Introduction
Cabo Verde is an island republic in the Atlantic, comprising ten volcanic islands. The prospect of establishing a company in Cabo Verde appeals to investors due to its advantageous location at the intersection of maritime and aerial routes between North America, South Africa, South America, and Central Europe. The state's economic system is market-oriented, enhancing its attractiveness for business and capital investment. Key sectors of the economy include tourism, light industry, and exports.
Investors planning to establish a company in Cape Verde are also attracted by the region's economic stability, particular attention to sustainable development, and active promotion of international investment. In recent years, the republic has actively promoted projects in the renewable energy sector, thereby opening additional opportunities for investors in this field. The government supports foreign investments by offering significant tax incentives and stimulating measures for companies engaged in export and tourism.
The opening of a business in Cape Verde is increasingly sought after by entrepreneurs due to low bureaucracy and efficient procedures. Foreign investors can opt for various forms of organization such as Sociedade Anónima, Sociedade por Quotas, and Sociedade em Nome Coletivo. In addition, Cape Verde presents tax incentives for new companies, including exemption from corporate income tax and dividends for the first five years, as well as a reduced corporate income tax rate of 10% from the sixth year of operation. The registration process can take from 24 hours to several weeks. It should be noted that personal presence of founders is required at certain stages of the registration process, although many procedures can be completed online.
Legal forms of companies in Cape Verde
|
Legal form |
Description |
Characteristic |
|
JSC (Sociedade Anónima) |
A corporation in which the funds are divided into shares of stock, and the liability of stockholders is limited to their contributions. |
To establish a company in Cape Verde in the form of a JSC, a minimum of two shareholders is required. |
|
LLC (Sociedade por Quotas) |
A limited liability company where the liability of the members is limited to their investment in fixed capital. |
To establish a business in Cape Verde in the form of an LLC, a minimum share capital is not required. |
|
General partnership (Sociedade em Nome Coletivo) |
A type of partnership in which all partners are jointly responsible for the obligations of the firm. |
The fixed capital is not regulated by law, but the partners are liable indefinitely with their personal assets. |
|
Limited partnership (Sociedade em Comandita) |
A partnership in which there are general partners with unlimited liability and limited partners whose liability is limited to their investment. |
There is no minimum fixed capital for a general partner; for limited partners, the amount of the contribution is indicated in the constituent documents. |
|
Cooperative (Sociedad Cooperativa) |
An association of individuals or companies created to jointly conduct business activities. |
The minimum authorized capital depends on the type of cooperative and is determined by the constituent documents. Cooperatives are usually formed to support agricultural or manufacturing activities. |
To launch a business in Cape Verde, careful consideration must be given to the company's legal form, requirements concerning registered capital, and the specifics of founders' liabilities. This process necessitates a meticulous approach to selecting the appropriate structure and preparing all necessary documentation.
Company registration process
Preparatory stage
The process of establishing a company in Cape Verde begins with selecting and reserving a company name. The name must be unique and comply with local requirements:
- Checking name availability: checking the availability of a company name is conducted through the Commercial Registry (Casa do Cidadão). This process is necessary to confirm the uniqueness of the name and ensure it does not coincide with already registered companies.
- Reservation of name: upon confirmation of availability, the name is reserved. The reservation process involves filing an application with the Commercial Registry and payment of fees. The cost of name reservation is approximately 10,000 escudos (around 100 USD). The name is reserved for a specific period, typically 60 days, during which the company registration process must be completed.
After reserving the name, it is necessary to proceed with the preparation of the articles of association and founding documents of the organization. These papers must be drafted in accordance with the legislative norms of Cabo Verde and contain the following essential elements:
- Charter of the company: this document defines the key goals and activities of the company, the rights and obligations of participants, as well as the procedure for managing and distributing profits. The charter must be signed by all founders and notarized.
- Memorandum of Association: this document describes the main provisions for establishing a company in Cape Verde, including information about the founders, the amount of the authorized capital, the procedure for making contributions and distributing shares. The agreement must be drawn up in writing and notarized.
- Declaration of Commencement of Activities: this document confirms the intent of the founders to commence operations of the company and is submitted to tax authorities and other governmental institutions. The declaration includes information on the legal address of the company, types of activities, and the date of commencement of operations.
Registration in the Commercial Register (Casa do Cidadão)
The process of registering a company in Cape Verde is carried out through Casa do Cidadão and includes several important steps:
The founders must submit a set of documents to the Commercial Register, including:
- Company Charter;
- Memorandum of Association;
- Identification documents of the founders (passports or national identity cards);
- Confirmation of name reservation.
The state requires a fee to be paid in order to register a firm. This charge, which varies according to the kind of business, is around 10,000 escudos (about $100 USD). Payments can be paid by bank transfer or in person at the Commercial Registry cashier.
Information about the new firm is published in the Cabo Verde Official Bulletin upon document submission and verification. Publication is necessary for the company's credibility as well as for public education. The price of publication is around 5,000 escudos (about 50 USD), and it fluctuates according to the amount of material.
