Call me
Login
Search
 

Consultants

 

Madeira, Global Business Solutions for Wise Professionals

 

Madeira is a very efficient location for companies with operations in the European Union and worldwide. 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.

 

Global Business Solutions

Madeira's International Business Centre has been conceived as a programme of State aid fully approved and supported by Portugal and the European Union, with the objective of providing the investor with a unique package of benefits. The wide scope of activities which may be carried out in the IBC, ranging from manufacturing and trading to shipping activities, and the various synergies which can be found among themselves, demonstrate that the MIBC has been carefully structured to serve the investor with a package of global business solutions.

Companies from all over the world have chosen Madeira as their business location. Some are small firms, establishing a presence away from their home markets for the first time. Others are well-known and large multinationals continuing to expand their operations in Europe, supported by the global business solutions offered by Madeira's International Business Centre.

 

Activities

Most types of industrial, service–oriented and shipping activities may be implemented within the IBC of Madeira, benefitting from the preferential tax regime in force. The list of authorized activities is set by Article 36º of the Portuguese Tax Incentives Statute.

 

Some of the most common service activities include international trading, shareholding, consultancy, management of intellectual property, e-business and telecommunications. Shipping companies, for the management of fleets of commercial vessels, yachts or even oil rig platforms, may also take advantage of the exceptional conditions offered by the IBC. Additionally, and although Portugal is governed by Civil Law, the incorporation and management of trusts within Madeira's IBC is also possible, as a result of specific legislation enacted for that purpose. 

 

Production and assembling activities may also be undertaken within the Industrial Free Trade Zone.

Financial services such as banking, insurance and brokerage activities, on the other hand, do not qualify for the available tax benefits, as well as “intra-group services”, namely coordination, treasury and distribution centres.

 

The specific advantages available for each of these activities are detailed under the Business Sectors and the Tax Benefits sections.

 

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 agreement

(5) 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%)

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 taxable income, which varies according to the number of jobs maintained, as follows:

Number of Jobs   Minimum Investment Ceiling
 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, please download the International Services Guide.
 

Formalities

Licence application


An application (in Portuguese language) must be 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 varies according to whether it pertains to a service's or an industrial activity. Further details on each type of application are available under the Business Sectors section.

Application and Annual Fees

 

Companies licensed to operate in the IBC of Madeira will be subject to license and annual fees which are set by Order n.º 222/99, of the 28th of December. Although these fees are collected by S.D.M., on behalf of the Regional Government of Madeira, they are in fact public revenue.

 

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

 

Shipping companies as well as 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.

 

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.
 
 

Online Presence

 
 
     
 

Online Tools

 
 
     
 

Documents

 
 
 
     
 
 

Subscribe Newsletter

To receive our exclusive "Consultants Newsletter" by email, please subscribe it below by entering your name and email address

   
 
Print | | Bookmark and Share