59118 Portugal © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. 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ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Portugal. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Portugal is ranked 31 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Portugal - Compared to global good practice economy as well as selected economies: Portugal's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 31 Starting a Business 59 Dealing with Construction Permits 111 Registering Property 31 Getting Credit 89 Protecting Investors 44 Paying Taxes 73 Trading Across Borders 27 Enforcing Contracts 24 Closing a Business 21 2 Summary of Indicators - Portugal Starting a Business Procedures (number) 6 Time (days) 6 Cost (% of income per capita) 6.5 Min. capital (% of income per capita) 34.1 Dealing with Construction Permits Procedures (number) 19 Time (days) 272 Cost (% of income per capita) 53.9 Registering Property Procedures (number) 1 Time (days) 1 Cost (% of property value) 7.4 Getting Credit Strength of legal rights index (0-10) 3 Depth of credit information index (0-6) 5 Public registry coverage (% of adults) 67.1 Private bureau coverage (% of adults) 16.3 Protecting Investors Extent of disclosure index (0-10) 6 Extent of director liability index (0-10) 5 Ease of shareholder suits index (0-10) 7 Strength of investor protection index (0-10) 6.0 Paying Taxes Payments (number per year) 8 Time (hours per year) 298 Profit tax (%) 14.9 Labor tax and contributions (%) 26.8 Other taxes (%) 1.6 Total tax rate (% profit) 43.3 Trading Across Borders Documents to export (number) 4 Time to export (days) 16 Cost to export (US$ per container) 685 Documents to import (number) 5 Time to import (days) 15 Cost to import (US$ per container) 999 3 Enforcing Contracts Procedures (number) 31 Time (days) 547 Cost (% of claim) 13.0 Closing a Business Recovery rate (cents on the dollar) 72.6 Time (years) 2.0 Cost (% of estate) 9 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.14 0.12 0.10 Doing business has 0.08 become easier (DB 0.06 change score) 0.04 0.02 0.00 Doing business has -0.02 become more difficult or more -0.04 France Portugal Belgium Greece Austria Germany Italy costly 6 1. Benchmarking Starting a Business Regulations: Portugal is ranked 59 overall for Starting a Business. Ranking of Portugal in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Portugal compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Portugal 6 6 6.5 34.1 Comparator Economies Austria 8 28 5.2 53.1 Belgium 3 4 5.4 19.6 France 5 7 0.9 0.0 Germany 9 15 4.8 0.0 Greece 15 19 20.7 22.3 Italy 6 6 18.5 10.1 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Portugal Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 59 59 Procedures (number) 7 6 6 6 Time (days) 7 6 6 6 Cost (% of income per capita) 7.0 6.5 6.4 6.5 Min. capital (% of income per capita) 34.7 34.3 33.5 34.1 3. The following graphs illustrate the Starting a Business sub indicators in Portugal over the past 4 years: 9 Starting a Business Summary - Portugal This table summarizes the procedures and costs associated with setting up a business in Portugal. STANDARDIZED COMPANY Legal Form: Sociedade por Quotas City: Lisbon Registration Requirements: No: Procedure Time to complete Cost to complete 1 Choose a pre-approved company name 1 no charge 2 Register at the one-stop shop 1 EUR 947 3 Register with the Social Security Regional Center 1 no charge 4 Deposit initial capital 1 no charge 5 Report to the Labor Inspectorate 1 no charge 6 Register for the workmen's accident compensation insurance at a 1 no charge private insurer 10 Starting a Business Details - Portugal Procedure 1 Choose a pre-approved company name Time to complete: 1 Cost to complete: no charge Comment: CHANGE THIS TEXT WITH THE SURVEY OF RUI PEIXOTO DUARTE Before requesting the corporate name, the company promoter can search the National Registry of Collective Entities (Registro Nacional de Pessoas Colectivas, RNPC) database (also via the Internet) for the availability of the requested name. The promoter can reserve a company name for 48 hours at a fee of EUR 31. (For information on company names or on notary and registrar issues, visit www.dgrn.mj.pt/impres/imprnpc.asp.) The RNPC issues a certificate of approval of the promoter's company name or of the promoter's choice of one of the preapproved names provided by the Portuguese authorities (the list is on the Internet). If the company decides not to use one of the preapproved company names, the company must obtain from the RNPC a certificate of approval and a provisional taxpayer card. A new search engine has expedited this procedure, which now takes about 4 days. The certificate is valid for 90 days and may be renewed only once. The fee for company name approval is EUR 70: - Certification of company name approval: EUR 