HomeReportsBureau of Economic and Business Affairs2018 Investment Climate Statements...Portugal

# 					2018 Investment Climate Statements: Portugal			

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													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Portugal’s economy is fully integrated into the European Union (EU). Fellow EU member states remain Portugal’s biggest trading partners and its largest investors. Portugal complies with EU law for equal treatment of foreign and domestic investors. Beyond Europe, Portugal maintains significant links with former colonies including Brazil, Angola, and Mozambique.

Portugal is one of 19 Eurozone members; the European Central Bank (ECB) acts as central bank for the euro (EUR) and determines monetary policy. Portugal’s banking sector has faced a number of challenges in recent years, including the costly central bank-led resolution of Banco Espirito Santo (succeeded by Novo Banco) in 2014 and Banif in 2015. Nonetheless, the sector’s future seems brighter as the biggest private banks are undergoing restructuring and recapitalizations.

In 2017, the economy continued on the upward trajectory begun in 2014 with completion of a EUR 78 billon European Union-IMF bailout program. Unemployment dropped to 8 percent, and GDP growth was 2.7 percent of GDP, the highest this century. Strong exports, driven by a record-breaking tourism boom, and investment buoyed this growth. In 2017 alone, tourist visits grew nine percent to over 20 million visitors, an all-time high that has not only improved the external account balance, but also enabled the state to reap substantial tax revenues. Foreign investor acquisitions of Portuguese property drove up housing prices 12.8 percent in 2017, with international investors constituting 20 percent of buyers.

Portugal made the most of a benign economic environment to reduce its public debt, slashing it to 125.7 percent of GDP in 2017, as compared to 129.9 percent the year before. Even so, the country’s high debt to GDP ratio remains a weak point, leaving the country exposed to the negative effects of an eventual economic downturn.

The country successfully exited the EU’s excessive deficit procedure in mid-2017, affording the government greater budget flexibility. Although a capital injection to state-owned Caixa Geral de Depositos bumped the deficit back up to 3 percent of GDP at the end of the year, without this one-off expense, the deficit would have been just 0.92 percent, the lowest since Portugal’s return to democracy in 1974.

All of these positive factors led to sovereign debt rating upgrades by two of the three major international ratings agencies, which has in turn enabled access to a larger pool of international investment options and better financing conditions.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

****Policies Towards Foreign Direct Investment****

The Government of Portugal recognizes the value of foreign investment and sees such investment as an important engine of economic growth. Portuguese law is based on a principle of non-discrimination. Both foreign and domestic investors are subject to the same rules. Foreign investment is generally not subject to any special registration or notification to any authority, with exceptions for a few limited, specific activities.

The Portuguese Agency for Foreign Investment and Commerce (AICEP) is the lead agency for promotion of trade and investment. AICEP is responsible for the attraction of foreign direct investment (FDI), promotion of global Portuguese trademarks, and export of goods and services. It is the primary point of contact for investors with projects over EUR 25 million or companies with a consolidated turnover of more than EUR 75 million. For foreign investments not meeting these thresholds, AICEP will make a preliminary analysis and direct the investor to assistance agencies such as the Institute of Support to Small- and Medium- Sized Enterprises and Innovation (IAPMEI), a public agency within the Ministry of Economy that provides technical support, or to AICEP Capital Global, which offers technology transfer, incubator programs and venture capital support. AICEP does not favor specific sectors for investment promotion. It does, however, provide a “Prominent Clusters” guide on its website where it advocates investment in Portuguese companies by sector: http://www.portugalglobal.pt/EN/InvestInPortugal/Pages/index.aspx .

The Portuguese government maintains regular contact with investors through the Confederation of Portuguese Business (CIP), the Portuguese Chamber of Commerce and Industry and AICEP. More information can be found at these websites:

- http://cip.org.pt/en/  ;
- http://www.portugalglobal.pt/EN/Pages/Index.aspx  ;
- http://www.ccip.pt/en/  .

****Limits on Foreign Control and Right to Private Ownership and Establishment****

There are no legal restrictions in Portugal as to foreign investment. To establish a new business foreign investor must follow the same rules as domestic investors, including mandatory registration and compliance with regulatory obligations for specific activities. There are no nationality requirements and no limitations on the repatriation of profits or dividends.

Shareholders that are not resident in Portugal must obtain a Portuguese taxpayer number for tax purposes. EU residents may obtain this number directly with the tax administration (in person or by means of an appointed proxy); non-EU residents must appoint a Portuguese resident representative to handle matters with tax authorities.

There are limitations on both foreign and domestic investments with regard to certain economic activities. Portuguese government approval is required in the following strategic sectors: defense, water management, public telecommunications, railway, maritime transportation and air transport. Any economic activity that involves the exercise of public authority also requires government approval; private sector companies can operate in these areas only through a concession contract. Recent examples of state-owned enterprise sales include the sales of flagship airline TAP to the Atlantic Gateway Consortium and the sale of Novo Banco to U.S. private equity fund Lone Star.

Portugal additionally limits foreign investment with respect to the production, transmission, and distribution of electricity, the manufacturing of gas, the pipeline transportation of fuels, wholesale services of electricity, retailing services of electricity and non-bottled gas, and services incidental to electricity and natural gas distribution. Any concessions for electricity and gas sectors are assigned only to limited companies with their headquarters and effective management in Portugal.

Portugal limits foreign investment in the provision of executive search services, placement services of office support personnel, and publicly-funded social services.

Investors wishing to establish new credit institutions or finance companies, acquire a controlling interest in such financial firms, and/or establish a subsidiary must have authorization from the Bank of Portugal (for EU firms) or the Ministry of Finance (for non- EU firms). In both cases, the authorities carefully consider the proposed transaction, but in the case of non-EU firms, the Ministry of Finance especially considers the impact on the efficiency of the financial system and the internationalization of the economy. Non- EU insurance companies seeking to establish an agency in Portugal must post a special deposit and financial guarantee and must have been authorized for such activity by the Ministry of Finance for at least five years.

****Other Investment Policy Reviews****

Portugal has not undergone an OECD, WTO or UNCTAD Investment Policy Review in recent years.

****Business Facilitation****

Over the last decade, but especially since the start of the economic crisis in 2010, the Portuguese Government has prioritized policies to increase the country’s appeal as a destination for foreign investment. In 2007, the Government established AICEP – a promotion agency for investment and foreign trade that also, through its subsidiary AICEP Global Parques, manages industrial plants and provides business location solutions for investors.

