Madeira

Madeira – the island of eternal spring and low taxes

Madeira is an archipelago in the Atlantic Ocean, about 900 kilometers from the Portuguese coast. It is part of the EU and officially belongs to Portugal, but it has the status of an autonomous territory with its own government, administration and laws. The main attraction for business is the local free trade zone – the International Business Center of Madeira (IBC of Madeira). The advantage of the IBC of Madeira is low tax rates. Corporate tax is only 5%, which is one of the lowest rates in Europe.

The capital: Funchal

Official language: Portuguese

Currency: euro – EUR

Description and advantages of the régime IBC of Madeira

• Corporate income tax 5 %
• Full exemption from withholding taxes on dividends, interests and license fees
• Property tax exemptions, transfer taxes and stamp duty
• It is not listed on the list of OECD nor EU as „tax haven“
• Double taxation contract also with the Czech Republic

For the application of the IBC of Madeira, the company must alternatively fulfill one of the following conditions:

1. the creation of 1-5 jobs in the first six months of the company formation

+ Minimum investment cost of EUR 75,000 (tangible or intangible assets) in the first two years after its establishment

1. b)creation of 6+ jobs in the first six months of the company’s establishment, in which case no minimum investment is required

The company licensed to operate within the IBC of Madeira must have its head office in Madeira. On the other hand, IBC companies of Madeira are authorized to set up branches in Madeira and i tis enough to have legal representation in Madeira.

In Madeira, both a classical limited liability company and a joint-stock company can be established. The third alternative is the holding company.

Lda. – Sociedade Limitada

• Minimum 1 partner
• Minimal basic capital 1 EUR for each partner
• Possibility to hold general meetings anywhere in the world

S.A. – Sociedade Anonima

• 5 shareholders, min. 1 director
• minimal basic capital 50 000 EUR
• shares registered on a name or shares on bearer (registered)

SGPS – Sociedade Gestora de Participacoes Sociais

• law form Lda. or S.A.
• the only subject of business management of shares held in other companies
• Exemption from dividend taxes, subject to conditions

Madeira automatically provides a Portuguese VAT number to companies. The standard VAT rate for Madeira is 22%.

Thanks to the fact that Madeira is a part of Portugal, the principle of free movement of capital within the EU is applicable to it, and European legislation and the Portuguese Double Taxation Treaties can be applied. Madeira also meets all OECD requirements for tax transparency and exchange of information.

The current tax regime allows new entities to be incorporated into the IBC of Madeira until the end of 2020, a reduced corporate tax rate will be provided by 2027.

For those who want to set up an active office in Madeira, low operating costs are an indisputable advantage. The costs of buying and renting properties, services and salaries of local staff are much lower than in other EU countries and jurisdictions.