56. - Provisional identity card (for collective person): EUR 14. An additional fee of EUR 31 applies if a name reservation is requested. Under Decree-Law No. 111/2005 (effective July 13, 2005), the certificate of approval is valid for 3 months and may be renewed only once. The provisional identification card is valid for 3 months and can be renewed if the incorporation process has not been completed. The provisional taxpayer card can be requested at the same time as the corporate certificate. If the parties decide to incorporate the company outside the Centros de Formalidades das Empresas, (CFE), they can request the certificate of approval and the taxpayer card via the Internet, mail, or at a local RNPC office. The forms should be signed by one of the future shareholders (or by a proxy). Procedure 2 Register at the one-stop shop Time to complete: 1 Cost to complete: EUR 947 Comment: If the company does not select one of the preapproved company names, the promoter must submit the documents cited in Procedure 1. Shareholders who opt to incorporate the company within 24 hours must choose one of the standard articles of association without adding other clauses. The company commercial registration is immediate, and a certificate is issued. Shareholders can also acquire a registered trademark at the same time. For tax purposes, shareholders may also file at this time a declaration of commencement of activities. If this option is not exercised, this declaration should be submitted within 15 days of company incorporation. Through this fast-track procedure, the following are handled on a single visit to the one-stop shop (a) the company corporate tax number; (b) the company's Social Security 11 number; (c) the commercial register of the company incorporation; and (d) the declaration of start of business operations. Employee registration must be done at least 24 hours before the start of employment. Promoters must file taxpayer identification documents, deeds, collective person's card, minutes of company inaugural meeting, a copy of statutory members' tax cards, and documents proving the declaration of commencement of activity. Companies that have interaction with the public must have the company's work schedule approved at the Ministry of Employment and Social Security (Ministério do Emprego e da Segurança Social; the homepage is http://www.seg-social.pt) The mandatory publications are made on a website of the Ministry of Justice (http://publicacoes.mj.pt/Index.asp) More information on the new system, "company one hour," can be found at http://www.empresanahora.pt/empresa. Decree-Law 125/2006 and Administrative Rule 657-C/2006 No. 657-C/2006 (dated June 29, 2006) provided for a special regime for setting up companies via the Internet. This new regime allows for online incorporation of civil and commercial companies. Incorporators can complete all incorporation procedures online, including the search for a unique company name. To search a company name, incorporators may elect between three options a) submit a preapproved, registered name (as in the company one hour system); b) apply for a company name online; or c) file a certificate of name approval, obtained nonelectronically . When preparing to file company bylaws, the incorporators may elect to either draft the bylaws or file standard, boilerplate bylaws (The required documents and information must be filed by electronic authentication or electronic signature. The application is deemed valid only after an electronic confirmation of the date and time the application was filed. The registry shall be made immediately or within 2 working days of the filing of the application. The online company registration system is accessible to lawyers, solicitors and notaries who own a digital certification that proves the user's profession. Administrative Rule 1416-A/2006 sets out two other stipulations: (1) The applicant's option of applying for commercial registration online is contingent on appropriate electronic certification. (2) The availability of information online must always be updated. Upon request, a password is sent that allows the applicant company or any other public or private entity (to whom the password is disclosed) to see the certificate online. The password is disclosed upon delivery of a hard copy certificate. As of June 30, 2006, shareholders that choose to incorporate and register the company at the one-stop shop (using the new expedited system) can also acquire a registered trademark at the same time. Procedure 3 Register with the Social Security Regional Center Time to complete: 1 Cost to complete: no charge Comment: Employers must register employees for social security insurance in 10 working days after the tax declaration on start of business activities and at least 24 hours before employees start employment. This procedure can be conducted at the at the Centros de