Upon completion of registration, the company obtains a tax identification number (NIF) necessary for financial and tax reporting purposes. To acquire the NIF, founders must submit the respective application to the tax authorities of Cape Verde.
The process of registering a company at Casa do Cidadão takes between 1 to 5 business days, depending on the completeness and accuracy of the documents provided and the speed of their processing. With properly prepared documents, registration can be completed within 24 hours. It should be noted that timelines may extend if additional documents are required or errors in the submitted materials need correction.
Opening a corporate account
The process of establishing a company in Cape Verde requires the deposit of the share capital into the company's bank account. This mandatory step must be completed prior to finalizing registration. Depositing the share capital confirms the financial stability of the company and readiness to commence operations.
Procedure for contributing authorized capital:
The company's founders need to decide which Cape Verdean bank will let them create an account and deposit the share capital. Caixa Económica de Cabo Verde, Banco Comercial do Atlântico, and Banco Interatlântico are important banks.
To open an account you must provide the following documents:
- Constituent documentation of the organization;
- Confirmation of company registration in Casa do Cidadão;
- Personal documents of the founders (passports or national identity cards).
Obtaining a Tax Identification Number (NIF)
A NIF must be obtained as part of the business establishment procedure in Cape Verde in order to carry out commercial operations and satisfy tax responsibilities. All legally recognized entities in the nation must first get the NIF.
Steps to obtain a NIF
To obtain NIF, you must prepare a number of documents, including:
- A copy of the company's charter;
- Memorandum of association;
- Confirmation of company registration in Casa do Cidadão.
The company's founders need to apply for an NIF to the Cabo Verdean tax authorities (Direção Nacional de Receitas do Estado, DNRE). The application is sent to the tax office in the municipality where the business is registered.
The submission of an application for obtaining an NIF involves the payment of an administrative fee. The fee amount may vary depending on the type of company, but typically amounts to approximately 2,000 escudos (about 20 USD).
Depending on the volume of work the tax service is handling and how comprehensive the information is, the tax authorities' examination of the filed paperwork and application might take three to seven working days.
Following a successful application evaluation, the business receives an NIF. This number is required to register bank accounts, file tax returns, and carry out other financial operations. It also identifies the firm inside the Cape Verdean tax system.
The NIF is an essential need in order to start a business in Cape Verde. All tax requirements, including company tax, VAT, and other taxes, must be fulfilled with its help. A business is not permitted to lawfully undertake commercial operations in the nation without an NIF.
Estimated time frame for registering a company in Cape Verde
The process of establishing a company in Cape Verde involves several stages, each of which requires a specific amount of time for completion. Based on our experience, it is possible to estimate approximate durations necessary to finalize the firm's registration in this country.
The stage of preparing and reserving a company name typically takes from 1 to 2 days. At this stage, the uniqueness of the name is verified, and it is reserved through the Commercial Register.
The preparation of the charter and founding documents, including the company's charter, articles of association, and declaration of commencement of activities, may take up to 5 business days. This timeframe encompasses notarial certification of documents and their formalization in accordance with legislative requirements.
Registration of a company in the Commercial Registry (Casa do Cidadão) takes between 1 to 5 business days. This period includes document submission, payment of registration fees, and publication of company information in the Official Bulletin of Cabo Verde. Publication requires between 5 to 10 business days, after which founders receive confirmation of publication.
Obtaining a NIF takes between 3 to 7 business days. This process involves submitting an application to the tax authorities and paying an administrative fee. The tax number is required to fulfill all corporate tax obligations.
Therefore, establishing a company in Cape Verde requires between 16 to 35 working days, contingent upon the completeness and accuracy of the submitted documents and the processing speed across various governmental entities. This process encompasses several pivotal stages such as capital infusion, obtaining a tax identification number, and registration with the Department of Commerce, enabling the company to commence legal operations and avail all pertinent tax incentives and investment stimuli.
Business tax system in Cape Verde
Before opening a company in Cape Verde, we recommend familiarizing yourself with the country's tax system, which encompasses various taxes, levies, and incentives. Cape Verde's tax regime aims to attract foreign investment and support local businesses, offering entrepreneurs a range of tax incentives and stimuli.
Standard tax rates
Company in Cape Verde is subject to corporate tax, VAT, and personal income taxes related to dividends and wages.
- Corporate tax (Imposto sobre o Rendimento das Pessoas Colectivas): the standard corporate tax rate in Cape Verde is 25% and is levied on the company's net profits.
- VAT (Imposto sobre o Valor Acrescentado): The standard VAT tariff in Cape Verde is 15%. VAT applies to most goods and services, with the exception of some exempt categories such as basic food products and medical services.
- Dividend tax (Imposto sobre Dividendos): The dividend tax rate is 10% and is levied on income distributed to the company's shareholders.
Tax benefits and investment incentives
To stimulate economic growth and attract investors, Cape Verde offers numerous tax incentives and stimuli aimed at reducing the tax burden on businesses.
