strategic discussions.

To fully capitalise on the potential of such reform efforts, Portugal could consider adopting a whole-of-government approach to ensure their effective planning and implementation, involving also foreign investors and the country’s broader business community in the process. For instance, Portugal could create a working group bringing together key actors from the public and private sectors to develop an action plan for the implementation of the regulatory and policy reforms outlined in the present report. A recent example of such co-ordinated industry-government policy action can be found in the development of Australia’s Services Exports Action Plan.7


[16] Commonwealth of Australia, Department of Foreign Affairs and Trade (2021), Australia’s Services Exports Action Plan: A Government and Industry Strategy to Boost Services Exports, https://www.services-exports.gov.au/sites/default/files/2021-03/australias_services_exports_action_plan.pdf.

[11] Dayan, S. (2021), Improving transparency of investment incentives: Draft discussion note.

[9] Grupo de Trabalho para o Estudo dos Benefícios Fiscais (2019), Os benefícios fiscais em Portugal : conceitos, metodologia e prática, Centro de Estudos Fiscais e Aduaneiros, Autoridade Tributária e Aduaneira, Lisboa, https://www.portugal.gov.pt/download-ficheiros/ficheiro.aspx?v=%3D%3DBAAAAB%2BLCAAAAAAABACzMDQwAgCG5%2BMmBAAAAA%3D%3D.

[4] IMF/OECD (2017), Tax Certainty. IMF/OECD Report for the G20 Finance Ministers, https://www.oecd.org/tax/tax-policy/tax-certainty-report-oecd-imf-report-g20-finance-ministers-march-2017.pdf.

[12] Knutsson, P. and P. Ibarlucea Flores (2022), “Trends, investor types and drivers of renewable energy FDI”, OECD Working Papers on International Investment, No. 2022/02, OECD Publishing, Paris, https://doi.org/10.1787/4390289d-en.

[10] OECD (2022), FDI Qualities Policy Toolkit, OECD Publishing, Paris, https://doi.org/10.1787/7ba74100-en.

[2] OECD (2022), Strengthening FDI and SME Linkages in Portugal, OECD Publishing, Paris, https://doi.org/10.1787/d718823d-en.

[6] OECD (2021), Building Tax Culture, Compliance and Citizenship: A Global Source Book on Taxpayer Education, Second Edition, OECD Publishing, Paris, https://doi.org/10.1787/18585eb1-en.

[3] OECD (2021), OECD Economic Surveys: Portugal 2021, OECD Publishing, Paris, https://doi.org/10.1787/13b842d6-en.

[1] OECD (2021), OECD Regulatory Policy Outlook 2021, OECD Publishing, Paris, https://doi.org/10.1787/38b0fdb1-en.

[7] OECD (2020), Justice Transformation in Portugal: Building on Successes and Challenges, OECD Publishing, Paris, https://doi.org/10.1787/184acf59-en.

[8] OECD (2019), OECD Economic Surveys: Portugal 2019, OECD Publishing, Paris, https://doi.org/10.1787/eco_surveys-prt-2019-en.

[15] OECD (2018), Australian Services Trade in the Global Economy, OECD Publishing, Paris, https://doi.org/10.1787/9789264303911-en.

[14] OECD (2018), OECD Competition Assessment Reviews: Portugal: Volume I - Inland and Maritime Transports and Ports, OECD Competition Assessment Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264300026-en.

[13] OECD (2018), OECD Competition Assessment Reviews: Portugal: Volume II - Self-Regulated Professions, OECD Competition Assessment Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264300606-en.

[5] OECD et al. (2022), Inventory of Tax Technology Initiatives (“Corporate income tax”; “Tax rule management and application”), https://www.oecd.org/tax/forum-on-tax-administration/tax-technology-tools-and-digital-solutions/corporate-income-tax.htm (accessed on 12 December 2022).


← 1. Certain notifications and permits, such as water permit, continue to fall outside the scope of the all-in-one permit. Business.gov.nl, consulted on 10 January 2023.

← 2. For example, among the peer group, the Slovak Republic and Spain have made tax regulation available in a machine-readable format, allowing rules to be incorporated in taxpayers’ software (OECD et al., 2022[5]). The Spanish tax administration has made available a series of virtual tax and customs assistance tools, including a VAT chatbot (Agencia Tributaria, consulted on 12 December 2022). In Estonia, solutions are in place for companies to submit data from their accounting software to the tax administration’s server, facilitating tax declarations (Invest in Estonia, consulted on 10 January 2023).

← 3. A restructuring of SEF, as part of which administrative migration processes would be taken over by a new agency, is expected to take place in the first quarter of 2023. Observador, 20 December 2022.

← 4. Draft law No. 108/XV/1 of 1 June 2022, approved on 22 December 2022.

← 5. At the time of writing, the amending Act had not yet been promulgated and hence not yet entered into force. The Government of Portugal will have 120 days from the entry into force of the amending Act to present bills to amend the statutes of professional associations and other relevant legislation.

← 6. For instance, in Spain, holders of cargo transport operator licenses are entitled to provide freight forwarding and storage services.

← 7. After the publication of an OECD report on the competitiveness of the Australian services sector (OECD, 2018[15]), the Australian Government initiated a partnership among the Department of Foreign Affairs and Trade, Austrade and the business community to identify barriers on services exports (Australian Government, Department of Foreign Affairs and Trade, Australia’s Services Exports Action Plan, consulted on 15 February 2022). A number of industry working groups were created to provide recommendations feeding into an action plan. Launched in 2021, Australia’s Services Exports Action Plan (Commonwealth of Australia, Department of Foreign Affairs and Trade, 2021[16]) defines key outcomes and actions needed to achieve these outcomes. Progress on the Action Plan is monitored and updated on a regular basis.

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