Madeira IBC
International Business Centre
Madeira Island is part of Portugal, is fully integrated in EU and has a lot to offer to international investors and entrepreneurs. Here are a few of the key elements:
All Shareholders of Madeira Companies, either corporate or individuals, benefit from exemption of capital gains tax on the sale of participations held in the Madeira company.
(*)Companies: European Union (PSD Directive EC/90/435), European Economic Area, Portuguese network of Double Taxation Agreements, Exchange of Information Agreements, subject to a tax of at least 12,6%, held for 12 months with a participation of at least 10%.
- Special Tax Regime duly approved by the EU commission up to end of 2027, under state aid rules.
- Duly regulated;
- EU and OECD compliance;
- Non harmful jurisdiction;
- Transparency;
- Credibility;
- Stability;
- Low operational costs;
- Special PIT regime for expatriate directors (maximum of 20% tax rate on Portuguese source income);
- Compliant with OECD BEPS initiative;
- Fully integrated in the EU;
- Benefits from all EU legislation and ECJ decisions;
- Duly regulated subject to national and EU supervision;
- Fully benefits from the Portuguese network of Double Taxation and Investment Protection Agreements;
- CIT rate of 5% up to 2027;
- Successful e-government implemented by Portugal;
- Advance transfer pricing agreements;
- Possibility of obtaining advance tax rulings.
Madeira Companies Corporate Income Tax Rate
| Period | Foreign Source Income | Portuguese Source Income |
| 2027 | 5% | Normal CIT Rate (currently 21%) |
DIVIDENDS RECEIVED |
|
| Qualifying Corporate entities and branches(*) | 0% |
| Other Corporate entities | International Tax credit relief against 5% CIT |
| Exemption Capital Gains | Sale of subsidiaries held for an uninterrupted period of 12 month with a participation or voting rigths =10% (Subsidiaries must be subject to income tax of at least 12,6%) |
| Exemption of 80% on Stamp Duties | On all acts and contracts, financial instruments related with the company activity |
| Exemption of 80% on Local Taxes | Municipal surcharges; Property Conveyance Tax (IMT); Municipal Property Tax (IMI) and Surcharges. |
| Losses carry forward | 5 years (limited to 70% of the assed tax each year) |
Local Substance Requirements
| Jobs Created | Limit of taxable income benefiting from reduced CIT Rate of 5% |
| 1 | € 2.73M |
| 3 | € 3.55M |
| 6 | € 21.87M |
| 31 | € 35.54M |
| 51 | € 54.68M |
| 100 | € 205.5M |
Withholding Taxes
| Non Resident Shareholders | Third Parties | |
| Interest | 0% | 0% |
| Royalties | 0% | 0% |
| Services | 0% | 0% |
WHT exemption on all operations with non Portuguese resident entities or entities also licensed to operate within the MIBC.
| WTH on dividends paid out | |
| Qualifying Corporate Entities and Branches(*) | 0% |
| Individuals | 0% |
| Other Corporate Entities | 25% |
| Offshore Listed Territories | 35% |
Investment Protection Agreements
Madeira Companies also benefit from the Portuguese IPA’s (Investment Protection Agreements)
| LIST OF PORTUGUESE IPA’S | |||
| ALBANIA | CUBA | LITHUANIA | CZECH REPUBLIC |
| GERMANY | EGYPT | MACAU | ROMANIA |
| ALGERIA | SLOVENIA | MOROCCO | EAST TIMOR |
| ARGENTINA | SLOVAKIA | MAURITIUS | TUNISIA |
| BULGARIA | PHILIPPINES | MEXICO | TURKEY |
| CAPE VERDE | GUINEA BISSAU | MOZAMBIQUE | SERBIA |
| CHILE | HUNGARY | PAKISTAN | UKRAINE |
| CHINA | INDIA | PARAGUAY | URUGUAY |
| SOUTH KOREA | LATVIA | PERU | VENEZUELA |
| CROATIA | LIBYA | POLAND | |
| PENDING ENACTMENT IPA’S | |||
| ANGOLA | GABON | QATAR | ZIMBABWE |
| BOSNIA | KUWAIT | RUSSIA | |
| BRAZIL | PRINCIPE ISLANDS | UZBEQUISTAN | |
INDUSTRIAL FREE TRADE ZONE (IFTZ)
Production, Assembling and Warehousing
An industrial park fully integrated in the legal framework of the IBC of Madeira offers attractive tax and customs duties regimes, which combined with competitive operational costs and high quality support services and infrastructure, make the IFTZ a very attractive location for the setting up of regional, national and international activities.