Taxation procedures have gone the same way. Effective warehouse and transport logistics have been developed, especially at the Sines Port terminal southwest of Lisbon, and telecommunications infrastructure has been improved. In March 2018, Portugal started construction of an 80-kilometer railway line between Evora and Elvas, which will improve commercial transportation between the Portuguese ports of Sines and Lisbon ports, and the Southwestern European Logistics Platform (PLSWE) in Badajoz, Spain, reducing freight transportation times to the rest of Europe.

The “Golden Visa” program that gives fast-track residence permits to foreign investors complying with specific pre-established conditions was established in 2012. To date, 3,588 out of 5,553 total residency permits have been issued to Chinese nationals.

Other measures implemented to help attract foreign investment include the easing of some labor regulations to increase workplace flexibility and the creation of a special EU-funded program, Portugal 2020, for large projects above EUR 25 million. Finally, to combat the perception of a cumbersome regulatory climate, the Government has created a “Cutting Red Tape” website detailing measures taken since 2005 to reduce bureaucracy, and the *Empresa na Hora* (“Business in an Hour”) program that facilitates company incorporation in less than 60 minutes.

Both Portuguese citizens and non-citizens can register a business in person at any of the government’s 214 “Empresa na Hora” registration locations.

Portuguese citizens can alternately register online through the “Citizen’s Portal” available at: https://bde.portaldocidadao.pt/evo/landingpage.aspx . Companies must also register with the Directorate General for Economic Activity (DGAE), the Tax Authority (AT), and with the Social Security administration. The online registration process can take as little as one to two days.

In line with the EU, Portugal defines an enterprise as micro-, small-, and medium-sized based on its headcount, annual turnover, or the size of its balance sheet. To qualify as a micro-enterprise, a company must have less than 10 employees and no more than EUR 2 million in revenues or EUR 2 million in assets. Small enterprises must have less than 50 employees and no more than EUR 10 million in revenues or EUR 10 million in assets. Medium-sized enterprises must have less than 250 employees and no more than EUR 50 million in revenues or EUR 43 million in assets. The Small- and Medium-Sized Enterprise (SME) Support Institute (IAPMEI) offers financing, training, and other services for SMEs based in Portugal: http://www.iapmei.pt/ .

More information on laws, procedures, registration requirements, and investment incentives for foreign investors in Portugal is available here, at AICEP’s website: http://www.portugalglobal.pt/EN/InvestInPortugal/Pages/index.aspx .

****Outward Investment****

Portuguese government does not restrict domestic investors from investing abroad. To the contrary, it promotes and incentivizes outward investment through AICEP, whose main tasks are to promote the internationalization of Portuguese companies, support their export activity, and attract investment, with the larger goal of creating value for the country. Through its Customer Managers, Export Stores and its External Commercial Network – which, in cooperation with the diplomatic and consular network, is present in about 80 markets – AICEP provides support and advisory services on the best way of approaching foreign markets, identifying international business opportunities of Portuguese companies, particularly SMEs.

See more at: http://www.portugalglobal.pt/PT/Paginas/Index.aspx .

							2. Bilateral Investment Agreements and Taxation Treaties					

Portugal shares no investment agreement with the United States.

Portugal has investment agreements with over 100 economies, including: Albania, Algeria, Angola, Argentina, Bosnia and Herzegovina, Brazil, Bulgaria, Cape Verde, Chile, China, Democratic Republic of Congo, Congo, Croatia, Cuba, Czech Republic, Egypt, Equatorial Guinea, Gabon, Germany, Guinea-Bissau, Hungary, India, Jordan, Republic of Korea, Kuwait, Latvia, Libya, Lithuania, Macao, Mauritius, Mexico, Morocco, Mozambique, Pakistan, Paraguay, Peru, Philippines, Poland, Qatar, Romania, Russian Federation, Sao Tome and Principe, Senegal, Serbia, Slovakia, Slovenia, Timor-Leste, Tunisia, Turkey, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Bolivarian Republic of Venezuela and Zimbabwe. For a complete list of investment agreements currently in force, please see the UNCTAD Navigator: http://investmentpolicyhub.unctad.org/IIA/CountryBits/169#iiaInnerMenu. 

Portugal signed an Income Tax Treaty with the United States in 1994 to prevent double taxation and tax evasion. In 2015, Portugal signed an agreement with the United States to improve international tax compliance and implement the U.S. Foreign Account Tax Compliance Act (FATCA). See more at: https://www.irs.gov/businesses/international-businesses/portugal-tax-treaty-documents  and at: https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx. 

							3. Legal Regime					

****Transparency of the Regulatory System****

The Government of Portugal employs transparent policies and effective laws to foster competition and establish clear rules. The legal system is quite welcoming with respect to FDI. Regulations are drafted by ministries or other regulatory agencies. Drafts must be approved by Parliament, and, in some cases, by European authorities. All proposed regulations are subject to a public consultation period during which the proposed measure is published on the relevant ministry or regulator’s website.

Typically, the consultation period is 30 days (or 20 days in urgent cases). Only after ministries or regulatory agencies have conducted an impact assessment of the proposed (not yet adopted) regulation, the text can be enacted and published at: www.parlamento.pt .

Ministries or regulatory agencies report on the results of the consultations on proposed regulations through a consolidated response published on the website of the relevant ministry or regulator.

There are no informal regulatory processes managed by nongovernmental organizations or private sector associations; all procedures are managed by government entities.

Rule-making and regulatory authorities exist within several sectors including the Energy, Telecommunications, Securities Markets, Financial and Health sectors. Regulations are enforced on the local level through District Courts, on the national level through the Court of Auditors and at the supra-national level through European Union mechanisms including the European Court of Justice, the European Commission, and the European Central Bank.

The legal, regulatory, and accounting systems are transparent and consistent with international norms. Since 2005, all listed companies have been required to comply with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The IFRS closely parallels the U.S. GAAP (Generally Accepted Accounting Principles). See more at: http://ec.europa.eu/finance/company-reporting/standards-interpretations/index_en.htm#related-information .

Parliament publishes draft bills on its website, http:/www.en.parlamento.pt  and at http://www.portugal.gov.pt/pt/pm/documentos.aspx , allowing for public review of proposals before they are voted on and become law. UTAO, the Parliamentary Technical Budget Support Unit, is a nonpartisan body composed of economic and legal experts that supports parliamentary budget deliberations by providing the Budget Committee with quality analytical reports on the executive’s budget proposal(s). More information on UTAO can be found here: https://www.parlamento.pt/OrcamentoEstado/Paginas/UTAO_UnidadeTecnicadeApoioOrcamental.aspx . In addition, the Portuguese Public Finance Council conducts an independent assessment of the consistency, compliance with stated objectives, and sustainability of public finances, while promoting fiscal transparency, and publishes all of its assessments online at: http://www.cfp.pt/?lang=en .

