How a Foreign Company Opens a Branch in Cape Verde: Step by Step

Branch in Cape Verde: the legal extension of your company

When a foreign company decides to operate in Cape Verde for more than a year, the Commercial Companies Code (Legislative Decree No. 3/99 of 29 March) calls for the establishment of a permanent representation. This representation may take the form of branch, a branch which does not have its own legal personality but which has full legal capacity to enter into contracts and operate in the Cape Verdean territory.

Unlike a subsidiary (a new company with its own legal personality), a branch is regarded under Cape Verdean tax law as permanent establishment of the parent company, which has specific tax implications that we will discuss in detail.

Why choose the branch route?

Legal Benefits

1. Speed of incorporation: It does not require the incorporation of a new company, only the registration of the representation
2. Direct control: The results are fully consolidated in the parent company’s accounts
3. Capital: There is no legal requirement for a minimum share capital for a branch (unlike limited liability companies or public limited companies)
4. Unique heritage: The branch’s assets are the parent company’s own assets

Legal Restrictions

• Unlimited liability: The parent company is jointly and severally liable for all obligations entered into by the branch in Cape Verde
• Mandatory representation: It must appoint a legal representative resident in the territory (Article 106(2) of the CSC)

Specific Legal Basis: What Cape Verdean Law Says

Article 106 of the Companies Act

The fundamental rule states:

“Any company that does not have its actual registered office in Cape Verde but wishes to carry out its activities here for more than one year must establish a permanent representative office and comply with the provisions of Cape Verdean law on commercial registration.”

Legal consequence: Failure to comply with this obligation means that the foreign company is liable for all acts carried out in its name in Cape Verde, and the court may order the cessation of its activities and the liquidation of its assets located in the country.

Article 118 of the CSC

It provides that the company may establish branches, agencies or representative offices by resolution of the shareholders, unless the articles of association provide otherwise.

Required documentation:

To open a branch, the foreign company must submit the following documents to the Commercial Registry Office:, must be translated into Portuguese and legalised:Table

Legalisation: All these documents must contain the The Hague Protocol (if the country of origin is a signatory to the Hague Convention) or consular legalisation.

Alert from S&D Consultancy: Most procedural delays occur during the translation and legalisation stage. We recommend that this stage be completed in the country of origin before commencing any proceedings in Cape Verde.

The registration process: two legal routes

Option 1: Registration with the Commercial Registry Office (Traditional Procedure)

This applies to all foreign companies, particularly where property is involved or there are complex corporate structures.

Formal steps:

1. Certificate of Name Admissibility: Check with the Registry Office whether the branch name can be used in Cape Verde (cost: 600$00 to 5,000$00 CVE)
2. Application for Registration: Submission of the legalised documentation referred to above
3. Company Register: Publication in the Official Gazette of the Republic (where required by law)
4. Issuing of a Tax Identification Number (NIF): Registration with the Directorate-General for Taxation (DGCI)
5. Business Licence: Required to commence business operations (issued by the Town Council)
6. Registration with Social Security (INSS): For employment purposes

Estimated timeframe: 3 to 15 working days

Method 2: “Company of the Day” (For Simple Structures Only)

Created by Decree-Law No. 9/2008, this scheme allows for fast-track incorporation through the Citizen's Centre (found in all municipalities and islands).

Restrictions on branches: The “Empresa no Dia” scheme was designed primarily for new commercial companies (Lda., SA). For branches of foreign companies, the traditional procedure at the Registry Office is generally required due to the complexity of the international documentation, although the Citizen’s Bureau can provide logistical support.

Useful contact details: Citizens’ Centre — Helpline: 800 2008

The Legal Representative: An Essential Requirement

O Article 106(2) of the Companies Act It stipulates that the foreign company must appoint a legal representative resident in Cape Verde.

Roles and Responsibilities

• Judicial and extrajudicial representation of the branch
• Compliance with tax and reporting obligations
• Signing of contracts and banking transactions (in accordance with the power of attorney)
• Response to the Tax Authority and other regulatory bodies

Who can be a representative?

1. Resident Cape Verdean citizen
2. Foreign nationals with a valid residence permit in Cape Verde
3. Local consultancy firm (such as S&D Consultancy) by means of a specific power of attorney

Handy tip: If the shareholders of the parent company do not reside in Cape Verde, it is advisable to appoint a local professional representative to ensure that tax deadlines are met and to avoid penalties for non-compliance.