Formalidades das Empresas (CFE). The employer must file the following documents: the taxpayer identification card, deeds, collective person's card, minutes of company inaugural meeting, a copy of the statutory members' tax cards, and a document proving the declaration of commencement of activity. Companies that have interaction with the public must have the company's work schedule approved at the Ministry of Employment and Social Security (Ministerio do Emprego e da Segurança Social). Under Decree-Law 14/2007, as of March 2007 employees may be registered online via 12 www.seg-social.pt/. Procedure 4 Deposit initial capital Time to complete: 1 Cost to complete: no charge Comment: Initial capital may be deposited by online banking or in person at the one-stop shop (Caixa Geral de Depósitos), where a bank attendant is available to handle the transaction. Procedure 5 Report to the Labor Inspectorate Time to complete: 1 Cost to complete: no charge Comment: Before starting its activity, the incorporated company must submit the following information to the Labour General Inspection: the company name and its tax number, its corporate activity, its registered office and other company locations, and the number of workers and managers. The company must also provide a copy of the published announcement of the incorporation deed. Since mid-2008, entrepreneurs can file a declaration of commencement of operations at the one-stop shop and the Registry can forward it electronically to the new Work Inspection Agency (ACT - Autoridade para as Condições do Trabalho). Procedure 6 Register for the workmen's accident compensation insurance at a private insurer Time to complete: 1 Cost to complete: no charge Comment: The workers' compensation insurance covers all workers and managers who receive a salary. The insurance is underwritten by a private insurer carrier and according to new regulations, it can be done after the company starts business activities. Note that social security insurance does not cover occupational accident or injury. According to Decree-Law 14/2007, as of March 2007 an employee can be registered online on the social security site. 13 14 1. Benchmarking Dealing with Construction Permits Regulations: Portugal is ranked 111 overall for Dealing with Construction Permits. Ranking of Portugal in Dealing with Construction Permits - Compared to good practice and selected economies: 15 The following table shows Dealing with Construction Permits data for Portugal compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Portugal 19 272 53.9 Comparator Economies Austria 14 194 72.9 Belgium 14 169 64.1 France 13 137 23.6 Germany 12 100 61.8 Greece 15 169 52.9 Italy 14 257 142.3 16 2. Historical data: Dealing with Construction Permits in Portugal Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 112 111 Procedures (number) 20 21 19 19 Time (days) 327 328 287 272 Cost (% of income per capita) 54.0 53.5 52.9 53.9 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Portugal over the past 4 years: 17 Dealing with Construction Permits in Portugal The table below summarizes the procedures, time, and costs to build a warehouse in Portugal. BUILDING A WAREHOUSE City: Lisbon Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain preliminary approval of project design 70 days no charge 2 Obtain approval of project designs from the municipality and other 95 days EUR 136 relevant entities 3 Obtain a building permit (alvará) and pay fee 42 days EUR 2,860 4 Inform the labor inspection agency about the new construction site 1 day no charge 5 Notify municipality when reaching plinth level in the construction and 1 day no charge receive site inspection 6 Notify municipality before proceeding with concrete work and receive 1 day no charge inspection 7 Receive inspection from Labor authority 1 day no charge 8 Apply for occupancy permit and pay fees 1 day EUR 1,405 18 9 * Submit application for a water and sewerage connection at the water and 1 day no charge sewerage authority 10 * Submit application for an electricity connection at the power authority 1 day no charge 11 * Submit application for a telephone line at the telecommunications 1 day no charge authority 12 * Receive inspection by the water and sewerage authority 1 day EUR 31 13 * Receive inspection by the power authority 1 day no charge 14 * Receive inspection by the telecommunications authority 1 day no charge 15 * Obtain water and sewerage connection 31 days EUR 70 16 * Obtain electricity connection 8 days EUR 514 17 * Obtain phone connection 14 days EUR 100 18 * Receive inspection and obtain occupancy permit 39 days no charge 19 Register the building with the real estate registry 10 days EUR 2,625 * Takes place simultaneously with another procedure. 