The government regularly publishes key regulatory actions here: http://www.en.parlamento.pt/ . The OECD, EC and IMF also publish key regulatory actions and/or summaries thereof at: https://www.oecd.org/portugal/ , https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-performance-country_en  and http://www.imf.org/external/country/PRT/index.htm .

Portugal’s Competition Authority enforces adherence to domestic competition and public procurement rules. The European Commission further ensures adhesion to EU administrative processes among its member states.

The Portuguese Public Finances Council conducts regular, independent assessments of the consistency, compliance with the stated objectives and the sustainability of public finances, while promoting fiscal transparency. All assessments are published online at: http://www.cfp.pt/?lang=en .

**International Regulatory Considerations**

Portugal has been a member of the EU since 1986, a member of the Schengen area since 1995, and joined the Eurozone in 1999. Portugal complies with EU directives regarding equal treatment of foreign and domestic investors. Portugal has been a member of the World Trade Organization (WTO) since 1995. With the Treaty of Lisbon’s entry into force in 2009, trade policy and rules on foreign direct investment became exclusive EU competencies, as part of the block’s common commercial policy.

The European Central Bank (ECB) is the central bank for the euro (EUR) and determines monetary policy for the 19 Eurozone member states, including Portugal. Portugal has incorporated U.S. FACTA regulations, into its banking system.

**Legal System and Judicial Independence**

The Portuguese legal system is a civil law system, based on Roman law. The hierarchy among various sources of law is as follows: (i) Constitutional laws and amendments; (ii) the rules and principles of general or common international law and international agreements; (iii) ordinary laws enacted by Parliament; (iv) instruments having an effect equivalent to that of laws, including approved international conventions or decisions of the Constitutional Court; (v) regulations used to supplement and implement laws.

The country’s Commercial Company Law and Civil Code define Portugal’s legal treatment of corporations and contracts. Portugal has specialized family courts, labor courts, commercial courts, maritime courts, intellectual property courts, and competition courts.

The judicial system is independent of the executive branch. Indeed, adverse Constitutional Court rulings during the country’s bailout period served as a check on the government’s ability to implement many austerity measures, including pension cuts and tax increases.

Regulations or enforcement actions are appealable, and are adjudicated in national Appellate Courts, with the possibility to appeal to the European Court of Justice.

****Laws and Regulations on Foreign Direct Investment****

The Bank of Portugal (Portugal’s central bank) defines FDI as “an act or contract that obtains or increases enduring economic links with an existing Portuguese institution or one to be formed.” A non-resident who invests in at least 10 percent of a resident company’s equity and participates in the company’s decision-making is considered a foreign direct investor.

The Portuguese legal system is based on non-discrimination with regard to the national origin of investment, and foreigners are permitted to invest in all economic sectors open to private enterprise. However, there are limitations on both foreign and domestic investments with regard to certain economic activities. Portuguese government approval is required in the following sectors: defense, water management, public telecommunications operators, railway, maritime transportation and air transport. Any economic activity that involves the exercise of public authority also requires government approval. Private sector companies can operate in these areas only through a concession contract.

Investors wishing to establish new credit institutions or finance companies, acquire a controlling interest in such financial firms, and/or establish a subsidiary must have authorization from the Bank of Portugal (for EU firms) or the Ministry of Finance (for non- EU firms). In both cases, the authorities carefully consider the proposed transaction, but in the case of non-EU firms, the Ministry of Finance especially considers the impact on the efficiency of the financial system and the internationalization of the economy. Non- EU insurance companies seeking to establish an agency in Portugal must post a special deposit and financial guarantee and must have been authorized for such activity by the Ministry of Finance for at least five years.

The Embassy is not aware of any new laws over the last 12 months that regulate FDI, or significant decisions that have changed how foreign investors or their investments are treated. Current information on laws, procedures, registration requirements, and investment incentives for foreign investors in Portugal is available here, at AICEP’s website: http://www.portugalglobal.pt/EN/InvestInPortugal/Pages/index.aspx .

**Competition and Anti-Trust Laws**

The domestic agency which reviews transactions for competition-related concerns is the Portuguese Competition Authority (Autoridade de Concorrencia) and the international agency is the European Commission’s Directorate General for Competition (DG Comp).

Portugal’s competition authority is investigating the takeover of leading media group Media Capital by Altice, a Netherlands multinational led by billionaire Patrick Drahi. In February, the competition authority said it launched a deep investigation because there are strong indications that it could result in “significant obstacles to competition in various markets.”

Those markets included television content production, advertising and telecommunications. Altice owns Portugal’s largest telecom operator and agreed to buy Media Capital in July 2017 from Spain’s Prisa in a EUR 440 million deal.

The Competition Authority’s mandate derives from Law No. 19/2012 (dated May 8, 2012) which superseded Law No. 18/2003. It specifically prohibits collusion between companies to fix prices, limit supplies, share markets or sources of supply, discriminate in transactions, or force unrelated obligations on other parties. Similar prohibitions apply to any company or group with a dominant market position. The law also requires prior government notification of mergers or acquisitions that would give a company more than 30 percent market share in a sector, or mergers or acquisitions among entities that had total sales in excess of EUR 150 million in the preceding financial year. The Competition Authority has 60 days to determine if the merger or acquisition can proceed. The European Commission may claim authority on cross-border competition issues or those involving entities large enough to have a significant EU market share.

**Expropriation and Compensation**

Under Portugal’s Expropriation Code, the government may expropriate property and its associated rights if it is deemed to support the public interest, and upon payment of prompt, adequate, and effective compensation. The code outlines criteria for calculating fair compensation based on market values. The decision to expropriate as well as the fairness of compensation can be challenged in national courts.

In 2005, the Portuguese Parliament passed a Water Resources Law that required owners of properties bordering coasts, rivers, and reservoirs to present evidence of private ownership dating to at least 1864 by a deadline of January 2014, or otherwise face government seizure of the land. The law elicited public protests from property owners, including many British expatriates, which in turn pressed Parliament in May 2014 to establish broad exemptions and eliminate the deadline for presentation of evidence of ownership. To date, there have been no public cases of expropriation of such properties.