Detailed tax treatment: the Portugal–Cape Verde convention

Convention for the avoidance of double taxation

Cape Verde and Portugal have signed a Convention for the Avoidance of Double Taxation with respect to Income Taxes, approved by Resolution No. 125/V/99 and published in the Official Gazette of 28 June 1999.

Withholding Tax Rates

Taxation of a Branch’s Profits

According to Article 7 of the Convention:

1. The Portuguese company’s profits may only be taxed in Portugal, unless which carries out business in Cape Verde through a permanent establishment (branch)
2. Where there is a branch, profits may be taxed in Cape Verde, but only to the extent that they are attributable to that permanent establishment
3. A permanent establishment is treated as a “a distinct and separate company” which operates completely independently of its parent company

Double Taxation Relief in Portugal

Where the branch pays tax in Cape Verde on the profits it earns, the parent company in Portugal may choose to:

Tax Credit Method (Article 91 of the CIRS):

• Deducting tax paid in Cape Verde from Portuguese corporation tax liability
• Threshold: the portion of corporation tax corresponding to income taxed in Cape Verde

Exemption Method (Article 54-A of the CIRS):

• Exemption from tax on profits attributable to a permanent establishment in Portuguese territory

Technical note: The consolidation of the branch’s transactions into the parent company’s accounts must be carried out using working papers that show all transactions and eliminate internal transactions (Accounting Guideline No. 23 of the former POC, retained as a recommended practice).

Tax and accounting obligations of the branch

Tax Obligations in Cape Verde

As a permanent establishment, the branch assumes the following obligations:

1. Corporate Tax (Cape Verdean IRC): Taxation of profits earned within the country at the standard rate of 25% (check sector-specific rates and incentives)
2. VAT: Registration is compulsory if turnover exceeds the exemption threshold; standard rate of 15%
3. Pay-as-you-earn deductions: Income from employment (employees), services and capital income
4. Periodic Statements: Monthly/quarterly submission of VAT returns and annual corporation tax returns

Accounting Obligations

• Mandatory organised accounting: The branch must maintain separate accounts that enable the calculation of the taxable profit from its activities in Cape Verde
• Compulsory reading: Journal, Ledger, Stock List and Balance Sheets (Article 93 of the CSC)
• Supporting documentation: Invoices, receipts, contracts and bank documents must be filed locally
• Management reports: Regular submission of trial balances to head office for consolidated accounting purposes

A critical mistake to avoid: The Cape Verdean Tax Authority requires that the branch’s accounts be physically available in Cape Verde. Attempting to operate with accounts held exclusively abroad, without an organised local presence, results in heavy fines and bank accounts being frozen.

Comparison Table: Branch vs. Subsidiary

A Practical Checklist for Investors

Before arriving in Cape Verde:

• [ ] Check whether the company’s country of origin is a signatory to the Hague Apostille Convention
• [ ] Request an up-to-date certificate from the parent company’s commercial register (valid for less than 6 months)
• [ ] Prepare a specific company resolution for the opening of a branch in Cape Verde
• [ ] Appoint a legal representative and draw up a power of attorney with appropriate powers
• [ ] Engage a sworn translator to produce the Portuguese version of the documents

In Cape Verde:

• [ ] Submit the necessary documentation to the Commercial Registry Office on the island where the business is established
• [ ] Obtain a provisional and definitive tax identification number from the DGCI
• [ ] Open a bank account in the branch’s name
• [ ] Obtain a business licence from the local council
• [ ] Register employees with the INSS
• [ ] Implement a local accounting system (certified software or a local accountant)

Conclusion: Why S&D Consultoria is the Strategic Partner

Opening a branch in Cape Verde involves navigating between the Cape Verdean Commercial Law (Commercial Companies Code), a International Convention on Double Taxation and local tax legislation (Industrial Tax Code and VAT).

A S&D Consultancy offers not only the service of “setting up” the registration, but also a permanent tax representation structure, ensuring:

• Compliance with monthly and annual reporting deadlines
• Preparation and submission of corporation tax and VAT returns
• Maintenance of local accounts in accordance with the Official Accounting Framework of Cape Verde
• Representation before the DGCI and other public bodies
• Strategic consultancy on tax optimisation (making use of the Portugal–Cape Verde Convention)

Official Reference Documents:

• Cape Verde Companies Act (Legislative Decree 3/99)
• Portugal–Cape Verde Double Taxation Convention (Resolution 125/V/99)
• Cape Verde Citizens’ Portal

Do you need to set up a branch or subsidiary in Cape Verde?
Please contact S&D Consultoria for a free preliminary legal assessment of your company’s documentation and a bespoke roadmap for entering the Cape Verdean market.

Book an Initial Consultation →

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