Madeira's International Business Center

Madeira

ServiCEs

✔The island of Madeira is an autonomous region of Portugal and is part of the European Union.

✔ With about 741 km², Madeira is located in the Atlantic Ocean, approximately 1,000 km from mainland Portugal and 870 km from North Africa. The topography is mountainous and the highest point of the island is about 1,862 meters high. With a subtropical climate, it has a spectacular landscape and lush and diverse vegetation.

✔ The current population is around 270,000 inhabitants, of whom 100,000 live in the capital, the city of Funchal, and are mostly of Portuguese origin, there are also small foreign communities, the British being the most predominant.

✔ Madeira has a long tourist tradition; the island's climate and natural beauty attract thousands of tourists all year round.

✔ Communications are excellent; There are daily connections to Lisbon (about an hour and a half by flight) and Oporto (almost two hours), as well as several weekly connections between Madeira and other European cities.

✔ Madeira offers safety and quality of life and is at the same time very cosmopolitan. Its economy is modern and service-based, with highly qualified professionals with excellent language skills. It has state-of-the-art infrastructures and support services, a local university with international partnerships, namely with Carnegie Mellon, and operating costs are extremely competitive.

✔ The reduced taxation combined with the other benefits announced, makes Madeira the ideal place for national and international investors.

Madeira's IBC

Madeira's International Business Center

The International Business Centre of Madeira (Madeira's IBC) is an important international center fully integrated into the Portuguese and European Union legal system and consists of the Industrial Free Trade Zone, the International Shipping Register - MAR and the International Services.

As Madeira is part of the European Union, Madeira's IBC represents the ideal entry point for the European market.

Madeira's IBC has been constantly approved by the European Commission under regional State aids and is fully regulated and supervised by the Portuguese Tax Authorities, the Bank of Portugal and other regulatory authorities.

The International Business Center of Madeira is thus a credible and safe place to set up international operations, providing a very attractive and competitive 5% taxation guaranteed until the end of the year 2027.

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THIS REGIME, NAMED REGIME IV GRANTS COMPANIES THE FOLLOWING BENEFITS:

✔ Reduced corporate tax rate of 5%, applicable on the taxable income, until the end of 2027

✔ Exemption from withholding tax on dividends paid to shareholders not resident in Portugal (individuals or legal entities), provided they are not located in tax havens

✔ Exemption from withholding on interest or other forms of payment of partner loans, capital contributions or advances made by the partner, provided that they are not resident in Portugal

✔ Application of the participation exemption regime to dividends, reserves, capital gains and losses

✔ Exemption from withholding tax on royalties, services or interest paid to third parties

✔ Possibility of applying the Patent Box regime

✔ Exemption on capital gains on the sale of shares held in Madeira's IBM companies

✔ Exemption from notary and registration fees

✔ 80% reduction in Municipal Property Tax (IMI) and Municipal Property Transfer Tax (IMT) rates

✔ 80% reduction in regional and municipal surtax

✔ Reduction of SGP and Autonomous Taxes in proportion to applicable IRC (Corporate Income Tax) rate (76.2% reduction)

TO BENEFIT FROM THIS REGIME COMPANIES MUST COMPLY WITH ONE OF THE FOLLOWING REQUIREMENTS:

(a) Creation of one to five jobs in the first six months of activity and undertake a minimum investment of 75,000 Euros in the acquisition of tangible or intangible fixed assets during the first two years of activity; or

(b) Creation of six or more jobs in the first six months of activity.

The law provides that the tax benefit granted to such entities will be subject to a limitation, as follows:

✔ 2,73 million euros for the creation of 1 to 2 jobs;
✔ 3,55 million euros for the creation of 3 to 5 jobs;
✔ 21,87 million euros for the creation of 6 to 30 jobs;
✔ 35,54 million euros for the creation of 31 to 50 jobs;
✔ 54,68 million euros for the creation of 51 to 100 jobs;
✔ 205,5 million euros for the creation of more than 100 jobs.

The portion of taxable income that exceeds the limitation will be taxed at the standard tax rate in force (in 2019 it is 20%).

In addition, a company licensed under this regime will also be subject to one of the following annual limits applicable to the tax benefits provided for:

(a) 15,1% of the annual turnover; or

(b) 20,1% of the annual Gross Value Added; or

As mentioned above, Madeira's companies may also make use of all Portuguese tax legislation, including the participation exemption regime introduced by the 2014 IRC Reform.

This regime provides for the total exemption from tax on dividends or reserves received by a Portuguese company, provided that it fulfills the following conditions:

✔A minimum shareholding of 10% held for 12 consecutive months;
✔ The subsidiary must not be resident in a jurisdiction included in Portugal's "black list";
✔ The entity distributing the dividends is subject to and not exempt from IRS (in the case of Portuguese companies), from a tax referred to in Article 2 of the Mothers / Daughters Directive or, from a tax identical or similar to IRC and the tax rate is not less than 60% of the current IRC tax rate in Portugal (ie not less than 12.6%).