19 Dealing with Construction Permits Details - Portugal Procedure 1 Obtain preliminary approval of project design Time to complete: 70 days Cost to complete: no charge Agency: City Hall Comment: Granted by the municipality, the approval indicates BuildCo's possibility to execute a certain project. This approval binds the authorities involved in the issuing process but does not authorize construction. Valid for a year, this approval is not a prerequisite for the other procedures. Even so, this procedure cannot be performed simultaneously with any other procedure. The Ministerial Order #111/2001 has been replaced by a new Ordinance 232/2008 as of March 11, 2008. According to it the required documents are as follows: - Title to the property, or proof of ownership or lease agreement. - Architectural project. - Project clearance from the Fire Department. Approval of the architectural project depends on the issuance of a favorable opinion from the Fire Department. The costs involved are chargeable only at the issuance of the operating license. The company should also request approval of the security system against fire risks that would be filed upon submission of the specific drawings. - Specific drawings, such as drawings of the electrical power layout. Approved project design drawings are valid for 6 months but are subject to a 3-month extension upon the company's request. - Specification of patent. - Direct billing, issued to the owner. - Schedule of construction work execution. - Other forms and documents deemed relevant. This procedure is not mandatory but it is common practice. Procedure 2 Obtain approval of project designs from the municipality and other relevant entities Time to complete: 95 days Cost to complete: EUR 136 Agency: City Hall Comment: The company must present the project design to the local municipality and consult with the relevant public entities, such as the Monuments Protection Authority. The number and type of entities that must be consulted vary from case to case. The municipality forwards the file to the public entities to be consulted. After the municipality grants approval of the design project, it requests the applicant to present, within 6 months, the "specialty projects," for instance, the stability, electricity, gas, sewage, waste water, telephone and telecommunications, thermal and acoustic behavior of the building, elevators, and the like. The municipality then forwards the specialty projects to the relevant entities for approval. The design project approval takes on average the first 30 days of the previous procedure, after which the specialty projects can be sent for approval at the same time that the approval from the relevant entities in the previous procedure is being requested (these two steps take 10 and 20 days, respectively). Once all approvals from third parties have been granted, it takes about 35 days for the municipality to make its final decision. Because 20 the applicant can present both the designs and specialty projects at the same time and to the same agency, those steps are considered as one procedure here. The applicant can also directly ask the relevant authorities for approval of the specialty projects and submit those approvals with the designs, which saves substantial time. Procedure 3 Obtain a building permit (alvará) and pay fee Time to complete: 42 days Cost to complete: EUR 2,860 Agency: City Hall Comment: BuildCo must request a building permit within a maximum of a year from the date of notification of final approval of the building project. The building permit is issued after the relevant taxes have been paid. Procedure 4 Inform the labor inspection agency about the new construction site Time to complete: 1 day Cost to complete: no charge Agency: Labor Conditions Agency Comment: The Labor Conditions Agency might perform on-site inspections during construction. The project might also receive unscheduled inspections from other agencies, such as the agency issuing construction licenses, the Register (INCI), and the municipality. Procedure 5 Notify municipality when reaching plinth level in the construction and receive site inspection Time to complete: 1 day Cost to complete: no charge Agency: City Hall Comment: The municipality might inspect the site after receiving notification. Procedure 6 Notify municipality before proceeding with concrete work and receive inspection Time to complete: 1 day Cost to complete: no charge Agency: City Hall Comment: The municipality might inspect the site after receiving notification. Procedure 7 Receive inspection from Labor authority Time to complete: 1 day 21 Cost to complete: no charge Agency: Labor Conditions Agency Comment: Labor Conditions Agency shows up more in recent years due to increased cases of using illegal labor force by construction companies. Although BuildCo is a law abiding company it is most likely it will be inspected at least once during the contruction cycle. The inspections lately look at mainly health and safety conditions. They also look