Transfer of Business: What It Is, How It Works, and Difference from Buying a Company

In summary: a transfer is the definitive transmission of an operating establishment — the agreed assets and elements that allow the business to continue — without necessarily buying the company that owns it. The contract must clearly identify what passes to the buyer and what remains with the seller.

Are you thinking of investing in your own business but don't want to start from scratch? You've probably heard of transfer. This is one of the most popular ways to acquire a business in Portugal, but it is also one of the most misunderstood.

Many entrepreneurs confuse "transfer" with simply "buying a company" or with leasing the space. If you choose the wrong model, you could end up paying debts that are not yours or losing the lease contract.

Before comparing alternatives, also consult our complete guide to business transfers, which includes the process, points to analyze, and the differences compared to the sale of a company.

In this guide, we explain what a transfer is, what taxes are involved (VAT, Stamp Duty), how to deal with the landlord, and the difference from buying shares.

What is a Transfer, After All?

The transfer is the definitive transmission of a commercial or industrial establishment.

Contrary to popular belief, the transfer is not the sale of the walls (property) nor the sale of the company (business/NIF). It is the sale of the "operating economic unit". By making a transfer, you acquire a "package" ready to invoice that includes:

• Tangible assets: furniture, stock, machines, equipment, and contents.

• Intangible assets: the brand, the customer portfolio, the goodwill (the reputation of the location), the license, and, fundamentally, the right to lease the space.

Golden rule: in a transfer, the ownership of the business changes, but the legal entity (the NIF of the selling company) remains with the former owner. The buyer integrates the establishment into their own company or individual activity.

Transfer vs. Company Purchase (Share Deal): What’s the Difference?

This is the most common question. The choice between these two modalities defines the risk you will assume.

1. Company Purchase (Share Deal)

Buys the shares or quotas of the company. Becomes the owner of the NIF and the entire history of the company..

• Risk: inherits everything, including unknown debts, old labor lawsuits, or past tax errors.

• Advantage: retains the same NIF, bank accounts, and credit history.

2. Transfer (Asset Deal)

Buys only the assets that make up that establishment.

• Risk: much lower. The debts of the selling company (as a rule) do not pass to the buyer.

• Advantage: starts "clean", only with the assets, but with an already established clientele.

Quick Comparison Table

Transfer vs. Assignment of Operation: Do Not Confuse!

Many people look for "transfer" when, in fact, they only want to manage the business for a while.

• Transfer: is a definitive purchase. The business becomes yours forever.

• Assignment of operation (or leasing of establishment): is a business lease. The owner remains the proprietor; the operator only pays a monthly rent to use the space and equipment. At the end of the contract, the business is returned to the owner.

If you do not have the capital to buy the transfer outright, the assignment of operation can be a good way to test the market.

How Much Does It Cost? Taxes on the Transfer

The tax treatment of the transfer depends on the scope and structure of the operation. Before comparing proposals, confirm the specific framework with a certified accountant or lawyer.

1. VAT Treatment

The transfer of a universal set of goods may be outside the scope of VAT when it meets the conditions of the Article 3, No. 4 of the VAT Code. The qualification depends on what is transferred and the continuity of the activity; do not automatically assume zero VAT.

2. Stamp Duty

The General Stamp Duty Table provides a rate of 5% for transfers of commercial, industrial, or agricultural establishments (item 27.1). Confirm whether the specific operation meets this item and what the taxable base is with a certified accountant or lawyer.

3. IMT (Municipal Tax on Transfers)

When the operation does not transfer the property, the IMT may not be applicable. If the property or equivalent rights are part of the business, the framework may change. Validate the complete structure of the operation before calculating taxes.

3 Critical Rules: Landlords and Employees

Before signing, confirm these three legal and operational issues, as they can determine whether the operation works as expected:

1. Communication to the landlord

In a transfer that meets the requirements of the Article 1112 of the Civil Code, the tenant's position can be transferred without the landlord's authorization, but the contract must be in writing and the transfer communicated. The landlord may have a right of first refusal unless otherwise agreed. Confirm the contract and applicable procedures before signing.

2. Continuity of the branch

To benefit from this regime, the transfer must preserve the establishment and cannot be intended for another branch of commerce or industry, unless the lease agreement allows for the change. Confirm the authorized use of the space before purchase.

3. Employees (Article 285)

The Article 285 of the Labor Code provides for the transfer of the employer's position and the maintenance of workers' rights when an economic unit is transferred. Confirm which workers are covered, the duties of information and consultation, and the responsibilities applicable to the operation.

Checklist: What to Request Before Signing (Due Diligence)

Never proceed with a business without requesting these documents. If the seller refuses, be suspicious.

• Permanent certificate of the selling company.

• Certificates of no debt (Tax and Social Security) — to ensure that the establishment is not encumbered.

• Original lease agreement and the latest rent receipts.

• Usage license and operating permit.

• Detailed inventory (list of all included equipment).

• IES (Simplified Business Information) from the last 3 years to validate actual revenue.

• List of staff and their respective employment contracts.

To delve deeper into hidden liabilities and other alerts, also read the common risks in buying companies and how to avoid them.

Conclusion: Is the Transfer worth it?

A transfer can allow you to acquire an already established operation, with assets, team, clientele, and location. However, speed, risk, and tax treatment depend on the contract, the scope transferred, and the prior verification of the business.

However, it requires thorough homework. The key to success lies in the clear distinction between buying the establishment (transfer) or the company (business purchase) and the correct verification of the lease agreement.

Are you looking for verified business opportunities?

Explore our list of transfers and companies for sale in Portugal here.

If you are comparing alternatives, also check our guide on how to buy a company.