How to Recover a Debt from a Company in Portugal

Recovering a debt from a company in Portugal involves choosing between two principal procedural routes – an expedited electronic payment order (Injunção/PEPEX) for uncontested claims and a full declarative court action (Acção Declarativa) where the debtor disputes liability. The appropriate path depends on whether the debt is acknowledged, the documentary evidence available, and whether enforcement assets can be identified in Portugal. Foreign creditors benefit from working with Portuguese-qualified counsel early, as procedural missteps at the outset can significantly delay recovery.

Legal Basis for Debt Recovery in Portugal

Portuguese civil debt recovery is governed primarily by the Código de Processo Civil (Civil Procedure Code), supplemented by specific legislation on late commercial payments that implements the EU Late Payment Directive. Commercial debts between businesses carry a statutory right to late payment interest at a rate periodically set by reference to the European Central Bank's reference rate, adjusted by the applicable national supplement – the precise applicable rate should be confirmed at the time of filing, as it is revised periodically.

Where the debtor is a registered company, the Autoridade Tributária e Aduaneira (Tax and Customs Authority) holds information on registered business addresses and tax identification numbers (NIF), which are required to serve proceedings correctly. The Banco de Portugal and the CMVM (securities regulator) may become relevant in cases involving regulated entities or financial instruments.

Portugal's membership of the European Union also opens access to cross-border mechanisms, including the European Payment Order Procedure (Regulation (EU) No 1896/2006) and the European Small Claims Procedure, both of which can be used by creditors domiciled in another EU Member State.

Step-by-Step: The Two Main Procedural Routes

Route 1 – Injunção and PEPEX (Uncontested or Likely Uncontested Debts)

The Injunção is a payment order procedure designed for creditors who hold clear documentary evidence of a debt and where there is a reasonable expectation that the debtor will not contest the claim. It is initiated electronically through the PEPEX platform (Plataforma Eletrónica de Execuções), which the Portuguese courts and enforcement agents use for the end-to-end management of payment order and enforcement proceedings.

The procedural sequence is broadly as follows:

• File the Injunção application online via the PEPEX platform, attaching the invoices, contracts, and any acknowledgement of debt. The application must identify the debtor by name and NIF, specify the principal amount, and quantify late payment interest to the date of filing.
• Notification of the debtor is handled by the court secretariat. The debtor has a fixed period after notification to either pay voluntarily, oppose the claim, or remain silent.
• If unopposed, the application is endorsed with an executoriedade (enforceability stamp) and immediately constitutes an enforceable title – equivalent in effect to a court judgment – without any hearing being required.
• Enforcement (Execução) is then pursued through a court-appointed or party-appointed enforcement agent (agente de execução), who locates and seizes assets, attaches bank accounts, or registers charges over real property.
• If the debtor opposes, the file is transferred to an ordinary court for a full contested hearing under the Acção Declarativa procedure described below.

In practice, the Injunção/PEPEX route is valued for its relative speed and lower cost where the debtor does not contest. Realistic timelines from filing to an enforceable title in an uncontested case range from a few weeks to several months, depending on court workloads and the efficiency of service. Actual enforcement – locating and recovering assets – adds further time and depends heavily on the debtor's financial position and the agente de execução's findings.

Route 2 – Acção Declarativa (Contested Claims)

Where the debtor formally disputes the debt, or where the creditor anticipates a substantive dispute over the underlying contract, a full declarative action before the competent civil court is required. This is a conventional adversarial proceeding with pleadings, evidence, and oral hearing.

• Jurisdiction: The competent court is generally determined by the debtor's registered seat or, in commercial matters, the place of performance of the contract. Certain specialised commercial courts (Tribunais de Comércio) have jurisdiction over insolvency and certain commercial disputes.
• Statement of claim (Petição Inicial): Must be filed by a Portuguese lawyer (advogado), set out the legal and factual basis, and be accompanied by all documentary evidence. Failure to attach documents at this stage generally means they cannot be introduced later without court leave.
• Defence period: The defendant has a statutory period to file a defence (contestação). The court may schedule a preliminary hearing to attempt settlement or define contested issues.
• Judgment and appeal: First-instance judgments can be appealed to the relevant Court of Appeal (Tribunal da Relação), and on points of law to the Supremo Tribunal de Justiça. International creditors should factor appellate timelines into their overall recovery strategy, as contested litigation in Portugal can extend over several years if appeals are pursued to the highest level.
• Enforcement: Once judgment is final (or provisionally enforceable), enforcement follows the same PEPEX/agente de execução mechanism as described above.