There have been no other cases of expropriation of foreign assets or companies in Portugal in recent history.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Portugal has been a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention – also known as the Washington Convention) since 1965. Portugal has been a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since January 1995. Portugal’s national arbitration law No. 63-2011, of December 14, 2011 enforces awards under the 1958 New York Convention and the ICSID Convention.

*Investor-State Dispute Settlement*

Portugal ratified the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards, and in 2002 ratified the 1975 Inter-American Convention on International Commercial Arbitration.

Portugal’s Voluntary Arbitration Law enacted in 2011 is based on the UNCITRAL Model Law, and applies to all arbitration proceedings based in Portugal. The leading commercial arbitration institution is the Arbitration Centre of the Portuguese Chamber of Commerce and Industry: http://www.centrodearbitragem.pt/index.php?lang=en .

The government promotes non-judicial dispute resolution through the Ministry of Justice’s Office for Alternative Dispute Resolution (GRAL), including conciliation, mediation, or arbitration. More information is available in English at AICEP’s website: http://www.portugalglobal.pt/EN/InvestInPortugal/Pages/index.aspx .

The GRAL website, in Portuguese, is here: http://www.dgpj.mj.pt/sections/gral .

Portugal has no bilateral investment or free trade agreements containing ISDS provisions with the United States.

The UN Conference on Trade and Development (UNCTAD) “investment navigator” database and the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) database show no cases of investment disputes, pending or concluded, between foreign investors and Portugal.

Portuguese courts recognize and enforce foreign arbitral awards issued against the government.

There have been no recent extrajudicial actions against foreign investors.

*International Commercial Arbitration and Foreign Courts*

Arbitration is the preferred alternative dispute resolution mechanism in Portugal. The country has a long-standing tradition of and success in utilizing arbitration in administrative and contract disputes. In recent years, it has also become the standard mechanism for resolving tax disputes between private citizens or companies and tax authorities, as well as in pharmaceutical patent disputes.

There are four domestic arbitration bodies within the country/economy: 1) The Arbitration Center of the Portuguese Chamber of Commerce and Industry (CAC); 2) CONCORDIA (Centro de Conciliacao, Mediacao, de Conflictos de Arbritragem); 3) Arbitrare (Centro de Arbitragem para a Propriedade Industrial, Nomes de Dominio, Firmas e Denominacoes); and 4) the Instituto de Arbitragem Commercial do Porto.

Each arbitration body has its own regulations, but all of them comply with the Portuguese Arbitration Law 63/11, which came into force in March 2012. The Arbitration Council of the Centre for Commercial Arbitration also follows New York Convention, Washington Convention and Panama Convention guidelines.

Arbitration Law 63/11 follows the standard established by the UNCITRAL Model Law, but is not an exact copy of that text.

Under the Constitution of the Portuguese Republic (CPR), the Civil Code of Procedure (CCP) and the New York Convention (applied in Portugal since 1995), awards rendered in a foreign country must be recognized (i.e., an exequatur is obtained) by the Portuguese courts before they can be enforced in Portugal. There is no legal authority in Portugal on the enforceability of foreign awards set aside at the seat of the arbitration.

The Code of Civil Procedure (CCP) sets forth the legal regime applicable to all judicial procedures related to arbitration, including appointment of arbitrators, determination of arbitrators’ fees, challenge of arbitrators, appeal (where admissible), setting aside, enforcement (and opposition to enforcement) and recognition of foreign arbitral awards.

While Portugal’s judicial system has historically been considered inefficient, the country has taken several important steps to increase the efficiency and quality of judicial proceedings in recent years. According to the World Bank 2018 Doing Business Index, enforcing a contract in Portugal takes an average of 547 days compared to the OECD average of 578 days, and costs 17.2 percent of the claim value, below the OECD average of 21.5 percent.

**Bankruptcy Regulations**

Portugal’s Insolvency and Corporate Recovery Code defines insolvency as a debtor’s inability to meet his commitments as they fall due. Corporations are also considered insolvent when their liabilities clearly exceed their assets. A debtor, creditor, or any person responsible for the debtor’s liabilities can initiate insolvency proceedings in a commercial court.

The court assumes the key role of ensuring compliance with legal rules governing insolvency proceedings, with particular responsibility for ruling on the legality of insolvency and payment plans approved by creditors.

After declaration of insolvency, creditors may submit their claims to the court-appointed insolvency administrator for a specific term set for this purpose, typically up to 30 days. Creditors must submit details regarding the amount, maturity, guarantees, and nature of their claims. Claims are ranked as follows: (i) claims over the insolvent’s estate, i.e. court fees related to insolvency proceedings; (ii) secured claims; (iii) privileged claims; (iv) common, unsecured claims; (v) subordinated claims, including those of shareholders.

Portugal ranks highly (15th of 190 countries) in the World Bank’s Doing Business Index “Resolving Insolvency” measure.

							4. Industrial Policies					

****Investment Incentives****

The Portuguese government offers investment incentives which can be tailored to individual investors’ needs and capital based on industry, investment size, and project sustainability. For example, a corporate income tax credit for 10 to 25 percent of eligible investment, 10 percent tax benefits for up to a 10-year period after the conclusion of the investment and exemptions from municipal property tax, municipal tax and stamp tax. There are also financial grants for job creation and for R&D-Research and Development. More information on investment incentives is available at: http://www.portugalglobal.pt/EN/InvestInPortugal/Documents/IncentivesOverviewinPortugal.pdf .

The Autonomous Regions of Madeira and the Azores also offer investment incentives. For example, profits derived from offshore operations by licensed industrial, shipping, international services, and financial companies established in the International Business Centre of Madeira (a foreign trade zone) are subject to the reduced corporate tax rate of 5 percent. For more information on the International Business Centre of Madeira’s corporate tax regime, please visit http://www.ibc-madeira.com/ .Since Portugal is an EU Member State, potential investors may be able to access European aid programs, which provide further incentives to investing in Portugal. Such funds have been used by Portugal to co-finance key investments in the areas of research and development, information and communications technology, transport, water, solid waste, energy efficiency and renewable energy, urban regeneration, health, education, and culture. For more information, visit: https://www.portugal2020.pt/Portal2020/lista_noticias .

