2024 Regional Roundtable Update: Portugal
2024 Portugal Regional Update
Firm Name: PLMJ
Author: Alexander Ehlert
1. How is the political environment impacting business in or with your country?
The current political landscape in Portugal is not as stable as it has been in the previous parliamentary term, considering that the recently elected Government does not hold a majority of seats in Parliament. Thus, political stability is currently a little more challenging. However, this political scenario is not likely to negatively impact foreign investment, as major political forces share a strong consensus around Portugal's investment attraction and entrepreneurship agenda.
One of the new Government's priorities is implementing the Portuguese Recovery and Resilience Plan, supported by the European Union. This plan also focuses on infrastructure projects in the transportation and renewable energy areas and on the digital transition of the Portuguese economy. This major priority will entail increased public investment and new business opportunities for the private sector until 2026.
According to the EY Europe Attractiveness Survey 2024, Portugal was the seventh largest destination country for foreign direct investment (FDI) projects in Europe, also due to the reorganization of global supply chains, which has caused more investment to be attracted to Southern Europe in recent years. The fact that Portugal continues to be a safe country – the seventh in the world, according to the Global Peace Index 2023 -has also allowed Portugal to strengthen its attractiveness.
2. Which countries have you previously collaborated with and do you see potential for future collaboration with on cross-border matters within the region?
Due to its size and the consequent need to develop economic relationships abroad, combined with a long history of political neutrality, Portugal is very open to foreign investment and has a friendly business environment.
This openness has only increased in recent years, driven by the country becoming increasingly more attractive as living destination. This can be seen not only by the growing number of foreigners living in Portugal but, most importantly, by the relevance of foreign direct investment (FDI) for Portugal.
According to the latest EY Europe Attractiveness Study 2024, Portugal continues to be among the top 10 destination countries in terms of the number of FDI projects and jobs.
Most investment comes from EU countries, and the most active countries were Germany, USA, France, UK, Spain and Switzerland. As per the publicly available M&A information under Transactional Track Record’s 2023 Annual Report for the Iberian Market, besides the aforementioned countries, there have also been relevant volumes of cross-border transactions involving Belgium, Brazil, Italy, Luxembourg and Netherlands.
From PLMJ’s perspective, over 40% of our clients are international and stem from several countries, and we continue to see many opportunities for international investment. Our team has a strong track record helping national clients expand abroad, as well as supporting international clients in their investments and businesses in Portugal.
In terms of sectors, we expect that the energy, infrastructure, private capital, real estate and technology sectors will continue to have a massive appeal for cross-border investment and transactions.
3. What legislation has recently changed or is changing that a potential international client should be aware of?
The Portuguese legal framework is being continuously refined and amended (also via the implementation of EU law) in order to foster Portugal's appeal as a destination for foreign investment. Recent examples of legislation which may have a relevant impact on foreign investment include:
- In the real estate and construction sector, the corresponding legal framework was substantially amended at the beginning of 2024 to reform and simplify town and country planning procedures and related matters to incentivize investment in the Portuguese housing construction sector.
- In the asset management sector, in 2023, the new Asset Management Regime (RGA) was enacted, which merges previously dispersed legal frameworks into a simplified and more coherent legal framework for the asset management sector. The RGA focuses on a risk-based approach and ex-post supervision by the regulator in order to avoid burdensome and lengthy authorization processes, which may contribute to the continuing growth of the private equity sector in Portugal.
Another hot topic for clients may be opportunities arising from the energy sector. Also due to its geographic features and location, Portugal is at the forefront of renewable energy production, and it ranks in the countries with the highest share of renewable sources used to produce energy in Europe. The aim to reach climate neutrality by 2050 translates into relevant business opportunities in Portugal.