at employment contracts and legal status of authorized workers ("alvara"). Every construction site can be inspected several times during the term of building permit. Procedure 8 Apply for occupancy permit and pay fees Time to complete: 1 day Cost to complete: EUR 1,405 Agency: City Hall Comment: Once the building has been completed, the applicant requests the occupancy and use permit, which costs EUR 1,404.65. The payment can be required either when the application form is filed or when the license is issued, depending on the municipality. The municipality might charge EUR 80.92 due to an additional inspection of the works. In this case, this procedure might cost around EUR 1,485.57. The timelimit within the permit must be issued is 15 working days from previously registered 30 days. Procedure 9 Submit application for a water and sewerage connection at the water and sewerage authority Time to complete: 1 day Cost to complete: no charge Agency: Electricidade de Portugal (EDP) Comment: Procedure 10 Submit application for an electricity connection at the power authority Time to complete: 1 day Cost to complete: no charge Agency: Electricidade de Portugal (EDP) Comment: Procedure 11 Submit application for a telephone line at the telecommunications authority Time to complete: 1 day Cost to complete: no charge Agency: Autoridade Nacional de Comunicações (Anacom) 22 Comment: Procedure 12 Receive inspection by the water and sewerage authority Time to complete: 1 day Cost to complete: EUR 31 Agency: Electricidade de Portugal (EDP) Comment: Procedure 13 Receive inspection by the power authority Time to complete: 1 day Cost to complete: no charge Agency: Electricidade de Portugal (EDP) Comment: Procedure 14 Receive inspection by the telecommunications authority Time to complete: 1 day Cost to complete: no charge Agency: Portugal Telecom Comment: Procedure 15 Obtain water and sewerage connection Time to complete: 31 days Cost to complete: EUR 70 Agency: Electricidade de Portugal (EDP) Comment: The steps for obtaining a water and sewerage connection are as follows: 1. Filing of an application for water connection with the Water Authority (EPAL). When the connection involves installation of a water meter, the cost is about EUR 69.70. The request must be filed in triplicate and accompanied by the localization map at a scale of 1:1000, the operating license, the direct billing of the water design engineer concerning the project and the execution of the water connection, the name of the design engineer, a favorable opinion issued by the Fire Department, the security certificate, and the certification of the Fire Department. This procedure may occur simultaneously with procedures 1, 4, and 16 . BuildCo can deliver the operating license to EPAL at any time before the first on-site inspection. 2. First on-site inspection by EPAL, following the company's request. The cost of each inspection is EUR 31.17. 23 3. Completion of the water connection work. BuildCo is responsible for establishing the water connection and bearing the associated costs. 4. Execution of the water supply agreement and installation of the water meters. 5. Issuance of a certificate by EPAL. The company must file a copy of the certificate with the municipal authority. Procedure 16 Obtain electricity connection Time to complete: 8 days Cost to complete: EUR 514 Agency: Electricidade de Portugal (EDP) Comment: The request must be accompanied by several documents, such as the electrical plans, a map with the warehouse location, the operating license or the direct billing of the electric design engineer, and information regarding the needed voltage, conduit size, and materials needed to establish the electricity connection. The costs of installing electricity depend on the size and technical characteristics of the connection and the adaptations to the power network needed to complete the installation. Those costs have increased. For one meter, the applicant now pays EUR 281.33, plus EUR 45.38 for fire services, at the time the application is filed. Fees of EUR 27.23 are needed for each additional meter. The applicant is entitled to two free inspections. Each additional one costs EUR 40. Issuance of the certificate costs EUR 72,60. The total cost is therefore EUR 399.31. (It is assumed that one water meter is needed and that no inspections other than the free ones take place. All these amounts include value-added tax.) Procedure 17 Obtain phone connection Time to complete: 14 days Cost to complete: EUR 100 Agency: Portugal Telecom Comment: Procedure 18 Receive inspection and obtain occupancy permit Time to complete: 39 days Cost to complete: no charge Agency: City Hall Comment: Procedure 19 Register the building with the real estate registry Time to complete: 10 days Cost to complete: EUR 2,625 24 Agency: Real Estate Registry Comment: 25 26 1. Benchmarking Registering Property