The present tax regime allows the incorporation of new entities within the legal framework of the International Business Centre of Madeira (IBC) until the 31st of December 2014, granting a reduced corporate tax rate of 5%, applicable on the taxable income, until the end of 2020.
In the case of services activities, the reduced rate is applicable to profits derived from operations exclusively carried out with non-resident entities or with other companies operating within the ambit of the IBC of Madeira. There are no restrictions, nevertheless, on the development of business activities with Portuguese companies which will be taxed at the normal corporate tax rate in Madeira, 23% from 2014 onwards.
Production and assembling activities carried out by companies in the Industrial Free Trade Zone of Madeira, on the other hand, will benefit from the tax reductions also in operations with Portuguese residents.
For more information you may consult and download the Tax Benefits Statute.
Companies licensed within the legal framework of the IBC of Madeira fully qualify for the application of the Portuguese participation exemption regime.
As such, worldwide dividends and capital gains deriving from qualified shareholding activities are not included in the taxable income of the companies, provided that the shares are held for a minimum period of 2 years and represent a minimum shareholding of 5%, amongst other conditions.
Shipping companies, vessels and yachts
Shipping companies will have full access to the reduced taxation regime until the end of 2020.
In addition, crew members aboard commercial vessels and yachts registered in MAR are not obliged to contribute to the Portuguese social security regime (provided some form of insurance is guaranteed) and are exempt from personal income tax.
Production, assembling and warehousing companies
In addition to the reduced tax rate of 5% until 2020, manufacturing companies in the Industrial Free Trade Zone may also benefit from a 50% reduction on the taxable income, when fulfilling two of the following criteria:
These companies will also benefit from a suspension regime, under whose provisions import duties will be charged on the non-E.U. incorporated raw materials and components only when the final products leave the IFTZ.
Tax benefits for Shareholders
Dividends paid to corporate shareholders of companies licensed to operate within Madeira’s International Business Centre, who are resident in E.U.or E.E.A.countries or in countries with which Portugal has a DTA with a tax information exchange clause, benefit from exemption from withholding tax in Madeira.
Otherwise, the payment of dividends will be subject to the rates according to the various DTA’s (5%, 10% or 15%) or to the general rate of 25% on the absence of a DTA or to a rate of 28% when paid to individual shareholders.
In addition, shareholders of IBC companies will be exempt from capital gains tax due on the sale of shares or on any share capital increases.
Other tax benefits and exemptions
Capital duty and other local taxes
|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|