Portugals EU Funding vs. Spain: The Ultimate Guide for German Entrepreneurs 2025

Understanding EU Cohesion Funds: What German Entrepreneurs Need to Know

Before we dive into the details, let’s clear up a common misconception: EU subsidies aren’t just for large corporations or research institutions. Quite the opposite.

The EU Cohesion Funds are one of the world’s largest investment programs. From 2021 to 2027, 392 billion euros are available. The goal? To reduce economic disparities between EU regions.

What does this mean for you as a German entrepreneur? If you invest in Portugal or Spain, the EU will subsidize your project. In some cases, up to 85% of project costs.

Programa Mais Coesão Portugal: The New Funding Period 2024-2030

Portugal has secured 16.6 billion euros in EU Structural and Cohesion Funds for the current funding period. That’s about 15% of Portugal’s GDP. Impressive, isn’t it?

The “Programa Mais Coesão” (More Cohesion Program) is the flagship initiative. It pools multiple EU funds under one roof:

• ERDF (European Regional Development Fund): €6.8 billion
• ESF+ (European Social Fund Plus): €3.2 billion
• Cohesion Fund: €5.1 billion
• EMFAF (European Maritime, Fisheries and Aquaculture Fund): €1.5 billion

Why do I mention this? Because German entrepreneurs who set up a branch or invest in Portugal can access these funds.

Overview: Spain’s EU Regional Funding

Spain plays in an even bigger league. As the second-largest recipient of EU cohesion funds, Spain receives €47.4 billion for 2021-2027.

But here’s where it gets interesting: Spain’s federal structure gives German entrepreneurs more flexibility. Each autonomous region has its own support programs, meaning you can target the region offering the best terms for your project.

The top recipient regions are:

Why These Programs Are Attractive for German Entrepreneurs

Here’s what many overlook: You don’t have to be Portuguese or Spanish to receive funding. You simply need to invest and create jobs in the region.

This opens up huge opportunities—especially for digital businesses that can work remotely. Traditional industries also have many options.

An example from my own practice: A German e-commerce entrepreneur secured €300,000 from the Programa Mais Coesão to digitalize his logistics center in Porto. Funding rate: 75% of eligible costs.

He also benefits from Portugal’s attractive tax regime for foreign entrepreneurs.

Portugal vs. Spain: Direct Comparison of EU Subsidies

Let’s get specific: Where do you get more bang for your buck as a German entrepreneur? I’ve scrutinized both systems for you.

Funding Amounts and Application Procedures

Portugal clearly leads when it comes to funding rates. Classified as a “less developed” region in the EU, Portugal qualifies for higher grant rates—

*Varies by region

But be careful: Higher funding rates don’t always mean a bigger payout. Spain’s absolute grant amounts are often larger because its economy is stronger.

As for applications, Portugal is ahead. The Portuguese have heavily digitized their processes in recent years. Almost everything runs online via the “Balcão 2020” portal—saving time and nerves.

Target Groups and Funding Criteria

The two countries differ significantly here. Portugal focuses heavily on small and medium-sized enterprises (SMEs). Their definition is generous: Up to 250 employees and €50 million in annual turnover still count as an SME.

Spain differentiates more between regions and industries. In developed areas like Madrid or the Basque Country, the hurdles are higher. In structurally weaker regions such as Extremadura or Castilla y León, the terms are much more attractive.

My recommendation: As a German business, you have strong chances in both countries if you meet these criteria:

• Minimum investment of €25,000
• Creation of at least 3 full-time jobs
• Project duration of at least 24 months
• Proof you can finance your own share

Processing Times and Success Rates

Here’s a reality check. Both countries have bureaucratic hurdles, but to different extents.

Portugal has gotten its act together. The average processing time is 4-6 months. For well-prepared applications, the success rate is about 70%.

Spain is slower but more thorough. Expect 6-12 months here. But for properly submitted applications, the success rate is over 80%.

Bottom line? In Portugal, you’ll get your money faster but take on more risk. In Spain, it takes longer, but you get more planning security.