Regulations: Portugal is ranked 31 overall for Registering Property. Ranking of Portugal in Registering Property - Compared to good practice and selected economies: 27 The following table shows Registering Property data for Portugal compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Portugal 1 1 7.4 Comparator Economies Austria 3 21 4.5 Belgium 8 79 12.7 France 8 59 6.1 Germany 5 40 5.1 Greece 11 22 12.7 Italy 8 27 4.5 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 28 2. Historical data: Registering Property in Portugal Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 51 31 Procedures (number) 5 5 5 1 Time (days) 42 42 12 1 Cost (% of property value) 7.4 7.4 7.4 7.4 3. The following graphs illustrate the Registering Property sub indicators in Portugal over the past 4 years: 29 Registering Property in Portugal This topic examines the steps, time, and cost involved in registering property in Portugal. STANDARDIZED PROPERTY Property Value: 733,617.65 City: Lisbon Registration Requirements: No: Procedure Time to complete Cost to complete 1 Register the property at the Real Property Registry 1 day 6.5% of the of the property's fiscal value or sale price, whichever is higher + 0.8% stamp duty and 375 EURO for the Land Registry 30 Registering Property Details - Portugal Procedure 1 Register the property at the Real Property Registry Time to complete: 1 day Cost to complete: 6.5% of the of the property's fiscal value or sale price, whichever is higher + 0.8% stamp duty and 375 EURO for the Land Registry Agency: Land Registry Comment: It is possible to register a property transfer in Portugal at any of the locations of the one-stop shop "On the spot house" (Casa pronta, www.casapronta.pt) in person. In April 2010, there were 31 locations in Lisboa, and 335 locations in all of Portugal (260 approximately in 2009). Banks can request that a public employee comes with a laptop with secured access to the database to complete the property transfer in the bank (for free) without going to a Casa pronta location. At the one-stop shop, the public employee will verify the following aspects: · Identity of parties · Powers of attorney (stating that the individuals are legal representatives of the firms) · Verify the legality of the transaction (that all laws are fulfilled) · Verify the ownership and the encumbrances (with access to the "predial" database) · Verify that all taxes have been paid (with access to the Tax administration's database) Once all the checks are completed, if there are any outstanding taxes, those can be paid at Casa pronto, though a specific agreement between the Tax Authorities and Casa pronta. A receipt is issued to show that the taxes have been paid. The deed is prepared and submitted, and the transaction is completed. Property registration is mandatory in Portugal and the one stop shop process is available since July 2008, and its use is gradually increasing. As an alternative to using the Casa pronta, it is possible to use the services of a notary or a lawyer (lawyers can do so only since 2008) to prepare and authenticate the deed and verify tax payments. The authenticated deed can be submitted to the Predial (land registry, www.predialonline.pt). Only an authenticated deed can be submitted to the Predial. Predial has 307 property registries (in each municipality) all connected to a central database. Casa pronta is an interface with the buyers and sellers that is connected to the central database managed by "registro predial". Preemption rights exist in Portugal but are not mandatory, unless the property is located in special areas (old town, cultural, or close to airport or near railways). In many commercial areas there is no need for such a waiver. Note on the registry: 100 Euros per transaction are transferred to an institute which supervises investments in information technology. This institute is managed by a President and 2 Vice-presidents all designated by the government. The computerization efforts at the Land registry used this funding, but also other funds from the government. 31 32 1. Benchmarking Getting Credit Regulations: Portugal is ranked 89 overall for Getting Credit. Ranking of Portugal in Getting Credit - Compared to good practice and selected economies: 33 The following table shows Getting Credit data for Portugal compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Portugal 3 5 67.1 16.3 Comparator Economies Austria 7 6 1.4 40.6 Belgium 7 4 57.2 0.0 France 7 4 33.3 0.0 Germany 7 6 1.0 98.4 Greece 3 5 0.0 61.5 Italy 3 5 16.6 80.5 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 34 2. Historical data: Getting Credit in Portugal Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 87 89 Strength of legal rights index (0-10) 3 3 3 3 Depth of credit information index (0-6) 5 5 5 5 Private bureau coverage (% of adults) 11.3 11.3 16.4 16.3 Public registry coverage (% of adults) 67.1 76.4 81.3 67.1 3. The following graphs illustrate the Getting Credit sub indicators in Portugal over the past 4 years: 35 Getting Credit in Portugal The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Portugal. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 5 bureau registry Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative data distributed? Yes No 1 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? Yes No 1 Is data on all loans below 1% of income per capita distributed? Yes Yes 1 Is it guaranteed by law that borrowers can inspect their data in the Yes Yes 1 largest credit registry? Coverage 16.3 67.1 Number of individuals 1,377,920 5,769,330 Number of firms 92,419 283,278 36 Strength of legal rights index (0-10) 3 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, No without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without No requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, No proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the No grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? Yes 37 38 1. Benchmarking Protecting Investors Regulations: Portugal is ranked 44 overall for Protecting Investors. Ranking of Portugal in Protecting Investors - Compared to good practice and selected economies: 39 The following table shows Protecting Investors data for Portugal compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Portugal 6.0 Comparator Economies Austria 4.0 Belgium 7.0 France 5.3 Germany 5.0 Greece 3.3 Italy 5.7 40 2. Historical data: Protecting Investors in Portugal Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 41 44 Strength of investor protection index (0-10) 6.0 6.0 6.0 6.0 3. The following graph illustrates the Protecting Investors index in Portugal compared to best practice and selected Economies: 9.7 7.0 6.0 5.7 5.3 5.0 4.0 3.3 al y m ug al e y nd ce ia ec an iu It tr an rt a lg re m us al Po Fr Be G Ze er A G ew N Note: The higher the score, the greater the investor protection. 41 Protecting Investors in Portugal The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Portugal. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 6 2 What corporate body provides legally sufficient approval for the transaction? 1 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 2 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 1 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 5 1 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 42 0 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 1 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 7 4 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 1 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 1 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 6.0 43 44 1. Benchmarking Paying Taxes Regulations: Portugal is ranked 73 overall for Paying Taxes. Ranking of Portugal in Paying Taxes - Compared to good practice and selected economies: 45 The following table shows Paying Taxes data for Portugal compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Portugal 8 298 43.3 Comparator Economies Austria 22 170 55.5 Belgium 11 156 57.0 France 7 132 65.8 Germany 16 215 48.2 Greece 10 224 47.2 Italy 15 285 68.6 * The following economies are also good practice economies for : Payments (number per year): Qatar 46 2. Historical data: Paying Taxes in Portugal Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 78 73 Total tax rate (% profit) 44.8 43.6 42.9 43.3 Payments (number per year) 8 8 8 8 Time (hours per year) 328 328 328 298 3. The following graphs illustrate the Paying Taxes sub indicators in Portugal over the past 4 years: 47 Paying Taxes in Portugal The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Portugal, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Stamp duty Value added tax (VAT) 1 online 96 20.0% value added filing Tax on check 1 online 0.05 EUR per check 0.00 transactions filing Vehicle tax 1 fixed fee per vehicle 0.10 (EUR 289) Interest tax 1 online 20.0% interest 0.50 filing income Property tax 1 0.4% property 0.60 value Municipal business tax 0 paid jointly 1.5% taxable 0.90 with CIT income Fuel tax 1 28 cents fuel 1.00 consumption in liters 48 Corporate income tax 1 online 40 12.5% [EUR taxable 14.00 filing 0-12,500], profits 25.0% [EUR 12,500-] Social security 1 online 162 23.8% gross salaries 26.80 contributions filing Totals 8 298 43.3 49 50 1. Benchmarking Trading Across Borders Regulations: Portugal is ranked 27 overall for Trading Across Borders. Ranking of Portugal in Trading Across Borders - Compared to good practice and selected economies: 51 The following table shows Trading Across Borders data for Portugal compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Portugal 4 16 685 5 15 999 Comparator Economies Austria 4 7 1180 5 8 1195 Belgium 4 8 1619 5 9 1600 France 2 9 1078 2 11 1248 Germany 4 7 872 5 7 937 Greece 5 20 1153 6 25 