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Prospective Investors

 

Welcome to Madeira
Your International Investment Hub

 

Madeira is a very efficient location for companies with operations in the European Union and worldwide that welcomes international investment. With reduced taxation, adequate infrastructures, competitive operational costs, safety and quality of life, Madeira is positioned to provide international investors with a unique package of benefits.

 

Madeira’s preferential tax regime has been approved by the Portuguese and E.U. authorities as a State aid programme for regional development until 2020. It is therefore a credible, transparent and stable regime. All companies setting up in Madeira are fully Portuguese, automatically given a VAT number and with access to the large network of international treaties to avoid double taxation ratified by Portugal. They also have full access to the European single market and benefit from the application of all E.U. Directives and Regulations.

 

In the following paragraphs you will find a summarized explanation of the most common activities and their tax treatment, as well as information on the requirements, formalities and business environment in Madeira. You may also download our investment guides or contact us for further information. To find out more about ship and yacht registration, please refer to the shipowners section.

 

About Madeira

Madeira is a Portuguese region located in the Atlantic Ocean, 900 Km southwest of Lisbon and a 3 hours flight from the major European capitals. Apart from the renowned natural beauty, Madeira also offers an excellent quality of life, with a political and social stability, mild climate and diversified offer of leisure activities. In addition, Madeira has a modern economy based in the international services, with highly specialized and efficient professional services providers and qualified workforce, with excellent language skills. The existence of a modern infrastructure, allied to a reduced direct and indirect taxation, also contributes to provide investors with a unique package of benefits. Madeira is a very efficient location for companies with operations in the European single market and worldwide.

Business Environment

To find out detailed information about Madeira’s Business Environment, such as: infrastructure, foreign staff, labour regulations, local recruitment, operational costs, real estate, support services, transportation, and telecommunications, click on Why Madeira or download our Guide Moving to Madeira.

 

International Investment Activities

The International Services, the Industrial Free Trade Zone and the International Shipping Register of Madeira (MAR) are the main areas of activity under the International Business Center of Madeira (IBC). Financial services such as banking, insurance and brokerage activities, on the other hand, no longer qualify for the available tax benefits. 

 

International Services


All types of service–oriented companies may request a licence to operate within the IBC of Madeira, with full access to the preferential tax regime in force, to carry out activities such as trading, shareholding and other services such as consultancy, management of intellectual property, real estate activities and e-business & telecommunications.

  

Production and assembling activities
 

Production, assembling and warehousing activities may also set up in the Industrial Free Trade Zone (IFTZ), an industrial park integrated in the legal framework of the IBC of Madeira, available to both Portuguese and international investors. The IFTZ offers an attractive tax and customs duties regime as well as a strategic location near the commercial harbour and the international airport of Madeira.
  

Ship and Yacht Registration


Detailed information about ship and yacht registration is available in the Shipowners section.
 

Tax Benefits

Service Activities

 

International Services companies and their shareholders benefit from a very competitive tax regime.
 

  Companies licensed as from 2007
 Taxation  Income from activities held with non-residents
Corporate Income Tax Rate 5%
Dividends and Capital Gains 0%(1)
Royalties 2,5%(2) or 5%
Capital (Stamp) Duty Full Exemption
Withholding Tax Paid to non-resident shareholders
Dividends 0%(3); or 5% to 28%(4)
Interest 0%
Royalties 0%
Capital gains 0%
Services 0%
(1) If relating to a participation of at least 5% held for 2 years, amongst other conditions, otherwise the rate of 5% shall be applicable
(2) If relating to income derived from the temporary disposal or use of Industrial Property Rights originated from R&D activities and subject to registration in Portugal, such as Patents and Industrial designs or models.
(3) When paid to corporate shareholders in E.U. and E.E.A. countries or countries with which Portugal has a DTA with a tax information exchange clause
(4) According to the various DTA’s (5%, 10% or 15%) or to the general rate (25%) on the absence of a DTA; Or when paid to individuals (28%)



Production and assembling activities


Benefit from a most advantageous tax and customs duties regime in the E.U.

Production, assembling and warehousing activities  
 Taxation Income from activities held with resident and non-resident entities
Corporate Income Tax Rate 5%(1)
Dividends and Capital Gains 0%(2)
Royalties 2,5%(3) or 5%
Capital (Stamp) Duty Full Exemption
Custom Duties Application of the IFTZ's suspensive customs duties regime
Withholding Tax Paid to non-resident shareholders
Dividends 0%(4); or 5% to 28%(5)
Interest 0%
Capital Gains 0%
Royalties 0%
Services 0%

(1) The general rate of 23% will be applicable to income derived from warehousing activities with resident entities, which do not involve production, transformation or assembling operations
(2) If relating to a participation of at least 5% held for 2 years, amongst other conditions, otherwise the rate of 5% shall be applicable
(3) If relating to income derived from the temporary disposal or use of Industrial Property Rights originated from R&D activities and subject to registration in Portugal, such as Patents and Industrial designs or models.
(4) When paid to corporate shareholders in E.U. and E.E.A. countries or countries with which Portugal has a DTA with a tax information exchange clause

(5) According to the various DTA’s (5%, 10% or 15%) or to the general rate (25%) on the absence of a DTA/ TIEA; Or when paid to individuals (28%)

Read more

 


Shipping companies


In addition to the facilities and tax advantages available to shipowners who choose to register their vessels in MAR – Madeira International Shipping Register, shipping companies also benefit from a most advantageous tax regime.
 