The IFTZ, with a total area of 140 hectares, is strategically located 8 Km away from the island’s international airport and next to the main commercial port, where all loading and unloading of cargo takes place.Production, assembling and warehousing operations may set up either on plots which have been carefully prepared and infra-structured for the construction of industrial premises, or in modules of small areas for companies which do not require large spaces to carry out their activity.
The industrial park has an immediate connection to the island’s main motorway, allowing a fast and easy distribution of products through Madeira, as well as a fast access to the capital city of Madeira, Funchal.
FAQ’s on Madeira Companies
| Company Types Available | Limited Liability (LDA), Stock Corporations (SA), Partnerships (Comandita) |
| Corporate Legislation |
Portuguese Company Code (CSC) |
| Time frame for incorporation | Between 5 to 6 business days |
| Availability of shelf companies | No |
| Corporate Names | Names can be in foreign language subject to availability and must bear the respective company type Limited Liability (Lda), Corporations (SA), Partnership (& Comandita). |
| Minimum number of shareholders | 1 in Limited Liability, 2 in Partnerships and 5 in Corporations (SA) |
| Minimum paid up capital | No requirements in incorporation for Limited Liability and Partnerships and 30% for Corporations. |
| Standard authorised capital | No requirements for Limited Liability and Partnerships. Corporations €50,000 |
| Classes of shares available | Registered, nominative, and registered bearer shares in Corporations |
| Denomination of capital | Euro |
| Residency requirement on shareholders | No residency requirements on shareholders |
| Annual ordinary shareholders’ meetings | Must be held locally, once a year, for the approval of the annual accounts and management report. |
| Shareholders’ meetings proxies allowed? | Yes |
| Information published relating to shares and shareholders | Yes at the Companies Register |
| Minimum and maximum number of directors | Minimum 1, no maximum number |
| Is it possible to appoint Corporate directors? | Yes, however it is required that the representation be carried out by an individual |
| Nationality and residency requirements of directors | None |
| Directors’ meetings | Normally one per quarter, mandatory one per year. |
| Information published relating to directors | Yes |
| Must accounts be signed by the directors? | Yes, and it is further required an annual director report on the accounts and company activities |
| Must annual returns be filed with the relevant authorities? | Yes |
| What records must be maintained in the jurisdiction? | All company records must be maintained at the registered office or with the company accountants, being made available at all times for tax inspection. |
| Can the company make secured loans? | Yes |
| Can the company make unsecured loans? | Yes |
| What are the limits placed on company borrowing? | Borrowing powers are limited to the group companies, either parent or subsidiaries, If made to third parties there must exist a reasonable corporate reason to perform such loans. |
| Is there a register of company charges? | Yes at the Commercial Register |
| Company seal | Yes |
| Re-domiciliation provisions | Yes, it is possible to re- domicile a company in and out of the jurisdiction based on reciprocity |
| Auditing | Only holding companies (SGPS) and Corporations companies are required to have audited financial statements. Limited Liability companies will only require audited financial statements if they exceed in two subsequent years certain limits of turnover. |
| Social Security obligations | Any company hiring local staff must pay social security contributions (23,75%) |
| VAT obligations | Monthly or quarterly for active business companies.
summary of company obligations |
| TAXES | CIT rate of 5% on international business and business developed with other companies operating within the IBC. Local business CIT rate is 21% |
| Stamp Duty | Exempt on all company contracts and financing facilities. |
| MIBC Official Fees | Enrolment fee of €1250. Annual maintenance fee €1800. Reduced rates if incorporated and maintained through an accredited management company. |
(*)Companies: European Union (PSD Directive EC/90/435), European Economic Area, Portuguese network of Double Taxation Agreements, Exchange of Information Agreements, subject to a tax of at least 12,6%, held for 12 months with a participation of at least 10%.