Programa Mais Coesão: Portugal’s Funding Initiative for Businesses

Let’s take a deeper dive into Portugal’s funding landscape. Programa Mais Coesão isn’t just a program—it’s Portugal’s master plan for the future.

The Four Pillars of the Portuguese Program

Portugal has cleverly structured its EU funding. Four thematic goals guide the allocation of funds:

1. Smarter Europe (40% of funds): Research, innovation, digitalization
2. Greener Europe (30% of funds): Climate action, circular economy, sustainable mobility
3. More Connected Europe (20% of funds): Transport, digital connectivity
4. More Social Europe (10% of funds): Employment, education, social inclusion

The first two pillars are especially attractive for German entrepreneurs—this is where the bulk of the money goes, and the criteria are business-friendly.

The beauty: You don’t have to be active in every area. One project fitting any of these categories can be eligible for funding.

Digitalization and Innovation: Up to €500,000 in Funding

Let’s get specific. The “Competir” sub-program targets businesses wanting to digitalize or innovate.

The funding opportunities are impressive:

A practical example: A German software company wants to develop an AI-based solution and test it in Portugal. Project cost: €400,000. With 85% funding, the company pays just €60,000 out of pocket.

This isn’t just affordable—it’s a gift.

The Application Process: Step by Step

Theory is all well and good, but practice is better. Here’s how to apply successfully in Portugal:

1. Pre-qualification (2-4 weeks): Register through “Balcão 2020” portal; upload company documents
2. Project Definition (4-6 weeks): Provide detailed project description, timeline, and budget
3. Submitting the Application (2 weeks): Online submission with all supporting documents
4. Evaluation (12-16 weeks): Technical and financial review by the authorities
5. Contract Signing (4-6 weeks): Grant approval and contract conclusion

Critical success factors from my experience:

• Local partner: Work with a Portuguese lawyer or consultant
• Realistic planning: Don’t overestimate your project goals
• Secure liquidity: Grants are usually paid out retroactively
• Documentation: Keep meticulous records of all expenses

Here’s a tip: Use the free advisory sessions from “IAPMEI” (Portugal’s Agency for Competitiveness and Innovation). They provide hands-on support with the application process.

Spain’s EU Cohesion Funds: Leveraging Regional Differences

Spain is a patchwork of opportunities. 17 autonomous regions, 17 grant landscapes. Complicated? Yes. But the payoff can be huge.

Andalusia vs. Catalonia: Where Is More Money Available?

I get asked this all the time. The answer: It depends.

Andalusia is Spain’s biggest recipient of EU funds. €8.1 billion over seven years—over a million euros per day. It’s classified as a “less developed region”, so the grant rates are higher.

Catalonia, on the other hand, receives less (€3.2 billion) but is economically much stronger. Projects here are often larger and more innovative.

Here’s my recommendation based on your business model:

ERDF: The Key Fund for Businesses

The “Fondo Europeo de Desarrollo Regional” (ERDF) is your main point of contact in Spain. About 60% of all business grants flow through this fund.

The ERDF focuses on five priorities:

1. Research and Innovation (25% of funds)
2. Digital Agenda (20% of funds)
3. SME Competitiveness (20% of funds)
4. Low Carbon Economy (20% of funds)
5. Sustainable Urban Development (15% of funds)

Grant rates vary by region and project type. In less developed regions like Andalusia or Extremadura, you may get up to 80% funding. In more developed areas like Madrid, it’s still a respectable 50%.

Here’s a real-life example: A German company develops an app for sustainable tourism in Seville. Project costs: €200,000. ERDF funding: 80% = €160,000. Own share: €40,000.

Combining with National Funding Programs

This is a particular strength of Spain: you can combine EU money with national and regional funds. This is harder in Portugal.

Especially noteworthy:

• CDTI (Centre for the Development of Industrial Technology): Extra funding for innovation projects
• ICEX (Spanish Institute for Foreign Trade): Support for internationalization
• ENISA (National Innovation Company): Low-interest loans for growth companies

With smart combinations, you can achieve total funding rates of more than 90%. That means: For a €100,000 project, you pay just €10,000 out of pocket.