  Companies licensed as from 2007
 Taxation  Income from activities held with non-residents
Corporate Income Tax Rate 5%
Dividends and Capital Gains  0%(1)
Royalties  2,5%(2) or 5%
Capital (Stamp) Duty Full Exemption
Withholding Tax Paid to non-resident shareholders
Dividends 0%(3) or 5% to 28%(4)
Interest 0%
Royalties 0%
Capital gains 0%
Services 0%
(1) If relating to a participation of at least 5% held for 2 years, amongst other conditions, otherwise the rate of 5% shall be applicable
(2) If relating to income derived from the temporary disposal or use of Industrial Property Rights originated from R&D activities and subject to registration in Portugal, such as Patents and Industrial designs or models.
(3) When paid to corporate shareholders in E.U. and E.E.A. countries or countries with which Portugal has a DTA with a tax information exchange clause
(4) According to the various DTA’s (5%, 10% or 15%) or to the general rate (25%) on the absence of a DTA; Or when paid to individuals (28%)

 


Access to Portugal's network of double taxation agreements


Access a list of Portugal's Double Tax Treaties and respective texts here

  Read more


 

 

Requirements

To qualify for the tax reductions, companies will have to comply with one of the following requirements:
 
  • To create one to five jobs in the first 6 months of operation and undertake a minimum investment of €75.000 in the acquisition of fixed assets, tangible or intangible, in the first two years of operation; 
  • To create six or more jobs in the first 6 months of operation.
 
On the other hand, the reduced corporate tax rates are applicable up to a ceiling placed upon the annual tax base, which varies according to the number of jobs maintained, as follows:

Number of Jobs   Minimum Investment Threshold
 1 - 2 € 75.000  € 2.730.000 
 3 to 5 € 75.000  € 3.550.000 
6 to 30   - € 21.870.000 
 31 to 50  -  € 35.540.000
51 to 100 - € 54.680.000
 More than 100  - € 205.500.000 
 
For further information on other requirements such as legal reserve, auditing requirements and corporate tax returns, click on International Services Guide.
 

Formalities

Licence application


An application (in Portuguese language) is submitted to S.D.M. - Sociedade de Desenvolvimento da Madeira, S.A. (concessionaire of Madeira's International Business Centre), in two copies, addressed to the Cabinet of the Regional Secretary for Planning and Finance of the Regional Government of Madeira, in the name of an existing company, in Portugal or abroad, or of a company to be incorporated. Branches of existing companies may also be licensed. The licence application must include all relevant information concerning the activity to be performed by the company.
 
In the case of industrial activities, information concerning the transformation process, waste treatment and disposal, estimated usage of water and energy, architectural plans, equipment to be installed, health and safety measures to be implemented, amongst other information, will also be required. 
 

Applicable fees
 

Service-oriented companies will be subject to an application fee of €1.000 and to an annual fee of €1.800.
 
Pure Holding companies (SGPS) will be subject to an application fee of €1.000 whilst the annual operating fees are of €1.800 for the 1st year and €1.800 plus 0.5% of the previous year’s taxable income, the first 1 million euros being exempt, for the subsequent years. This variable component of the annual fee will always be restricted to a ceiling of €30.000.   
 
Manufacturing companies will be subject to an application fee of € 1.000. The annual operating fee shall be calculated according to the area occupied determined on the basis of the following scale:

Area Applicable Fees
 Up to 2,500 m2, inclusive  12.5 €/m2
Additional section of 2,501 m2 up to 5,000 m2, inclusive  11 €/m2
Additional section of 5,001 m2 up to 10,000 m2, inclusive 9.5 €/m2
Additional section of 10,001 m2 up to 20,000 m2, inclusive 8 €/m2
Additional section above 20,000 m2 7 €/m2
 

Company formation

Companies are formed in the IBC of Madeira through the use of the Private Deeds Registry Office with full exemption from fees and notary costs. Before incorporation, a name approval certificate and a provisional identification card must be requested to the National Company Registrar (RNPC). The public deed will be performed at the date indicated by the notary office. Companies licensed to operate in the IBC of Madeira must keep the head-office in Madeira, whilst companies with branches licensed in the IBC of Madeira are required to maintain legal representation.