This participation exemption regime also applies to capital gains or losses arising from the sale of shares under the above conditions.

Capital gains realized by non-residents resulting from the sale of shares of a Portuguese company remain exempt from taxation in Portugal, unless the non-resident is domiciled in a jurisdiction listed in Portugal's so-called "black list" or if the Portuguese company owns real estate located in Portuguese territory.

Madeira's companies may also benefit from the Portuguese Patent Box regime, under which, if certain requirements are met, only 50% of the income from the temporary use of patents and industrial designs will be taken into account for the calculation of taxable profit.

By combining the regimes provided for in the CIRC and the Tax Benefits Statute, income from the temporary use of patents and industrial models will be subject to an effective rate of 2.5% if they meet the requirements set for this purpose.

From a tax point of view, this regime is highly competitive (when compared to the regimes in other European countries) and translates into significant savings in respect of patents, designs and industrial models subject to registration in Portugal.

As Portuguese companies, Madeira's companies are normally subject to VAT, currently at 22%.

Madeira's companies may be used for:

✔ International trade operations, invoicing and trading
✔ Consulting and Marketing services
✔ Shareholding management
✔ Exploitation of intellectual property
✔ Real estate activities
✔ Ship and yacht registration
✔ E-commerce and telecommunications
✔ Access to treaty network to avoid double taxation
✔ Use of all EU directives

It is important to highlight that Madeira has low operating costs compared to other EU countries as well as highly qualified support services. That's why we consider Madeira an excellent onshore domicile.

Madeira Management's activity has been strongly developed in the services area of Madeira's International Business Center, where it establishes and manages a large number of commercial companies, which operate in various areas of activity.

Madeira Management was one of the first companies licensed to operate within Madeira's IBM and already has 30 years of experience and knowledge. This accumulated know-how makes MMCL the ideal partner in Madeira.

In addition to providing all the services required to establish a company at Madeira's IBM and all administrative support services, our legal and accounting staff can assist clients with all their tax and accounting obligations applied to a Portuguese company, optimizing existing possibilities and advantages.

Madeira Management can provide a shared co-work service space for our clients' societies, as well as all the legal, accounting and human resources support services needed to hire employees. We also provide all the support related to the lease of your own space, when the client so chooses. More information can be provided if and when you wish.

More information can be provided if and when you wish

Madeira's Companies

Types of Companies

All companies incorporated under the International Business Center of Madeira are subject to the same rights and obligations as any other Portuguese company.

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Restrictions

Companies may not engage in any activity not provided for in their corporate purpose.
They are also prohibited from engaging in any activity related to banking, insurance, guarantees, reinsurance, fund management and asset management (except their own assets) without prior consent and licensing.

Licensing Fees

€ 1,000 is the amount of the Registration Fee, € 270 as a guarantee and € 1800 is the value of the Annual Fee due to SDM.

Accounting Obligations

✔ Accounts must be prepared in Portuguese and in accordance with Portuguese accounting rules
✔ As a rule, the fiscal year ends on December 31st
✔ Accounts must be approved by March 31st of the following year
✔ Model 22 is due to be submitted to the tax authorities by May 31st and the IES by July 15th

Management

As a rule, private limited companies have two managers and limited liability companies have a minimum of 3 administrators.
Managers can be individuals of any nationality and are not required to have residency in Madeira.

Ship Registration

MAR - Madeira's International Shipping Register

The International Shipping Register of Madeira - MAR, is the second, but most important, register of ships and vessels in Portugal, constituting a fundamental instrument for the maritime sector.

MAR was created within the framework of the International Business Center with the aim of preventing ships from being diverted to other flags and attract new ships and shipowners. It is undoubtedly a credible alternative to other international registrations, maintaining the technical discipline, rigor and security that characterize conventional registrations.

All ships registered under MAR fly the Portuguese flag, and all International Conventions ratified by Portugal apply to them, contributing to the Madeira Registry being included in the Paris MOU White List.

Flying the Portuguese flag, they may be used for cabotage (coastal navigation, navigation, trade or transport) in EU countries.

All types of commercial, cargo or passenger ships, oil rigs, tugs, pleasure craft and commercial yachts may be registered with MAR. Only registration of fishing boats is expressly excluded.

MAR is part of Madeira's IBC and relies on a Technical Commission as well as on the services of the Commercial Registry and the Public Notary which ensures a faster registration process. Ships may also be registered temporarily with Portuguese Consulates abroad.

Registration of a ship in MAR may be done by a non-resident entity in Portugal. For this purpose you only have to appoint a legal representative in Madeira, for which Madeira Management is highly qualified.

Another possibility would be to set up a company within the Madeira International Business Center and transfer ownership of the ship to that company, in which case there will be no need to appoint such a legal representative. In this case, the wide range of tax and financial incentives applicable to Madeira companies will also apply to you.

Madeira Management has extensive experience in the registration of ships and yachts as well as in the administration of shipping companies.

