As a member of the European Union, Portugal abides by the investment rules that govern the rest of the union. New foreign investment legislation was enacted in 1986. The Institute of Foreign Investment (ICEP) is the supervising agency. Foreign investment is permitted in all sectors except power production, ports, air and rail services, and the arms industry. Even in these areas, however, deregulation is under way. The foreign investment code contains liberal profit remittance regulations and tax incentives.
Foreign direct investment (FDI) inflows in Portugal averaged about $2 billion per year in 1992–95, or 1.6% of GDP. Main investing countries are the United Kingdom, Spain, and France. The financial sector accounted for about 60% of all new foreign investment. In 1998, FDI inflows reached $3.1 billion, up from $2.5 billion in 1997, but fell to $1.2 billion in 1999. FDI inflows soared to $6.4 billion in 2000, and were still above $6 billion in 2001, despite the global economic slowdown.