Private limited companies (Lda.)


Private limited companies (Lda.) may be incorporated with a single shareholder and a minimum capital of €1 (one Euro) per shareholder. This type of company does not need to appoint directors; the minimum requirement is to appoint a manager who, by law, has the powers to undertake the management of the company.
 

Share companies (S.A.)


Share companies (S.A.) may also be incorporated with a single shareholder and a minimum capital of Euro 50,000. The management of these companies must be guaranteed by a board of directors made up by the number of members defined in the bylaws of the company. If the share capital does not exceed Euro 200,000, these need only one director.
 

Branches


Branches, on the other hand, have no minimum capital requirements. 
 

SGPS companies


SGPS companies must have the legal form of an S.A. or Lda. company and must have as its single object the management of shares held in other companies.
 

Shareholders


Shareholders of IBC companies may be an individual or a company, national or foreign. According to Portuguese Law, shareholders may also be the managers of the company or may choose to appoint an individual to act as manager of the company.
 

Labour and Recruitment

Labour Regulations


The working week includes a maximum of 40 hours with Sunday being the day of rest. Employees are entitled to 22 working days of vacation per year, plus 10 days statutory holidays, and to sick leave and maternity leave. If the employee starts work in the first half of the calendar year, he will be entitled to a minimum vacation period of 10 working days during that year.

 

Overtime is payable at the rate of 125% for the first hour and 137,5% thereafter. Overtime worked during rest days is payable at the rate of 150%. Salaries are paid on a monthly basis 14 months per year (holidays and Christmas bonuses included).

 

The law allows short-term contracts, with a minimum period of 6 months, renewable at the employer’s option, up to a limited period of 3 years, after which the employee is either granted a permanent contract or is dismissed. 

 

Local recruitment


Placing an advertisement in local and national newspapers is a very common procedure, as well as resorting to the local employment centre or a recruitment agency. S.D.M. has set up a database containing the CV’s of applicants who seek job opportunities within the companies operating under Madeira's IBC. Companies may also use the appropriate section of this site advertise their recruitment needs.

 

Madeira’s University, as well as other local technical schools, are a good source of skilled professionals. It is also possible to recruit from a large pool of Madeirans studying in Portuguese universities or working abroad.

S.D.M. may support companies setting up in the IBC in their recruitment process, by providing them with CV's adequate to their vacancies or by putting them in contact with the relevant schools or entities.

 

Foreign staff


Portugal abides by Article 9º of the Convention for the Application of the Schengen Agreement, namely regarding the regime of the concession of visas. The working visa will allow the entrance in Portuguese territory of foreign citizens (from non-EU or European Economic Area (EEA) countries or Switzerland), for the undertaking of their professional activities for a maximum of three years (allowing for multiple entrances). Visas should be applied for from a Portuguese consulate or embassy in the country of residence. The applicant will have to present a valid working contract in Portugal and will be subject to an interview at the Portuguese Consulate. 

 

All citizens from the EU, EEA and Switzerland are allowed to enter, remain and live in Portugal, up to three months, without formalities other than holding a valid passport or identity card. Relatives accompanying such citizens, irrespective of their nationality, are also allowed to enter, remain and live in Portuguese territory. If the three months period is exceeded, such citizens must proceed with a registration at the SEF- Foreigners and Frontiers Services, to formalize the right to reside in Portugal. Relatives, of EU or non-EU citizenship, are also required to register at the SEF. 

 

Personal Income Tax and Social Security Taxes


Companies are required to withhold personal income tax and social security contributions on the payment of salaries and other forms of remuneration to workers. Personal income tax rates vary according to the level of salary paid. As a reference, the applicable withholding rates in Madeira for 2013 start at 1% (for a monthly income up to 590 euros, single individuals) to 44,5% (for a monthly salary over 225.000 euros, single individuals). Monthly salaries up to 585 euros are not subject to withholding personal income tax.

 

Social security contributions are of a fixed rate of 11% for the employee and of 23,75% for the employer. The social security rates applicable to Directors are of 21,25% paid by the company and 10% paid by the Director.

 

The amounts withheld will be paid to the tax authorities until the 20th day of the following month in which the deductions were made.

 

Minimum and average wages


The latest available data on the average monthly salaries paid in the Autonomous Region of Madeira, dated from 2009, show that the average gross monthly wages paid in the services sector were of approximately 1.996,60 euros for highly qualified workers and of 775,49 euros for non-qualified workers. The minimum monthly wage set for 2013 in Madeira is of 494,70 euros.

 


 

 

Business Environment

Madeira offers a wide range of professional support services provided by local companies as well as a state of the art infrastructure and availability of a qualified and young workforce in a business friendly environment, with high levels of safety and quality of life. 

Find out more on Why Madeira.
 
 

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