****Foreign Trade Zones/Free Ports/Trade Facilitation****

Portugal has one foreign trade zone (FTZ)/free port in the Autonomous Region of Madeira, established in 1987. Continued operation of this foreign trade zone/free port has been authorized in accordance with EU rules on incentives granted to member states. Industrial and commercial activities, international service activities, trust and trust management companies, and offshore financial branches are all eligible. Companies established in the foreign trade zone enjoy import- and export-related benefits, financial incentives, tax incentives for investors, and tax incentives for companies.

Under the terms of Portugal’s agreements with the EU, companies incorporated in the Madeira FTZ can take advantage of a reduced corporate tax rate of 5 percent until 2020.For example, profits derived from offshore operations by licensed industrial, shipping, international services, and financial companies established in the International Business Centre of Madeira (a foreign trade zone) are subject to the reduced corporate tax rate of 5 percent. For more information on the International Business Centre of Madeira’s corporate tax regime, please visit http://www.ibc-madeira.com/ .

****Performance and Data Localization Requirements****

Portugal does not impose performance requirements or mandate local employment conditions for foreign investors. Qualification standards for investment incentives are applied uniformly to both domestic and foreign investors.

As a member of the EU, there is a high level of labor mobility between Portugal and other member states. To work in Portugal, non-EU foreign nationals must be sponsored for a work permit by a Portuguese employer.

There are no nationality-related restrictions that affect a foreign national’s ability to serve in senior management or on a board of directors. Foreign or expatriate workers with appropriate work authorizations are entitled to the same rights and subject to the same duties as employees with Portuguese citizenship.

While Portugal does not force data localization, according to the Portuguese Data Protection Law (pursuant to the EU’s 1995 Data Protection Directive) “data controllers,” i.e., people or corporations that process personal data, must register in Portuguese with the national Data Protection Authority (CNPD). Data transfers outside of the EU are only allowed if the recipient country or company ensures an adequate level of protection.

Portugal is set to be subject to new rules stipulated in the EU’s General Data Protection Regulation: https://www.eugdpr.org . These will come into effect on May 25, 2018.

There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption; the same rules apply to foreign IT providers as apply to national providers.

Data transfers to other countries within the EU do not require prior authorization from the National Commission for Data Protection (CNPD). Data transfers to countries outside the EU can only take place in compliance with the Data Protection Law, meaning the receiving state must also provide an adequate level of protection to personal data.

If the receiving state does not ensure an adequate level of protection, the CNPD can authorize the transfer under specific conditions, namely: if the data’s subject has given clear consent to the proposed transfer; if the transfer is necessary for the performance of a contract between the data subject and the controller; if the implementation of pre-contractual measures is taken in response to the data subject’s request; if necessary for the performance or conclusion of a contract between the controller and a third party that is concluded, or to be concluded, in the data subject’s interests; if necessary or legally required on important public interests grounds, or to establish, exercise or defend legal claims; if necessary to protect the data subject’s vital interests; and if made from a register that is intended to provide information to the public and is open to consultation, either by the public or by any other person who can demonstrate a legitimate interest, provided the conditions laid down in law for consultation are fulfilled.

In addition, the CNPD can authorize a transfer or a set of transfers of personal data to a receiving state that does not provide an adequate level of protection. This can only be achieved if the controller provides adequate safeguards to protect the privacy and fundamental rights and freedoms of individuals. This can be through appropriate contractual clauses or if a transfer to the United States, through adherence to the U.S.-EU Privacy Shield principles.

The CNPD is responsible for overseeing all enforcement of local data storage rules.

							5. Protection of Property Rights					

****Real Property****

Portugal reliably enforces property rights and interests. The Portuguese Constitution provides for the right to private property and grants Parliament the power to establish rules on the renting of property, the determination of property in the public domain, and the rules of land management and urban planning. The Civil Code of 1967, modelled after the Bürgerliches Gesetzbuch, provides for the right to absolute and full ownership, which can be restricted by mortgage, liens, or other security interests. Apart from the Civil Code, additional laws have established or modified rules on time-sharing, condominiums, and land registration.

Property registration is fairly easy in Portugal, and can be done quickly online (https://www.predialonline.pt/PredialOnline/ ). According to the World Bank’s 2015 Doing Business Index, registration is faster and simpler than in most other OECD countries, taking one day to complete the process. The cost, however, is slightly higher than the OECD average (4.2 percent) at 7.3 percent of the property value.

Foreign investors can directly own/purchase property freehold or leasehold, to build industrial and commercial premises or can purchase through a real estate company.

As of 2013, between 10 and 20 percent of land in Portugal had no clear title. In 2018, Portugal launched an initiative to improve land ownership registration, making it free to do so in the next two years. To reduce the risks of a repeat of the tragic fires of 2017, Portugal started the process of identifying unclaimed land so it can pool it and later promote its use, preferably by cooperatives of forestry producers.

If legally purchased property is unoccupied, Portuguese law allows ownership to revert to other owners (such as squatters), as set out in Chapter VI of the Portuguese Civil Code (CCP), Article 1287.

****Intellectual Property Rights****

IPR infringement and theft are not common in Portugal. It is fairly easy for investors to register copyrights, industrial property, patents, and designs with Portugal’s Institute of Industrial Property (INPI) and the Inspectorate-General of Cultural Activities (IGAC). Intellectual property can be registered online for a small fee.

For more details, please consult: https://inpi.justica.gov.pt/Servicos  and https://www.igac.gov.pt/ .

The Portuguese government adopted the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and provisions of the General Agreement on Tariffs and Trade (GATT) in 2003. Portuguese legislation for the protection of intellectual property rights has been consistent with WTO rules and EU directives since 2004. The Arbitration Centre for Industrial Property, Domain Names, and Company Names (ARBITRARE) was established in 2009 to facilitate voluntary arbitration of intellectual property disputes in English or Portuguese, and in 2012, the government created an intellectual property court with two judges.

During last year, no new IP related laws or regulations have been enacted. See more at: http://www.wipo.int/wipolex/en/profile.jsp?code=pt .

Portugal is a participant in the eMAGE and eMARKS projects, which provide multilingual access to databases of trademarks and industrial designs. Portugal’s Food and Economic Security Authority (ASAE), in partnership with other national law enforcement agencies, provides statistics on seizures of counterfeit goods.

Portugal is not listed in USTR’s Special 301 report, nor is it listed in the notorious market report.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

							6. Financial Sector					

****Capital Markets and Portfolio Investment****

The Government of Portugal recognizes the value of foreign investment and sees such investment as an important engine of economic growth. The Portuguese Agency for Foreign Investment and Commerce (AICEP) is the lead agency for promotion of trade and investment.

