Is it illegal to own a company in Portugal while living in France?

No, it isn't illegal in itself. Freedom of establishment in the European Union allows you to set up a company in another member state. The risk isn't the legality of the incorporation, but tax reclassification: if the company is actually run from France or has a permanent establishment there, the French authority can tax it in France. It all depends on the facts of your situation, to be examined case by case.

What is the place of effective management?

It's where the company's management and strategic decisions are actually made. Tax law attaches more importance to this than to the registered address. If your Portuguese Lda is run from your home in France, its place of effective management may be deemed French, which would make it a French tax resident. This is the central criterion of the whole topic.

How can I honestly reduce the reassessment risk?

By giving the company real substance and genuinely making decisions in Portugal: office or domiciliation, a Contabilista Certificado, an active Portuguese bank account, contracts, documented decisions, possibly local staff or a contractor. And above all by having your case analysed by a tax adviser before you start. No honest professional can promise “zero risk”: the goal is a defensible setup, not a guarantee.

Will I have to pay exit tax when leaving France for Portugal?

Possibly, depending on your situation. The exit tax (art. 167 bis of the CGI) can apply to people domiciled in France for at least 6 of the last 10 years whose holdings reach 50% of a company's profits or exceed €800,000 in total value. A departure to Portugal, within the EU, gives entitlement to an automatic payment deferral, with discharge after a few years of holding the securities. The thresholds and exact application must be checked with a tax adviser before departure.

Pillar guide · reassessment risk

A company in Portugal while living in France:the real risk isn't the incorporation

Opening a Unipessoal Lda in Portugal has become easy, a legaltech will sell you the shell “in 2 hours”. But if you keep making every decision from France, the danger isn't Portuguese: it's the French tax authority, which can reclassify your company and treat it as taxable in France. This guide explains, honestly, the criteria that actually decide, and where my role as a consultant ends.

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Published 9 June 2026Updated 9 June 2026

The truth no one tells you

The reassessment risk isn't in Portugal, it's in France

A company incorporated in Portugal is Portuguese on paper. But tax law looks beyond the paper: it looks at where the company is actually run and where the activity is actually carried out. If decisions are made in France and you work from there, the French authority may consider the company effectively French, and claim the corresponding corporate tax, with penalties. The “2-hour” incorporation protects nothing: it even creates an empty shell, exactly what authorities know how to challenge on both sides (abuse of law in France, ATAD/anti-abuse rules in Portugal).

The 4 risk pillars

What the French authority really looks at

These criteria are assessed as a body of evidence, never as a binary rule. No single element “saves” or “condemns” a case: what matters is the overall consistency between your real life and your company.

Pillar 1, the criterion that decides everything

The place of effective management

A company is tax-resident in Portugal if its registered office or its place of effective management (“local de direção efetiva”) is located there. Where strategic decisions are made outweighs the registered address. So a Lda incorporated in Portugal but run from France can be deemed a French tax resident, a dual-residence case that the France-Portugal treaty then resolves on the basis of effective management.

What counts: where management decisions are made (contracts, hiring, investments, strategy), not where the office is registered.
Holding decision-making bodies and signing major commitments in Portugal strengthens the consistency of the file.
A manager who decides everything from their living room in France weakens the company's Portuguese residence.

The place of effective management is where the company is actually run. If that's in France, the Portuguese company may be taxed in France.

Pillar 2, the number-one trap of the “legal offshore company”

A permanent establishment in France

Even if the company stays resident in Portugal, carrying out its activity through a fixed place of business in France (an office, your home turned into a workplace) can create a French permanent establishment: a portion of the profit then becomes taxable in France. An undeclared permanent establishment has already led, in case law, to a reconstruction of the turnover attributable to France.

A permanent establishment is a fixed place of business through which the activity is carried out, it needn't be a dedicated commercial premises.
The OECD (2025 update on remote work) mentions an indicative marker around 50% of working time as a vigilance threshold, a clue, not an automatic legal threshold.
The concrete risk: paying IRC in Portugal AND tax in France on the share attributed to the permanent establishment.

Regularly working from France for your Portuguese company can create a taxable permanent establishment there. The percentage of time is only one clue among others.

Pillar 3, an empty shell is attackable on both sides

Real economic substance

BEPS standards and the ATAD I and II directives (transposed in Portugal by Law 24/2020, in force since January 2022) require genuine economic activity for tax advantages to hold: staff, premises, equipment, documented decisions. A company without substance, a mere mailbox, is fragile both against abuse of law in France and against anti-abuse / CFC rules in Portugal.

Substance must be proven: a domiciliation contract or real office, a Contabilista Certificado, an active Portuguese bank account, contracts, possibly a local employee or contractor.
Documenting where and by whom decisions are made matters as much as the figures.
The more genuine economic reality the company has in Portugal, the more defensible it is in the event of an audit.

Economic substance is not optional: it's what separates a defensible setup from an empty shell that can be attacked in France as well as in Portugal.

Pillar 4, when you leave France

Exit tax on departure to Portugal

If you genuinely move your tax residence from France to Portugal, the exit tax (art. 167 bis of the French CGI) may apply to taxpayers domiciled in France for at least 6 of the 10 years before departure, where their holdings represent at least 50% of a company's profits or exceed a total value of €800,000.