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SHIP REGISTER ADVANTAGES

✔ MAR is a credible and secure EU registry with full access to cabotage within the EU

✔ All International Conventions to which Portugal is a signatory apply

✔ There are no nationality restrictions on ownership of ships registered in MAR

✔ The salaries of the crew are exempt from taxes

✔ Composition requirements for flexible manning, 30% of the safe manning of the ship must be European or citizens of Portuguese-speaking countries (PALOP, which include Portugal, Brazil, Sao Tome and Principe, Guinea-Bissau, and East Timor). Vessels owned by Spanish entities have similar authorization for Spanish-speaking countries. This requirement may be eliminated whenever it is duly justified.

✔ Possibility of applying the Patent Box regime

✔ Exemption on capital gains on the sale of shares held in Madeira's IBM companies

✔ Exemption from notary and registration fees

✔ 80% reduction in Municipal Property Tax (IMI) and Municipal Property Transfer Tax (IMT) rates

✔ Non-Portuguese crew members and their employers are not required to contribute to the Portuguese social security regime provided that they are covered by an alternative system, public or private. Portuguese crew is subject to a reduced contribution rate

✔ Mortgages may be governed by the laws of a country other than Portugal

ADDITIONAL ADVANTAGES FOR REGISTRATION OF RECREATIONAL OR TRADE VESSELS

✔ VAT exemption on purchase or import if the yacht engages in offshore commercial activity it will also be exempt from VAT on fuel purchase

✔ The nationality requirements for the crew of MAR registered commercial yachts do not apply

✔ Flexible social security regime

✔ Community Register with full access to navigation in European Union waters

TAX ADVANTAGES OF COMPANIES

Companies operating in Madeira's IBM shipping industry benefit from a highly attractive and highly competitive tax regime. Let us see:

✔ Access to the reduced taxation regime of 5% until the end of 2027
✔ Possibility of exemption from withholding tax on dividend distribution and payment of interest, royalties or capital gains
✔ Salaries of crew members of vessels registered in MAR exempt from any tax or contribution

HOW TO REGISTER

Some documents and information about the ship must be submitted to the MAR Technical Commission for analysis.The information and documentation to be presented varies depending on whether it is a temporary registration or a permanent registration.

HOW TO REGISTER

In assessing the essential crew composition requirements, the MAR Technical Commission has as its primary objective to ensure the safety on board and the quality of life of crew members.

The captain and 30% of the crew must be of European or CPLP (Community of Portuguese Speaking Countries) nationality. Ships belonging to Spanish shipowners are authorized to have crew from Spanish-speaking countries.

These crew composition requirements do not apply to yachts.

The income received by the crew of MAR registered ships is exempt from any tax in Madeira.

Crew members of ships registered in MAR are not obliged to contribute to the Portuguese Social Security regime.

MORTGAGE LAW

The debtor and the mortgage lender may freely and in writing choose which law applies to the mortgage they wish to constitute.

Failing agreement, Portuguese law shall apply.

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Industrial Free Trade Zone

Excellent geographical location

In the 1980s a deepwater port was built in Caniçal, 30 km from Funchal, where previously there was only a fishing village, and the Industrial Free Trade Zone was established here.

It currently occupies an area of about 138 hectares, where a large number of companies, that are involved in activities as diverse as food, tobacco, metal works and electrical appliances, have installed.

The Industrial Free Trade Zone was created to receive activities that by their nature involve the physical movement of goods. All goods, regardless of their nature, quantity, origin and destination, can be imported into the Free Trade Zone for storage and processing.

The Industrial Free Trade Zone offers a wide range of tax and customs incentives that form a unique package unmatched compared to any other Free Trade Zone.

Madeira is thus a credible, safe and highly advantageous alternative for non-European companies wishing to enter the EU market. It is also an instrument of excellence for European companies that aim to reduce their operating costs and enhance their tax efficiency.

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Madeira's International Business Center

Madeira

ServiCEs

Madeira's IBC

Madeira's International Business Center

THIS REGIME, NAMED REGIME IV GRANTS COMPANIES THE FOLLOWING BENEFITS:

TO BENEFIT FROM THIS REGIME COMPANIES MUST COMPLY WITH ONE OF THE FOLLOWING REQUIREMENTS:

More information can be provided if and when you wish

Madeira's Companies

Types of Companies

THE MOST USED COMPANY TYPES ARE:

Restrictions

Licensing Fees

Accounting Obligations

Management

Ship Registration

MAR - Madeira's International Shipping Register

SHIP REGISTER ADVANTAGES

ADDITIONAL ADVANTAGES FOR REGISTRATION OF RECREATIONAL OR TRADE VESSELS

TAX ADVANTAGES OF COMPANIES

HOW TO REGISTER

HOW TO REGISTER

MORTGAGE LAW

Contact Us FOR MORE INFORMATION

Industrial Free Trade Zone

Excellent geographical location

Contact Us FOR MORE INFORMATION