Sounds too good to be true? It isn’t. I’ve seen it happen in practice many times.

Tax Implications: What German Entrepreneurs Should Consider

Now we come to my core area of expertise: tax issues. EU funding is not automatically tax-free. Here, you can get a lot right—or a lot wrong.

Grants and German Tax Liability

The bad news first: Grants are generally subject to tax, both in Germany and in the recipient country.

The good news: With the right structure, you can substantially reduce your tax burden.

In general:

• Deduction of business expenses: You can offset funding against eligible project costs
• Amortization requirement: For investment grants, you must distribute them over the asset’s useful life
• Repayment risk: Improperly used funding must be taxed and repaid

Here’s a practical example: You receive €100,000 in ERDF funding for a machine worth €150,000. You can only write off €50,000 for tax purposes. The grant reduces your depreciation base.

The result: Less depreciation, but lower taxable profit thanks to the grant. All in all, often a zero-sum game.

Smart Use of Double Taxation Treaties

This gets interesting for international structures. Germany has double taxation agreements (DBA) with both Portugal and Spain.

These agreements determine where you must pay your taxes. With clever tax planning, you can benefit from lower tax rates in Portugal or Spain.

A comparison of the relevant tax rates:

Portugal also offers the “NHR Program” (Non-Habitual Resident) for new residents. Under certain conditions, you can take advantage of tax benefits for 10 years.

Branch Office vs. Subsidiary

The way you set up your operations in Portugal or Spain determines how you are taxed. There are two main options:

Option 1: Branch Office

• Simple establishment, lower compliance costs
• Profits taxed in Germany
• Grants flow to the German parent company
• Best for smaller, time-limited projects

Option 2: Subsidiary

• Separate legal entity, higher compliance costs
• Profits taxed locally (often cheaper)
• Funding remains in the subsidiary
• Ideal for long-term activities with larger volumes

My recommendation: For projects over €500,000, a subsidiary is usually worth it. For smaller projects, a branch office will suffice.

But a word of caution: Don’t take this decision alone. The tax implications are complex and highly individual.

Practical Guide: How to Apply Strategically for EU Grants

Enough theory. Here’s how to actually proceed. After more than a hundred grant applications, I know the typical pitfalls.

The 5-Step Strategy for Successful Applications

Step 1: Strategic Location Selection (4-6 weeks)

Not every location is ideal for every project. Be systematic as you analyze:

• The regional funding landscape
• Industry clusters and partner networks
• Availability of skilled workers
• Tax framework
• Cost of living and infrastructure

Step 2: Project Definition & Budgeting (6-8 weeks)

This is where success or failure is decided. Focus on these critical points:

• Clearly defined, measurable goals
• Realistic timing with buffers
• Detailed cost estimation (allow a 15% buffer)
• Proof of self-financing
• The innovative nature of the project

Step 3: Building a Network (in parallel to Steps 1 & 2)

Never underestimate the power of contacts. Key contacts include:

• Local business development agencies
• Industry associations
• Universities and research institutions
• Other grant recipients in your sector
• Specialized consulting firms

Step 4: Application and Follow-up (8-12 weeks)

The application is just the beginning. Follow-up is crucial:

• Complete documentation on first submission
• Proactive communication with authorities
• Quick response to queries
• Adjust project scope if necessary

Step 5: Project Implementation & Reporting (project period)

Once you’re approved, the real work begins:

• Meticulous documentation of all expenses
• Regular progress reports
• Compliance with all regulations and deadlines
• Prepare for audits

Common Mistakes and How to Avoid Them

We all learn from mistakes. Better still: don’t make them at all. Here are the common pitfalls:

Mistake 1: Unrealistic Project Goals

Many entrepreneurs overestimate what can be achieved in the project period. Plan conservatively and allow room for surprises.

Mistake 2: Inadequate Financial Planning

Grants are usually paid out retroactively. You need to pre-finance the expenses, so ensure you have sufficient liquidity.

Mistake 3: Neglecting Bookkeeping

EU-funded projects require meticulous documentation. Set up separate accounting from day one.

Mistake 4: Ignoring Local Particularities

Every region has its quirks. Invest time to understand the local culture and business practices.