The Portuguese stock exchange is managed by Euronext Lisbon, part of the NYSE Euronext Group, which allows a listed company access to a global and diversified pool of investors. The Portuguese Stock Index-20 (PSI20), launched in 1993, is Portugal’s benchmark index representing the largest (only 18, not 20, in 2018) and most liquid companies listed on the exchange.

Euronext Lisbon as a whole has 59 listed companies and a market capitalization of EUR 57 billion. In 2017 almost EUR 24 billion in shares were traded and the PSI20 rose 15.2 percent.

There are 185 debt instruments listed in the exchange with a market capitalization of EUR 130 billion.

The Portuguese stock exchange offers a diverse product portfolio: shares, funds, exchange traded funds, bonds, and structured products, including warrants and futures. Various market segments and solutions were developed to meet the different characteristics of issuers and products.

The Portuguese Securities Market Commission (CMVM) supervises and regulates securities markets, and is a member of the Committee of European Securities Regulators and the International Organization of Securities Commissions. Additional information on CMVM can be found here: http://www.cmvm.pt/en/Pages/homepage.aspx .

Portugal respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Credit is allocated on market terms, and foreign investors are eligible for local market financing. Private sector companies have access to a variety of credit instruments, including bonds.

****Money and Banking System****

32 banks and nine credit institutions are registered with the Bank of Portugal and the penetration rate of banking services is high. Online banking penetration stood at 31 percent in 2017, a two percent increase from 2016, but still below the European average of 51 percent.

Portugal’s banking assets totaled EUR 381 billion at the end of 2017, a EUR 5 billion decrease from 2017, and continuing of the downward trend that has prevailed since 2012. The country’s largest bank by assets, Caixa Geral de Depositos (CGD), is state-owned and at the end of 2017 had assets worth EUR 93.3 billion. The country’s largest private bank, Millennium BCP closed the year with assets of EUR 71.9 billion.

Though gradually improving, Portuguese banks’ non-performing loan portfolios are among the largest in Europe, with an estimated EUR 25-30 billion of bad loans in the books, approximately 15 percent of total credit portfolios. The financial sector is actively tackling the legacy of the debt crisis.

In November 2017, U.S. private equity firm Lone Star took control of 75 percent of state-rescued Novo Banco for EUR 1 billion. The closing of the deal helped turn the page on a major uncertainty for the Portuguese financial sector. Novo Banco reported a record net loss of EUR 1.4 billion in 2017. This triggered a fresh EUR 800 million capital injection from the country’s bank resolution fund, which holds a 25 percent stake in Novo Banco. This injection was part of the sales contract with Novo Banco.

Caixa Economica Montepio Geral (CEMG), delisted from the stock market in late 2017, has been singled out by some analysts as a possible focus of market concern after the previous fall of two bigger lenders in Portugal in 2014-15, BES and Banif. In June 2017, CEMG completed a EUR 250 million capital increase, and, in September 2017, it became a public liability company, benefiting from changes in the treatment of deferred tax assets boosting its capital ratios. The bank swung to a EUR 30 million net profit in 2017 from a EUR 86.5 million loss the previous year.

The Portuguese state injected EUR 3.9 billion into state-owned Caixa Geral de Depositos in 2017 to, a complex operation done at market terms and needed to shore up the bank, which struggled under massive bad loans on its books after the 2010-13 economic crisis.

Banks’ return on equity and on assets moved into positive territory in 2017 from a negative figure the previous year. In terms of capital buffers, Common Equity Tier 1 ratio improved to 13.9 percent by December 2017 from 11.4 percent a year before.

Foreign banks are allowed to establish operations in Portugal. In terms of decision-making policy, a general ‘four-eyes policy’ must be in place at all banks and branches operating in the country, irrespective of whether they qualify as international subsidiaries of foreign banks or local banks. Branches operating in Portugal are required to have such decision-making powers that enable them to operate in the country, but this requirement generally does not prevent them from having internal control and rules governing risk exposure and decision-making processes, as customary in international financial groups.

There are limitations on both foreign and domestic investments with regard to certain economic activities. Any economic activity that involves the exercise of public authority requires government approval. Private sector companies can operate in these areas only through a concession contract. Investors wishing to establish new credit institutions or finance companies, acquire a controlling interest in such financial firms, and/or establish a subsidiary must have authorization from the Bank of Portugal (for EU firms) or the Ministry of Finance (for non- EU firms). In both cases, the authorities carefully consider the proposed transaction, but in the case of non-EU firms, the Ministry of Finance especially considers the impact on the efficiency of the financial system and the promotion of exports. Non- EU insurance companies seeking to establish an agency in Portugal must post a special deposit and financial guarantee and must receive authorization for such activity by the Ministry of Finance for at least five years.

No restrictions exist on a foreigner’s ability to establish a bank account and both residents and non-residents may hold bank accounts in any currency. However, any transfers of EUR 10,000 or more must be declared to Portuguese customs authorities. See more at: https://www.bportugal.pt/ .

****Foreign Exchange and Remittances****

*Foreign Exchange Policies*

Portugal does not have exchange controls and there are no restrictions on the import or export of capital. Funds associated with any form of investment can be freely converted into any world currency.

Portugal is a member of the European Monetary Union (Eurozone) and uses the euro, a floating exchange rate currency controlled by the European Central Bank (ECB). The Bank of Portugal is the country’s central bank; the Governor of the Bank of Portugal participates on the board of the ECB.

*Remittance Policies*

There are no limitations on the repatriation of profits or dividends. There are no time limitations on remittances.

****Sovereign Wealth Funds****

The Ministry of Labor, Solidarity, and Social Security manages Portugal’s Social Security Financial Stabilization Fund (FEFSS), with total assets of around EUR 14 billion. This is not technically a Sovereign Wealth Fund (SWF) and does not subscribe to the voluntary code of good practices known as the Santiago Principles, or participate in the IMF-hosted International Working Group on SWF’s.

Among other restrictions, the law requires that at least 50 percent of assets are invested in Portuguese public debt, and limits FEFSS investment in equity instruments to that of EU or OECD members. FEFSS acts as a passive investor and does not take an active role in the management of portfolio companies.

							7. State-Owned Enterprises					

There are currently over 40 state-owned enterprises (SOEs) operating in Portugal in the banking, health care, transportation, water and agriculture.

At the end of the first semester of 2017, total assets were above EUR 14 billion, net income of Parpublica was EUR 6.8 million, and EBITDA came down 13 percent year-on-year to EUR 250 million. When SOEs are wholly owned, the government appoints the board, although when SOEs are majority-owned the board of executives and non-executives nomination depends on the negotiations between government and the remaining shareholders, and in some cases on negotiations with European Authorities as well.