Departure to Portugal (within the EU): automatic payment deferral, with no guarantee required.
Relief / discharge after holding the securities for 2 years, or 5 years above a certain value threshold.
Changes have been discussed in finance bills: this point must absolutely be checked case by case with a tax adviser before any departure.

Exit tax doesn't prevent leaving and benefits from automatic deferral within the EU, but the thresholds and the discharge must be anticipated with a tax adviser before you go.

Two dangerous shortcuts

The resident-manager myth and the 183-day myth

Two misconceptions circulate on this topic. Both are misleading shortcuts, one makes you spend for nothing, the other gives false security.

Myth 1, “you must have a manager resident in Portugal”

False. No Portuguese law requires the manager of a Unipessoal Lda or a Lda to reside in Portugal, to hold Portuguese nationality, or to spend 183 days there. You need a NIF (for the partner/manager) and a NIPC (for the company); a fiscal representative is in principle only required for residents outside the EU/EEA. The essential nuance: the absence of a Portuguese obligation does not remove the French tax risk if the company is, in reality, run from France. The resident-manager myth distracts from the real issue, where decisions are made.

Myth 2, “under 183 days in France and I'm safe”

False for individuals. Spending fewer than 183 days in France is not enough to become a non-resident. The French criteria (art. 4 B of the CGI) are alternative: home or main place of stay, main professional activity, centre of economic interests. The France-Portugal treaty then applies successive criteria, permanent home, then centre of vital interests, then habitual abode, then nationality. “The 183-day rule” taken in isolation is a misleading shortcut: your family, your home and the core of your activity weigh more.

My role, honestly

I warn you, I help build a real setup, and I refer you to the right tax adviser

I'm a consultant in company formation and business setup in Portugal, not a tax adviser, not an accountant, not a lawyer. I never sell arrangements, tax avoidance, or “zero risk”. What I do: help you build a real, documented setup, explain the French-side risks frankly, and connect you with a competent tax adviser to analyse your personal situation. Regulated accounting is handled by a Contabilista Certificado registered with the OCC, a partner of the practice.

What I do, and what I don't

01I carry out and coordinate the company formation (NIF, articles of association, Certidão Permanente, RCBE) and the banking support.

02I warn you about French reclassification risks and the need for substance.

03I refer you to a partner tax adviser for tax residence, exit tax and a defensible setup.

04I never offer any artificial arrangement and never promise a tax outcome or “zero tax”.

Frequently asked questions

A Portuguese company while living in France: your questions

: No, it isn't illegal in itself. Freedom of establishment in the European Union allows you to set up a company in another member state. The risk isn't the legality of the incorporation, but tax reclassification: if the company is actually run from France or has a permanent establishment there, the French authority can tax it in France. It all depends on the facts of your situation, to be examined case by case.
: It's where the company's management and strategic decisions are actually made. Tax law attaches more importance to this than to the registered address. If your Portuguese Lda is run from your home in France, its place of effective management may be deemed French, which would make it a French tax resident. This is the central criterion of the whole topic.
: No, that's a myth. No Portuguese law requires the manager of a Unipessoal Lda or a Lda to reside in Portugal or to spend 183 days there. But beware: the absence of a Portuguese obligation does not remove the French tax risk if you run the company from France. The real issue is where decisions are made, not the manager's residence status.
: No, that's a misleading shortcut. For individuals, spending fewer than 183 days in France is not enough. The French criteria are alternative: home or main place of stay, main professional activity, centre of economic interests. The France-Portugal treaty then applies successive criteria (permanent home, centre of vital interests, habitual abode, nationality). Your family, your home and your activity often weigh more than the day count.
: By giving the company real substance and genuinely making decisions in Portugal: office or domiciliation, a Contabilista Certificado, an active Portuguese bank account, contracts, documented decisions, possibly local staff or a contractor. And above all by having your case analysed by a tax adviser before you start. No honest professional can promise “zero risk”: the goal is a defensible setup, not a guarantee.
: Possibly, depending on your situation. The exit tax (art. 167 bis of the CGI) can apply to people domiciled in France for at least 6 of the last 10 years whose holdings reach 50% of a company's profits or exceed €800,000 in total value. A departure to Portugal, within the EU, gives entitlement to an automatic payment deferral, with discharge after a few years of holding the securities. The thresholds and exact application must be checked with a tax adviser before departure.

Sources & framework

What this guide is based on

These references frame the facts cited. They do not replace a tax adviser's analysis of your situation. Official sources should be consulted directly (impots.gouv.fr, bofip.impots.gouv.fr, légifrance, diariodarepublica.pt).

France-Portugal tax treaty of 14 January 1971

Residence, double taxation, permanent establishment, successive residence criteria.

BOFiP, art. 4 B and 167 bis of the CGI

Tax residence of individuals, exit tax, permanent establishment on the French side.

OECD model & 2025 update on remote work

Indicative marker (~50% of time) for permanent-establishment risk, a clue, not a legal threshold.

ATAD I/II directives, Portuguese Law 24/2020 (in force since January 2022)

Requirement of real economic substance, anti-abuse and CFC rules.

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