If your situation involves a disputed commercial contract with a Portuguese counterparty and you are uncertain which procedure applies, you are welcome to outline the facts to our team at info@ferrazwhitmore.com or through our contacts page. We can assess the most appropriate procedural route and advise on realistic timelines before you commit resources.

Precautionary Measures and Asset Freezing

Portuguese procedural law allows creditors to apply for precautionary (interim) measures before or during proceedings to prevent the dissipation of assets. The most commonly used measure in debt recovery is the arresto (attachment of assets), which effectively freezes the debtor's bank accounts, receivables, or real property pending the outcome of the main proceedings.

To obtain an arresto, the applicant must satisfy the court that:

• There is a credible prima facie case (fumus boni iuris) – that the debt is likely to be established; and
• There is genuine risk of asset dissipation or frustration of enforcement (periculum in mora) if the measure is not granted.

Applications are typically heard on an ex parte basis in the first instance. If granted, the debtor is notified after the fact and may apply to discharge the measure. Speed is critical: the application should be filed as soon as the risk of dissipation becomes apparent. Foreign creditors should be aware that identifying attachable Portuguese assets – bank accounts, real property registered with the land registry, shareholdings – is a preparatory step that counsel can assist with before the application is made.

Documents a Foreign Creditor Should Prepare

Adequate documentation is the single most important factor in the success of a Portuguese debt recovery action. The following documents are typically required or strongly advisable:

• Original contracts or purchase orders establishing the commercial relationship and payment terms.
• Invoices with clear references to the contractual basis, amounts, and due dates.
• Proof of delivery or service performance – delivery notes, acceptance confirmations, or correspondence acknowledging receipt.
• Payment demands and correspondence – any written demands for payment, reminders, and the debtor's responses (including silence in the face of a formal demand).
• Debtor's NIF and registered address – essential for correct service; the NIF can often be sourced from the debtor's invoices or confirmed via public Portuguese company registries.
• Apostilled or legalised corporate documents of the creditor entity, particularly where it is incorporated outside Portugal, to evidence legal standing.
• Certified translations into Portuguese for any documents in a foreign language that will be submitted to the court.

Foreign companies dealing with AIMA (Agência para a Integração, Migrações e Asilo) in any related regulatory capacity, or whose Portuguese debtors are subject to regulatory oversight by the Banco de Portugal or the CMVM, should also consider whether any enforcement action could intersect with regulatory constraints on the debtor's assets.

Cost Drivers and Realistic Timelines

The overall cost of recovering a commercial debt in Portugal is driven by several variable factors. Court fees (taxa de justiça) are calculated on a sliding scale by reference to the value of the claim. The enforcement agent's fees are similarly value-linked and are regulated by statute. Legal fees will depend on the complexity of the matter, whether the action is contested, and whether precautionary measures are required.

As a general orientation:

• Uncontested Injunção/PEPEX: Lower cost overall; total procedural time from filing to an enforceable title typically measured in weeks to a few months in straightforward cases, though actual asset recovery timelines depend on enforcement circumstances.
• Contested Acção Declarativa: Substantially longer and more expensive. First-instance proceedings commonly take one to three years; appellate stages add further time.
• Precautionary measures: Can be obtained relatively quickly but add procedural cost and require a hearing in the main proceedings within a defined period.

It is worth noting that Portugal's legal framework allows the successful creditor to recover a portion of legal costs from the debtor (known as custas de parte), but the recoverable amount is calculated by reference to statutory tables and will rarely cover the full economic cost of litigation.