- Reduced corporate tax rate: if certain conditions are met, such as job creation or investment in priority sectors of the economy, entities can expect a reduction in the corporate taxation tariff of up to 15%.
- Exemption from tax on dividends: if a foreign investor holds a tax residency certificate from his home country and is not a resident of Cape Verde, then profits given to them may be tax-free.
- Newly established firms in Cape Verde might qualify for a waiver on customs tariffs when importing essential equipment, machinery, and raw materials needed for their manufacturing operations.
- VAT exemption: companies operating in priority sectors such as tourism, agriculture and renewable energy can claim VAT exemption on certain goods and services used in their activities.
- Benefits for businesses operating in free trade zones: Businesses operating in Cape Verde's free zones may be qualified for a ten-year corporation tax exemption. Following this time frame, a 15% corporation tax rate will be in effect.
- Free zone businesses are not required to pay income tax or dividend tax for a maximum of 10 years, provided they fulfill specific criteria related to investment and job creation.
Therefore, forming a business in Cape Verde offers several tax advantages and encouragements that can substantially lessen the tax load on enterprises and foster their growth. Principal taxes encompass corporate tax, VAT, and dividend tax, while incentives are provided through lowered tariffs, tax waivers, and customs duties for companies that meet specified criteria and operate in priority sectors of the economy.
Features of doing business in Cape Verde
Labor relations and hiring of workers
Labor relations in Cape Verde are governed by the Labor Code, which establishes norms and rules for employers and employees. When establishing a company in Cape Verde, it is important to consider the following aspects.
Employment contracts must be documented in writing and include essential terms of employment such as working hours, remuneration, and employee responsibilities. Contracts may be fixed-term or indefinite, depending on the nature of the work and agreements between the parties.
The lowest pay in Cape Verde stands around 13,000 escudos per month (around 120 euros). This figure can fluctuate depending on the sector and location, necessitating attention in budgeting for staff expenses. Employers must also comply with regulations on working hours and ensure compensated time off. The typical work week consists of 44 hours, with at least 22 days of paid vacation annually. Moreover, additional vacation days and paid holidays may be awarded based on tenure.
Social welfare is a crucial element of labor relations. Employers must invest in the social welfare program for their employees. These investments encompass pension schemes, healthcare coverage, and support during periods of unemployment. Employers' financial commitment to the social welfare program equates to 23% of the employees' earnings, while employees themselves contribute 8% of their income.
Labor laws in Cape Verde also encompass provisions aimed at upholding workers' rights, including protections against unfair termination, the guarantee of safe and conducive working environments, and the opportunity for collective bargaining and involvement in labor unions. When initiating a business in Cape Verde, it is crucial to take these factors into account to ensure adherence to labor rights and the establishment of beneficial working conditions.
Specifics of doing business in free zones
Setting up a business in the free zones of Cape Verde provides significant tax and customs advantages, making them appealing to international investors and entrepreneurs. Establishing a company in Cape Verde's designated zones requires careful consideration of their unique conditions and benefits they offer.
Companies registered in free zones are granted exemption from corporate tax for up to 10 years. Upon expiration of this period, a reduced corporate tax rate of 15% applies. These tax incentives are aimed at stimulating investment and developing export-oriented industries. Additionally, companies in free zones are exempt from income tax and dividend tax for the same 10-year period, significantly reducing the tax burden and enhancing business profitability.
Businesses operating within free zones are also spared from paying customs tariffs on imported equipment, machinery, and raw materials essential for production purposes. This notably lowers initial capital outlay and continuous operational costs. Another significant benefit for firms in pivotal sectors like hospitality, farming, and sustainable power is the waiver from VAT on specific goods and services.
Establishing a company within a free trade zone necessitates meeting several prerequisites, including a minimum financial commitment and generating a specified workforce. These criteria can differ depending on the particular zone and business type. It's crucial to emphasize that to fully leverage all advantages and incentives, firms must rigorously comply with the legal regulations and guidelines set forth by the administration of the free trade zone.
Establishing a firm in Cape Verde and operating within a free zone presents substantial chances to lessen tax obligations and improve competitiveness. Taking into account all facets of employment relationships and the unique circumstances of free zones, it is feasible to effectively conduct and expand operations in this nation.
Conclusion
Establishing a company in Cape Verde entails several primary steps, starting from selecting a name and preparing founding documents, and concluding with obtaining necessary registrations and licenses. To effectively conduct business in Cape Verde, it is essential to comprehend local labor legislation and adhere to all mandatory procedures regarding employee recruitment. Special attention should be given to registering the company in free zones, where significant tax benefits and investment incentives are provided.
Companies operating in free zones are entitled to exemption from corporate tax for up to 10 years, followed by preferential tax rates thereafter. They are also exempt from import/export taxes and VAT. These advantages make Cape Verde attractive to foreign investors seeking to reduce tax liabilities and enhance profitability.
Our experts are prepared to provide comprehensive information and thorough support for registering a company in Cape Verde. Please contact us using the appropriate method found in the 'Contacts' section.