1265 Italy 4 20 1245 4 18 1245 * The following economies are also good practice economies for : Time to export (days): Estonia 52 2. Historical data: Trading Across Borders in Portugal Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 23 27 Cost to export (US$ per container) 580 685 685 685 Cost to import (US$ per container) 994 999 999 999 Documents to export (number) 4 4 4 4 Documents to import (number) 5 5 5 5 Time to export (days) 16 16 16 16 Time to import (days) 16 16 15 15 3. The following graphs illustrate the Trading Across Borders sub indicators in Portugal over the past 4 years: 53 54 Trading Across Borders in Portugal These tables list the procedures necessary to import and export a standardized cargo of goods in Portugal. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 10 150 Customs clearance and technical control 1 100 Ports and terminal handling 3 260 Inland transportation and handling 2 175 Totals 16 685 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 10 300 Customs clearance and technical control 1 264 Ports and terminal handling 3 260 Inland transportation and handling 1 175 Totals 15 999 55 Documents for Export and Import Export Bill of lading Commercial invoice Customs export declaration Packing list Import Bill of lading Certificate of origin Commercial invoice Customs import declaration Packing list 56 57 1. Benchmarking Enforcing Contracts Regulations: Portugal is ranked 24 overall for Enforcing Contracts. Ranking of Portugal in Enforcing Contracts - Compared to good practice and selected economies: 58 The following table shows Enforcing Contracts data for Portugal compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Portugal 31 547 13.0 Comparator Economies Austria 25 397 18.0 Belgium 26 505 16.6 France 29 331 17.4 Germany 30 394 14.4 Greece 39 819 14.4 Italy 41 1210 29.9 59 2. Historical data: Enforcing Contracts in Portugal Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 24 24 Procedures (number) 35 34 31 31 Time (days) 577 577 547 547 Cost (% of claim) 14.2 14.2 13.0 13.0 3. The following graphs illustrate the Enforcing Contracts sub indicators in Portugal over the past 4 years: 60 Enforcing Contracts in Portugal This topic looks at the efficiency of contract enforcement in Portugal. Nature of Procedure (2010) Indicator Procedures (number) 31 Time (days) 547 Filing and service 30.0 Trial and judgment 337.0 Enforcement of judgment 180.0 Cost (% of claim)* 13.00 Attorney cost (% of claim) 10.6 Court cost (% of claim) 1.8 Enforcement Cost (% of claim) 0.5 61 Court information: Lisbon Civil Court ("Juízos Cíveis do Tribunal Judicial da Comarca de Lisboa") * Claim assumed to be equivalent to 200% of income per capita. 62 63 1. Benchmarking Closing Business Regulations: Portugal is ranked 21 overall for Closing a Business. Ranking of Portugal in Closing Business - Compared to good practice and selected economies: 64 The following table shows Closing Business data for Portugal compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Portugal 72.6 2.0 9 Comparator Economies Austria 73.1 1.1 18 Belgium 87.6 0.9 4 France 45.2 1.9 9 Germany 53.1 1.2 8 Greece 43.2 2.0 9 Italy 58.0 1.8 22 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 65 2. Historical data: Closing Business in Portugal Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 22 21 Time (years) 2.0 2.0 2.0 2.0 Cost (% of estate) 9 9 9 9 Recovery rate (cents on the dollar) 74.0 69.4 69.4 72.6 3. The following graphs illustrate the Closing Business sub indicators in Portugal over the past 4 years: 66 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 67 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Austria Austria made it easier to transfer property by requiring online submission of all applications to register property transfers. Belgium Belgium's capital city, Brussels, made it more difficult to transfer property by requiring a clean-soil certificate. Belgium introduced a new law that will promote and facilitate the survival of viable businesses experiencing financial difficulties. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Germany Germany eased business start-up by increasing the efficiency of communications between the notary and the commercial registry and eliminating the need to publish an announcement in a newspaper. Greece Greece made transferring property more costly by increasing the transfer tax from 1% of the property value to 10%. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Italy Italy made starting a business easier by enhancing an online registration system. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Portugal Portugal established a one-stop shop for property registration. Portugal introduced a new social security code and lowered corporate tax rates. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. 68 Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 69 70