Trading, Holding & Other Services

Highlights

Companies benefit from an attractive tax regime, granted until 2027 and agreed with the European Commission as a legal Regime of State aid in full compliance with the guidelines set by the EU’s “Code of Conduct on Business Taxation”.


Tradings, Holdings and Other International Services in Madeira

 

Services

The IBC of Madeira offers a very attractive package of benefits to international services activities:

  • low taxation;
  • state-of-the-art infrastructure;
  • efficient local support services;
  • low operational costs;
  • safety and quality of life. 

In addition, Madeira is fully integrated in the Portuguese and EU legal systems, providing the IBC with full credibility, transparency and stability and, in addition, providing companies with a Portuguese VAT number and full access to the international treaties to avoid double taxation ratified by Portugal as well as to all EU Directives and Regulations. 

The tax regime of the IBC of Madeira is granted until 2027 and formally approved by the European Commission as a legal Regime of State aid, supported on Madeira’s official status of outermost region of the EU and in full compliance with the guidelines set by the EU’s “Code of Conduct on Business Taxation”.

 

Activities

The list of activities and companies which may set up and operate within the legal framework of the International Business Centre of Madeira is set by Article 36º-A of the Portuguese Tax Incentives Statute.

Most types of international service activities will be allowed such as international trading, e-business and telecommunications, management services, consulting services, as well as the ownership of intellectual property, the development of real estate investments or the holding of participations through the incorporation of a SGPS - the Portuguese pure holding company.

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

It should be noted that general services companies, nevertheless, may also hold participations in addition to the undertaking of their commercial activity.

Additionally, and although Portugal is governed by Civil Law, the constitution and management of trusts within Madeira's IBC is also possible, as a result of specific legislation enacted for that purpose.

Pure financial services such as banking, insurance and brokerage activities provided to third entities, on the other hand, do not qualify for the available tax benefits.

Formalities

Licence application


An application (in Portuguese language) must be submitted to S.D.M., the official concessionaire of the IBC of Madeira, in two copies, addressed to the Cabinet of the Regional Secretary for Finance and Public Administration 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.

All relevant information concerning the activity to be performed by the company must be included in the licence application, namely:

  • Company name and address;
  • Activity to be undertaken and respective NACE code (European nomenclature of the economic activity);
  • Total value of the investment;
  • Indication of the number of jobs to be created.

In the case of a successful application, the licence is deemed to be granted in favour of the company once the applicant furnishes proof of the formation and registration of such company. All documents in support of the licence application must be duly translated into Portuguese and legalised.

Please consult the Legislation and our Document Library for details on the relevant law and pro-forma documents, namely examples of licence applications.

Applicable 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 published by the Regional Government of Madeira.

Service-oriented companies will be subject to an application fee of €1,000 and to an annual fee of €1,800.

SGPS companies 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 profit, 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.

Company Formation

Among the various legal structures available according to Portuguese law, investors have generally chosen the share company (S.A.) and the private limited company (Lda.). In addition, two other legal structures are available, since they are often used to operate in Portugal and, therefore, within the legal framework of Madeira's IBC. These are the branch and the S.G.P.S. (Portuguese pure holding company).

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

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. It may render services and, in certain cases, lend credit to the companies in which it holds shares.

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

Companies must keep the head-office in Madeira, whilst branches are required to maintain legal representation.

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.

For a step by step explanation of the process of incorporation, please consult our Investment Guide.

 

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