Common Errors by Foreign Creditors

In our experience advising international businesses, the following missteps are most frequently encountered:

• Delay in initiating proceedings: Portuguese limitation periods apply to commercial debts. Waiting too long – for example, whilst pursuing informal negotiation – can result in a time-barred claim. Limitation periods vary by the type of contract and debt; it is essential to seek advice promptly when a debt becomes overdue.
• Issuing demands without preserving evidence: Sending informal emails or WhatsApp messages without retaining complete records, or failing to send a formal written demand, weakens the evidentiary position at the enforcement stage.
• Failing to verify the debtor entity's standing: A Portuguese company may be dissolved, in insolvency proceedings, or have changed its registered address. Before commencing proceedings, verify current registry status through the Registo Comercial and check for pending insolvency proceedings via the relevant court databases.
• Pursuing the wrong entity: In group structures, the contracting party may be a subsidiary without assets, while the valuable assets sit in a parent or related company. Piercing the corporate veil is possible in limited circumstances under Portuguese law but requires a separate legal analysis.
• Overlooking cross-border EU mechanisms: EU-domiciled creditors sometimes miss the option of the European Payment Order or the mutual recognition of judgments framework, which can streamline cross-border enforcement.
• Misidentifying the applicable interest rate: Late payment interest in commercial transactions is calculated by reference to the periodically revised statutory rate. Using the wrong rate in the claim can create procedural complications.

If you are assessing whether to pursue a Portuguese debtor and would like a preliminary view on the strength of your documentary position, our team is available at info@ferrazwhitmore.com. You may also find our detailed overview of the debt recovery services we provide in Portugal a useful starting point.

What if the Debtor is Insolvent?

If, during the course of the debt recovery process, it becomes apparent that the debtor company is insolvent or approaching insolvency, the legal framework shifts substantially. Portuguese insolvency is governed by the Código da Insolvência e da Recuperação de Empresas (CIRE). Once insolvency proceedings are opened, individual enforcement actions are generally stayed and creditors must file their claims within the insolvency process as registered creditors.

Creditors who have already obtained a precautionary measure or who hold security over Portuguese assets may be better positioned than unsecured creditors. In some cases, it may be strategically appropriate to file a creditor's petition for insolvency rather than – or alongside – a standard debt recovery action, particularly if the debtor has ceased communications and appears to be dissipating assets.

For matters at the intersection of debt recovery and insolvency, our bankruptcy and restructuring practice in Portugal can advise on the interaction between the two procedures and help creditors protect their position in parallel proceedings.

Cross-Border Considerations for Foreign Creditors

Creditors based outside Portugal frequently encounter additional procedural layers. Key points to consider include:

• Choice of law and jurisdiction clauses: If the underlying contract contains a clause selecting a non-Portuguese court or a foreign governing law, Portuguese courts will generally respect this. However, enforcement of any foreign judgment in Portugal requires a separate recognition procedure (revisão e confirmação de sentença estrangeira) before the Supremo Tribunal de Justiça, unless the judgment originates in another EU Member State (where Regulation (EU) No 1215/2012 applies and abolishes the exequatur requirement for most civil and commercial matters).
• Arbitration awards: A foreign arbitral award can be enforced in Portugal pursuant to the New York Convention (1958), to which Portugal is a party. The recognition application is filed with the competent Portuguese court.
• Service of process: Serving a Portuguese defendant from abroad through official channels (the Hague Service Convention or EU Service Regulation) adds time. In practice, having Portuguese counsel handle in-country service through the court system is usually more efficient.
• Currency and interest: Claims denominated in non-euro currencies must be converted; the applicable exchange rate and any conversion losses may form part of the damages claimed, subject to the applicable law of the contract.

Our team has handled cross-border matters including situations analogous to those described in our case study on recovering a debt owed to a Singapore trading company, which illustrates some of the enforcement challenges that arise when the creditor and debtor are in different legal systems.

Decision Checklist: Before You Commence Proceedings

Before instructing counsel to commence formal proceedings, international creditors should work through the following questions:

• Is the debt clearly evidenced by contract, invoice, and proof of performance?
• Has a formal written demand been sent to the debtor's registered address in Portugal?
• Is the debtor entity currently active and solvent, or are there signs of financial difficulty?
• Have you identified attachable assets in Portugal (real property, bank accounts, trade receivables)?
• Does the debtor's NIF and registered address match your contract documentation?
• Is there a risk that the limitation period is approaching?
• Does the contract contain a jurisdiction or arbitration clause that needs to be assessed?
• Is the debtor an EU-based entity, making EU procedural instruments potentially available?
• Have you considered whether precautionary asset freezing should be sought immediately?

Working through this checklist with qualified Portuguese counsel before filing ensures that the chosen procedure is appropriate to the facts and that the documentary foundation is solid. To discuss your specific situation with our team, please contact us at info@ferrazwhitmore.com or visit our contacts page.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.