Portugal’s only SOE with revenues greater than one percent of GDP is the Caixa Geral de Depositos (CGD). CGD has the largest market share in customer deposits, commercial loans, mortgages, and many other banking services in the Portuguese market.

Parpublica is a government holding company for several smaller enterprises that audits and reports on smaller SOEs; information on these can be found at: http://www.parpublica.pt/ .

The activities and accounts of Parpublica are fully disclosed in budget documents and audited annual reports. In addition, the Ministry of Finance publishes an annual report on SOEs, presenting annual performance data by company and sector, through a specialized monitoring unit (UTAM): http://www.utam.pt/ .

According to Law No. 133/2013, SOEs must compete under the same terms and conditions as private enterprises, subject to Portuguese and EU competition laws. Still, SOEs often receive preferential financing terms from private banks.

Even before entering the bailout program, the OECD’s 2011 SOE Governance Reform lauded Portugal as “one of the most active jurisdictions” in introducing new legislation and guidelines for SOE governance. In March 2008, Portugal’s Council of Ministers approved resolution no. 49/2007, which defined the Principles of Good Governance for SOEs according to OECD guidelines. The resolution requires SOEs to have a governance model that ensures the segregation of executive management and supervisory roles, to have their accounts audited by independent entities, to observe the same standards as those for companies publicly listed on stock markets, and to establish an ethics code for employees, customers, suppliers, and the public. The resolution also requires the Ministry of Finance’s Directorate-General of the Treasury and Finances to publish annual reports on SOEs’ compliance with the Principles of Good Governance.

Credit and equity analysts generally tend to criticize SOEs’ over-indebtedness and inefficiency, rather than any poor governance and ties to government.

****Privatization Program****

Portugal launched an aggressive privatization program in 2011 as part of its EU-IMF bailout, including state-owned enterprises in the air transportation, land transportation, energy, communications, and insurance sectors. Foreign companies have been among the most successful bidders in these privatizations since the beginning of the program.

The bidding process has been public, transparent, and non-discriminatory to foreign investors. Chinese, Omani, and French companies have purchased large stakes in Portugal’s electricity utility (EDP), its electricity and natural gas grid operator (REN), its airport operator (ANA), and the insurance arm of the state-owned bank (Caixa Seguros). In addition, Portugal’s postal service (CTT) sold 70 percent of its shares to public investors on the Lisbon stock exchange in 2013, and in 2016 95 percent of Portuguese rail operator CP Carga was sold to the MSC Group.

							8. Responsible Business Conduct					

There is strong awareness of responsible business conduct in Portugal and broad acceptance of the need to consider the community among the key stakeholders of any company. The Group of Reflection and Support for Business Citizenship (GRACE) was founded in 2000 by a group of companies, primarily multinational corporations, to expand the role of the Portuguese business community in social development.

The Ministry of Economy and AICEP encourage foreign and local enterprises to observe the OECD Guidelines for Multinational Enterprises, and both agencies jointly comprise the National Contact Point (NCP) for the promotion of these guidelines or facilitation of resolving disputes which may arise regarding the Guidelines. For contact information: http://www.portugalglobal.pt/PT/Paginas/Index.aspx .

The Portuguese Business Ethics Association (APEE) is dedicated to promoting corporate social responsibility and works in collaboration with the Ministry of Economy’s Directorate-General of Economic Activities. It promotes events like Social Responsibility Week and celebrates protocols and agreements with companies to assure they follow RBC principles incorporated into the Labor Code through Law 99/2003 and Law 35/2004. For more, please see: http://www.apee.pt/normalizacao/normalizacao-nacional .

Portugal’s Competition Authority both encourages and enforces competition rules, including ethical business practices. The Competition Authority operates a leniency program for companies that self-identify lapses. For more information,see http://www.concorrencia.pt/vEN/Praticas_Proibidas/Leniency_Programme/Pages/Leniency-Programme.aspx .

There have not been any high profile, controversial instances of private sector impact on human rights. The Portuguese government enforces domestic laws effectively and fairly through the domestic courts system, and through the supra-national European Court of Human Rights. Within its constitution, Portugal states that constitutional precepts concerning fundamental rights must be interpreted and completed in harmony with the Universal Declaration of Human Rights.

The Portuguese legal and regulatory framework on corporate governance includes not only regulations and recommendations from the Portuguese Securities Market Commission (CMVM), but also specific legal provisions from the Portuguese Companies Code and the Portuguese Securities Code. CMVM promotes sound corporate governance for listed companies by setting out a group of recommendations and regulations on the standards of corporate governance. CMVM regulations are binding for listed companies.

Non-governmental organizations also promote awareness of environmental and good governance issues in business. These include Quercus Portugal, which publishes guidelines and organizes events to promote environmental responsibility in business practices, and Transparencia e Integridade Associacao Civica (TIAC), which produces reports on corruption on everything from football match-fixing to conflicts of interest in public and private enterprise. TIAC also allows whistle-blowers to anonymously submit reports of corruption through their website.

Portugal does not participate in the Extractive Industries Transparency Initiative (EITI), or the Voluntary Principles on Security and Human Rights. On April 3, 2017 the Council of the European Union approved a new EU regulation on conflict minerals. The regulation imposes due diligence rules on companies importing tin, tantalum, tungsten, and gold into the EU. It has a transition period for compliance before entering full effect on January 1, 2021.

							9. Corruption					

Portugal has made legislative strides toward further criminalizing corruption. The government’s Council for the Prevention of Corruption, formed in 2008, is an independent administrative body that works closely with the Court of Auditors to prevent corruption in public and private organizations that use public funds. Transparencia e Integridade Associacao Civica, the local affiliate of Transparency International, also actively publishes reports on corruption and supports would-be whistleblowers in Portugal. In 2010, the country adopted a law that criminalized violation of urban planning rules and increased transparency in political party funding. In 2015, Parliament unanimously approved a revision to existing anti-corruption laws that extended the statute of limitations for the crime of trading in influence to 15 years and criminalized embezzlement by employees of state-owned enterprises with a prison term of up to eight years.

Still, according to a 2018 report by the Council of Europe’s Group of States against Corruption (GRECO), Portugal should improve efforts to reform its legal framework to prevent corruption in respect of MPs, judges and prosecutors.

