What to Check Before Hiring a Contractor in Portugal
Hiring a contractor in Portugal is still, for a lot of people, a leap of faith. Stories of unfinished projects, budgets that double without warning, and companies that vanish mid-job are so common we've almost normalized them. But it doesn't have to be this way.
The truth is that most contractor problems could have been avoided with a basic check before signing anything. This article is a practical checklist, point by point, covering everything you should confirm before moving forward with any hire.
1. IMPIC construction license
The license (alvará) issued by IMPIC (Instituto dos Mercados Públicos, do Imobiliário e da Construção) is the document that legally authorizes a company to carry out construction work in Portugal. Without a valid license, the company is operating illegally, full stop.
Check specifically: whether the license is active and not expired, what the class is (from 1 to 9, which defines the maximum project value the company can take on), and which subcategories are authorized. A company with a class 1 license cannot, for example, take on a large-scale rehabilitation project. Many property owners don't even know this class system exists, and end up handing over hundreds of thousands of euros to companies without adequate qualification.
2. Company registration and NIF
It sounds basic, but it's surprising how many people move forward without even confirming that the company is formally incorporated and active. Check the commercial registry to verify the company's status, date of incorporation, share capital, and who the partners and directors are.
Companies incorporated just a few months ago, with minimum share capital and no track record, deserve extra caution. That doesn't mean they're all problematic, but it's a signal that should factor into your decision. If the company was created yesterday and is already promising the world, be skeptical.
3. Court proceedings on CITIUS
CITIUS is the official platform of the Portuguese judicial system and allows you to search for proceedings associated with a company or person. This is, honestly, one of the most important and most overlooked steps on this entire list.
Look for insolvency proceedings, enforcement actions, declaratory actions, and in particular, proceedings under CIRE (Código da Insolvência e da Recuperação de Empresas). A critical detail that many people don't know: when an insolvency notice is published on CITIUS, creditors have only 30 days to file their claims. If you didn't check before hiring and the company enters insolvency during your project, you could lose everything you've already paid with no practical recourse. Thirty days fly by, especially when you don't even know the clock has started.
4. Tax and Social Security debts
Portugal has public debtor lists, both from the Tax Authority (Autoridade Tributária) and Social Security (Segurança Social). A company with significant debts to these entities is, in practice, in precarious financial shape. If it can't pay its taxes and contributions, how is it going to guarantee it'll finish your project?
Checking these lists takes minutes and can save you thousands of euros. It's genuinely one of the simplest and most revealing checks you can do. If the company's name appears on these lists, think twice before handing over your money.
5. Civil liability insurance
Ask the contractor to provide proof of valid civil liability insurance. This insurance covers damage caused to third parties during the execution of works, including damage to neighboring properties, accidents, and other incidents that happen more often than you'd think.
Without this insurance, any problem during the works can translate into direct costs for you as the property owner. Don't accept excuses, don't accept promises that they'll "sort it out later." Without a valid policy presented before work begins, don't proceed.
6. References from previous projects
Ask for contact details of previous clients. A serious contractor won't have any problem providing references from completed projects. Call those people. Ask if the project was completed on time, if the budget was respected, if there were unpleasant surprises, and the most revealing question of all: whether they'd hire the same company again.
Be suspicious of anyone who only shows photos of "completed" projects but never provides contacts for real clients. Photos are easy to come by. Verifiable testimonials are not.
7. Detailed written quote
Never, under any circumstances, accept a verbal quote. The quote should be delivered in writing, detailed by item, with a description of materials to be used, quantities, labor costs, and estimated timelines for each phase of the project.
A vague quote like "the kitchen renovation will be 15 thousand euros" is not a quote. It's a trap. Without detail, any "extra" that comes up during the project, and it will come up, gets charged separately without you having any basis to contest it. The detailed written quote is your main contractual protection tool.
8. Contract with staged payments
The contract should provide for a clear staging of payments, tied to concrete project milestones. The 30/30/30/10 rule is a good reference: 30% at kickoff, 30% at the midpoint, 30% at completion, and 10% retained during a warranty period for defect correction.
Never pay more than 30% upfront, no matter how much the contractor insists they need to "buy materials" or "can't start without the money." If the company doesn't have enough liquidity to start a project without receiving almost everything up front, that's basically another financial red flag.
9. Check the directors and partners
A common practice in Portugal is creating new companies by people who have already racked up insolvencies and court proceedings through other entities. So it's not enough to check the company itself. Check who's behind it too.
Cross-reference the names of partners and directors with searches on CITIUS and the debtor lists. If the manager of the company that presented you with a flawless quote already has two insolvencies with other companies, you probably don't want to be next on the list of creditors.
10. Use ObraXRAY to check everything at once
Each of these 9 steps matters, but let's be honest: individually searching CITIUS, IMPIC, the debtor lists, the commercial registry, and then cross-referencing director data is a process that takes hours and requires knowing exactly where to look and how to interpret the results.
That's exactly why we built ObraXRAY. All of these steps in a single search. ObraXRAY automatically cross-references all of these sources, analyzes the risk, and delivers a complete report on any contractor in Portugal. IMPIC license, court proceedings, insolvencies, public debts, director background - everything consolidated and interpreted in one place.
The numbers don't lie: 94% of inspected urban planning operations in Portugal show at least one irregularity when analyzed in detail (note: these refer to operations previously flagged for inspection, not a random sample of the sector). From high-profile cases, like the contractors in the Palmela area who left dozens of families with no house and no money, to quieter situations where companies simply disappear mid-renovation, the pattern repeats constantly. Those who don't check first, pay later.
Search your contractor now on ObraXRAY and make an informed decision before signing anything.
Conclusion
Hiring a contractor is, for most Portuguese families, one of the biggest expenses they'll ever face. Treating that decision with the same seriousness as buying a house or a car isn't overkill, it's basic common sense.
This 10-point checklist doesn't guarantee you'll never have problems, but it drastically reduces the probability of falling into the most serious situations. And if you want to simplify the entire process, ObraXRAY does the heavy lifting for you in minutes.
Protect your project. Verify before you hire.