Mistake 5: Poor Communication

Keep funding institutions up-to-date on project progress. Silence is often taken as a sign of trouble.

Build Your Expert Network

No need to reinvent the wheel. Use the expertise of others:

Legal advice:

• Specialized law firms for EU grant law
• Local lawyers for national specifics
• Tax advisors with international experience

Operational support:

• Project management service providers
• Accounting services for EU projects
• Translation services for applications

Strategic partners:

• Local companies as cooperation partners
• Universities for research cooperation
• Industry associations for market access

Invest 10-15% of your project budget in professional advice. It pays off with higher success rates and better terms.

Future Outlook: EU Regional Funding 2025-2030

What does the future hold? The next EU funding period (2028-2034) is already coming into focus. Here’s my outlook on major trends:

1. Green Deal Will Dominate

The EU aims to be climate neutral by 2050. At least 50% of all subsidies will be tied to climate targets. Companies investing in green technologies today will be tomorrow’s big winners.

2. Digitalization Remains a Priority

AI, blockchain, IoT—digital transformation is unstoppable. Portugal and Spain are investing massively in digital infrastructure. German tech companies are in pole position.

3. Less Bureaucracy, More Results

The EU has realized: Complicated application processes deter entrepreneurs. The next funding period will be simpler, but more results-driven.

4. Focus on Innovation and Competitiveness

Pure infrastructure projects will get less support. Instead, innovation, research and international competitiveness will be the centerpiece.

5. Enhanced EU Country Cooperation

Cross-border projects get priority. German businesses partnering with Portuguese or Spanish firms have better funding prospects.

My advice: Start planning now. The best projects need 2-3 years’ lead time. Early movers get the largest funding pots.

The future belongs to entrepreneurs who think and act European. Portugal and Spain are ideal test markets—subsidized by the EU.

Seize the opportunity. The funding pots are brimming, and conditions are better than ever.

What’s stopping you from submitting your first EU grant application?

Yours, RMS

Frequently Asked Questions (FAQ)

Can I apply for EU funding in Portugal and Spain as a German citizen?

Absolutely. You only need to establish a branch or company in Portugal or Spain and invest there. Your German citizenship is no obstacle—if anything, it’s often an advantage since German businesses are seen as reliable partners.

How long does it take to receive the grants?

In Portugal, the average processing time is 4-6 months; in Spain, it’s 6-12 months. Payouts are usually made quarterly after expenses are documented. Make sure you have the liquidity to pre-finance your project.

Do I have to repay the grant if my project fails?

It depends. If the project is discontinued for reasons beyond your control (e.g., market changes), you typically only need to repay unused funds. For breaches of funding conditions, full repayment with interest may be required.

What ongoing obligations do I have as a grant recipient?

You must provide regular (usually quarterly) progress reports, document all expenses in detail, and keep funded assets in the region for at least 5 years after project completion. EU auditors may also conduct checks.

Can I use multiple funding programs at the same time?

Yes, but not for the same expenses. You can fund different parts of a project through different programs or combine EU grants with national ones. Total funding usually can’t exceed 100%.

How do EU grants affect my German tax liability?

Grants are generally taxable, but they also reduce your depreciable acquisition costs. In most cases, the net additional tax is minimal. With a smart subsidiary structure, you may even benefit from tax advantages.

Do I need a local partner to apply?

Legally, no—but it’s highly recommended. Local partners know the intricacies of local processes, have established contacts with authorities, and can offer invaluable support in implementation.

What if the conditions change during my project?

EU funding programs are typically stable throughout the project. Minor adjustments are usually possible with prior approval. For major changes, you may need to renegotiate the grant terms.

Are EU grants worthwhile for smaller projects under €100,000?

Definitely. In fact, smaller projects often receive especially attractive funding rates. The application process is less burdensome and success rates are often higher than with large-scale projects.

How do I identify reputable consulting firms for EU funding?

Look for references, EU funding law specialization, and transparent fee structures. Reputable advisers don’t charge success fees and can show concrete case studies. Always get several quotes and check their reputation thoroughly.