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The number of foreign residents in Portugal has risen for four consecutive years, resulting in around 90,000 new arrivals in 2019. The majority of new arrivals are moving to the capital, with roughly half of overseas residents living there, and many are setting up businesses — the tech industry alone attracted record foreign investment in 2019.
This has led Lisbon to quickly become one of Europe’s premier business hubs, with Vodafone Portugal CEO Mário Vaz lauding its potential to transform into “the Silicon Valley of Europe”.
Ranked among the continent’s top ten cities to set up a startup, international investors are descending upon Lisbon in their droves, and it’s not just companies from abroad who are setting up shop in the capital either. Sound Particles, Barkyn, and Heptasense are just three examples of Lisbon-based startups that have come to prominence in recent years.
With Lisbon not traditionally considered a leading business hub until these recent developments, why exactly is the city proving so attractive to startups now?
Pro-business government programmes
The Portuguese government is extremely pro-business, and has introduced a number of programmes to encourage entrepreneurs to launch companies in the country. One is the Golden Residence Visa, available to those who create at least ten jobs in Portugal.
Applicants can apply for permanent residency just five years after making their first investment, and citizenship a year after that. This is particularly enticing for non-European nationals, with Portuguese citizenship giving them the ability to travel and invest in countries across the Schengen area. It also enables them to hire European talent for their business, as well as expand it to other countries within the European Union.
Another business-friendly government policy is the tax incentives offered to entrepreneurs. For example, investments of up to €5 million can receive tax deductions of 20%, while the overall corporate tax rate is just 21%. This is much lower than countries like France (33.3%), Germany (30%) and Spain (25%).
The Portuguese government has also made it easier than ever for people to launch a business, allowing entrepreneurs to complete all necessary paperwork online. All of this has propelled the country further up the Ease of Doing Business Index, with Portugal placed 39th out of 190 in the most recent report.
Access to talent
Portugal’s first-rate school system is providing its businesses with plenty of talent. The most recent statistics show that the Portuguese government spends 4.9% of its GDP on education, considerably more than what Germany, Spain and Italy put towards their respective sectors.
The country was ranked 20th in the world in US News’ 2020 Best Countries for Education and produces roughly 100,000 graduates a year, most of whom speak strong English. Considering English is the lingua franca of global business, both international and Portuguese entrepreneurs have a wealth of talented individuals to choose from when hiring.
In Lisbon specifically, both University of Lisbon and the Universidade Nova de Lisboa were in the QS World University Rankings 2020, guaranteeing a constant supply of talented graduates within the city. Indeed, when asked why Lisbon has become such a popular business destination, Miguel Fontes, the CEO of leading incubator Startup Lisboa, pointed to the amount of talent in the city.
Describing it as the most valuable asset a company could have, Fontes said: “It doesn’t matter if it’s a global company, a multinational company, or a startup. Everybody needs to find the right talent, and we have talented people here.”
Lisbon’s enviable lifestyle
With its balmy climate, laidback way of life and low cost of living, it’s no wonder that entrepreneurs find Lisbon enticing. The weather alone is enough to make anyone want to live there.
The city boasts over 290 days of sunshine a year and is temperate throughout, with residents able to get to the beach within 20 minutes. All in all, Lisbon is globally ranked as the 37th best city for quality of life, outdoing London, Barcelona and New York for its economy, low levels of unemployment and safety.
The Portuguese capital is also a lot cheaper to live in than Paris, London and Madrid, among others, and the country as a whole is extremely politically stable.
For business meetings specifically, it is the sixth most popular city in the world according to the International Congress & Convention Association, for its international prestige, the quality and price of tourist activities, and experience in holding diverse events.
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