The report concluded that Portugal has only satisfactorily implemented one of fifteen previous recommendations. Three have been partly implemented, and eleven have not yet been implemented. The situation is qualified by GRECO as “globally unsatisfactory.”

GRECO, however welcomed a reform to bolster integrity, enhance accountability and increase transparency of a wide range of public office holders, including MPs.

See more here: http://bit.ly/2FjbQTu .

The European Commission raised similar issues in its 2014 Anti-Corruption Report on Portugal and also noted an extremely prevalent perception of corruption among the Portuguese populace. According to a 2013 survey, 90 percent of Portuguese respondents stated that “corruption is a widespread problem in their country” (vs. an EU average of 76 percent), while 36 percent of Portuguese respondents said that they “are personally affected by corruption in their daily life” (vs. an EU average of 26 percent). The report is available at: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/anti-corruption-report/docs/2014_acr_portugal_chapter_en.pdf .

The laws extend to family members of officials and to political parties.

Portugal has laws and regulations to counter conflict-of-interest in awarding contracts or government procurement. See more at: http://www.portugal.gov.pt/pt/o-governo/referenda.aspx .

The Portuguese government encourages (and in some cases requires) private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials. See more at: http://www.portugal.gov.pt/pt/o-governo/referenda.aspx .

Most private companies use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials. As described above, the Competition Authority operates a leniency program for companies that self-identify infringements of competition rules, including ethical lapses.

Portugal has ratified and complies with both the UN Convention against Corruption and the OECD Anti-Bribery Convention.

Portuguese government provides pro-bono legal services to NGOs involved in investigating corruption.

U.S. firms occasionally report encountering limited degrees of corruption in the course of doing business in Portugal; they do not identify corruption as an obstacle to foreign direct investment.

**Resources to Report Corruption**

Contact at government agency responsible for combating corruption:Jose TavaresDirector General, Council for the Prevention of CorruptionAvenida da Republica, 651050-189, Lisbon, Portugal+351 21 794 5138cp-corrupcao@tcontas.pt

Contact at “watchdog” organization:Luis de SousaPresident, Transparency International – Transparencia e Integridade Associacao CivicaRua Leopoldo de Almeida, 9B,1750-137, Lisbon, Portugal+351 21 752 2075secretariado@transparencia.pt

							10. Political and Security Environment					

Since the 1974 Carnation Revolution, Portugal has had a long history of peaceful social protest.

Portugal experienced its largest political rally since its revolution in response to proposed budgetary measures in 2012. Subsequent demonstrations against government austerity measures and economic policies have resulted in isolated and low levels of vandalism, generally directed at parliamentary facilities. Public workers, including nurses, doctors, teachers, aviation professionals, and public transportation workers have organized peaceful demonstrations periodically in protest of salary cuts and other austerity measures throughout 2017.

							11. Labor Policies and Practices					

A stronger labor market has moved the wheels of a virtuous economic cycle. Unemployment has tumbled to below 8 percent from a record high above 17 percent in 2013.

Numerous labor reform packages aimed at improving the productivity of Portugal’s workforce were implemented after the 2011 bailout, but overall low labor productivity remains a key challenge. In its February 2018 post-program monitoring report, the International Monetary Fund (IMF) said after declining for the last years, unit labor costs have started to rise and if they keep going up external competitiveness could be threatened. The IMF indicated that the increase in the minimum wage in 2018 to EUR 580 per month (14 payments per year), from EUR 557 per month, may contribute to increasing future labor costs as the minimum wage covers about a fifth of full-time employees.

Numerous experts and international bodies have identified increased labor market flexibility as a challenge and area ripe for structural policy changes. Nonetheless, as economic recovery has picked up, certain sectors are facing labor shortages, including the tourism, information technology, and engineering fields.

In 2016, 125,400 foreign workers were legally employed in Portugal. Foreign workers, particularly Asian migrants, generally work in the commercial and service sectors and, overall, are self-employed; Africans, most of whom are salaried employees or wage earners, tend to hold low-skilled jobs in the industrial sector (which includes cleaning services, in the case of women, and construction work, in the case of men). EU and American citizens, largely tend to hold highly qualified jobs (skilled professions, directors and administrative staff) or engage in entrepreneurial activities. This group is also correlated with agricultural workers, which are dependent on the number of European citizens (e.g. Dutch, English and French expats) who come to Portugal to enjoy their retirement, investing in large properties destined for agricultural exploration.

The Health, tourism, information technology (IT) and engineering sectors currently have the largest shortages of skilled labor. More information can be found at: https://www.iefp.pt/ .

Employers are allowed to conduct collective dismissals linked to adverse market or economic conditions, or due to technological advancement, but must provide advance notice and severance pay. Depending on the seniority of each employee, an employer must provide between 15 to 75 days of advance notice, and pay severance ranging from 12 days’ to one month’s salary per year worked. Employees may challenge termination decisions before a Labor Court.

Labor laws are uniformly applicable and enforced, including in Portugal’s foreign trade zone/free port in the Autonomous Region of Madeira.

Collective bargaining is common in Portugal’s banking, insurance, and public administration sectors. In 2016, 4,172 Portuguese were fired within collective bargaining agreements. More information is available at: http://www.dgert.msess.pt/ .

Portugal has labor dispute resolution mechanisms in place through Labor Courts and Arbitration Centers.

Labor strikes are more common than in the United States, but are nonviolent and of short duration. In recent years, work stoppages by public sector workers, including transportation workers, teachers, and nurses, as well as by unionized groups including taxi drivers and longshoremen have occurred.

Portugal is a member of the International Labor Organization (ILO), and has ratified all eight Fundamental Conventions as well as all four Governance (Priority) Conventions.

The Labor Code caps the work schedule at eight hours per day, and 40 hours per week. The public sector employee workweek, with certain exclusions, was capped at 35 hours in July 2016. In January 2017, Portugal’s minimum wage was increased from EUR 530 to EUR 557 per month. Employees are entitled to at least 22 days of annual leave per year. In addition, the employer must pay employees a Christmas bonus and vacation bonus, both equivalent to one month’s salary.

In 2016, new rules on access to early retirement were amended. Applicants must now be at least 60 years of age and have at least 40 years of employment and social security contributions to qualify. For individuals between the ages of 55 and 60 who applied for early retirement prior to the passage of the aforementioned statute, they must have had 30 years of documented social security contributions to qualify.

							12. OPIC and Other Investment Insurance Programs					

Portugal is a country with low political risk; there is no OPIC program in Portugal.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*