Archive for February, 2015

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New Guide: Shipping in Madeira

In on February 18, 2015 by NEWCO

 

Blog_SHIPPING

2014 was a major year for the International Shipping Register of Madeira (MAR). The numbers speak for themselves: MAR has recorded a 158% increase in gross registered tonnage (GRT) of registered ships in just one year, while there was also a reduction in ships’ average age to 12.3 years, which shows the quality and dynamic of this European ship register.

The growth seen in the first ten months of the year helped make MAR the European register with the highest percentage increase during this period. At the end of September 2014, MAR became the fourth largest international register of the European Union.

This not only boosts Madeira’s significant contribution to the national shipping industry and to Portugal’s recognition with international shipping bodies, it also illustrates the role that this International Shipping Register can play in terms of compliance with the European Commission goal that 60% of Member States’ ships must sail under a European flag.

Madeira offers international shipowners a series of tax advantages and very competitive operations within a regulated environment that is safe for managing maritime fleets. Some of the advantages offered by the International Shipping Register include:

•High quality European registry;

•Access to EU short-sea shipping;

•Application of all treaties, conventions and international agreements ratified by Portugal;

•Total compliance with technical strictness and the safety requirements of a Community registry;

•Flexibility in crew composition;

•Competitive conditions for crews from MAR ships, in terms of income tax and social security;

•Close, personal service available 24/7.

Download our Guide Shipping in Madeira to know more about the advantages that the International Shipping Register offers in terms of international shipping.

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Madeira IBC grows 15% in 2014

In on February 13, 2015 by NEWCO

Logo IBC

S.D.M., the concessionnaire of the International Business Centre of Madeira (Madeira IBC), has just published statistics for 2014, revealing that overall, the number of entities operating within the IBC increased 15% compared with 2013. This growth essentially stems from the dynamic activity seen in two of the Madeira IBC’s most competitive areas, namely the International Services and the International Ship Register of Madeira (MAR).

As pointed out by the concessionnaire, “These are positive indicators that began to appear in the second half of 2013, following the positive decision of the European Commission regarding revision of the maximum limits, having strengthened since that time.” In fact, the International Business Centre is a regional economic development instrument created by Portugal in the 1980s and approved by the European Commission as part of its State aid program. Portugal’s option to fully integrate the Madeira IBC into both the Portuguese legal system and the European legal system, thereby being subject to state aid rules, means that the Portuguese state must negotiate periodically with the European Commission with respect to which tax benefits regime shall apply to a particular period, producing a broader range of effects. The Madeira IBC regime is therefore periodically analysed and assessed by the European Commission before it is authorized, which results in an extremely secure and transparent framework for the entities that operate within it.

Licensed companies benefit from a tax regime that offers a 5% tax rate until the end of 2020, among various other benefits. The Portuguese state is currently undergoing negotiations with the European Commission regarding an extension of the regime and it is hoped that it will be extended until 2027 and that it will be as or more competitive than the current one.

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State Budget for 2015

In on February 10, 2015 by NEWCO

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Following approval of the 2015 Government Budget in the Portuguese Assembly of the Republic at end 2014, along with other important tax legislation, such as Laws nos. 82-C/2014, 82-D/2014 and 82-E/2014, all of 31 December, several amendments were introduced into the Portuguese tax regime, some of them of great significance to the International Business Centre of Madeira (IBC).

Among these changes we highlight the stability of corporate taxation, thus staying the course with regard to the Corporate Income Tax reform that took place in the past year.

We therefore wish to disclose some of the more relevant changes.

CORPORATE INCOME TAX:

  • The general corporate income tax rate has been reduced to 21% (the rule for Small and Medium Enterprises having been kept, in which the rate applicable to the first 15,000 euros of taxable income is 17%), while in terms of the companies licensed to operate within the scope of the IBC, the reduced rate of 5% continues to apply.
  • For the tax exemption (withholding tax) to be applicable to the distribution of profits/reserves by a company residing in Portugal, it should be clarified that the benefiting entity (not residing in the EU, EEA or Switzerland) must reside in a State with which a double taxation agreement has been signed, is currently in force, and involves exchange of information. This wording amends the previous version which stated that the respective agreement provided for administrative cooperation in terms of taxation, equivalent to that which is established in the EU (the other conditions and requirements having remained the same);
  • Express provision that exemption from taxation on the distribution of profits/reserves by a company residing in Portugal to a permanent establishment (PE) located in another EU Member State or member of the European Economic Area (EEA) depends on compliance with the regime applicable to the distribution of profits and reserves to commercial companies (thus adding the obligation of compliance with the requirement that shares must be held uninterruptedly for a period of 24 months before distribution);

VAT:

  • Companies that are required to take inventory must report to the Tax Authorities an inventory of stock quantities as they exist at 31 December. This information must be sent, in electronic format and via a file with pre-defined characteristics and structure, no later than 31 January or by the end of the first month that follows the date on which the taxation period ends, if different from the calendar year.

PERSONAL INCOME TAX:

  • The concept of tax residence in Portuguese territory has been changed, the general criteria now being:

a) A period of residence that exceeds 183 consecutive or non-consecutive days within any 12-month period beginning or ending in the year in question;

b) In the case of a shorter period of residence, if, at any time during the period stipulated in the previous sub-paragraph, the person has housing at this location under conditions that indicate an intention to maintain it and occupy it as a habitual residence.

  • There is express provision for tax representatives of non-residents to be able resign under the general terms, subject to written communication to the represented party, sent to the last known address of the latter, thereby becoming effective with regard to the Tax Authorities and Customs after they have been informed of the situation.
  • The option to include any income subject to withholding tax or special taxes now determines the obligatory inclusion of all other income that is also subject to withholding or special taxes and which belongs to the same category, but not income belonging to different categories.

TAX COURTS AND OTHER

  • For a taxpayer to have his or her tax situation settled, he/she:

a) Must not owe any taxes or any other type of contribution and respective interest;

b) Must be authorized to pay the debt in instalments, provided a guarantee is pledged in accordance with applicable legislation;

c) There is pending litigation involving the dispute of the legality of the outstanding debt and the tax execution procedure is backed by a pledged guarantee in accordance with applicable legislation;

d) Tax execution has been suspended and a guarantee has been pledged in accordance with applicable legislation.

  • Taxpayers who have not settled their tax situation may not:

a) Sign supply contracts, public works contracts or procurement contracts for goods and services with the State, autonomous regions, public institutes, local municipalities and private charity institutions mostly funded by the Government Budget, nor may they renew existing contracts;

b) Bid for public service concessions;

c) List securities that represent their share capital on stock markets;

d) Launch public stock offerings for their capital or sell securities, bonds or shares via public subscription;

e) Benefit from the support of European Structural Funds and investment and public support funds;

f) Distribute yearly profits or make advances against profits over the course of the financial year.

  • Entities that offer payment services (together with credit institutions and financial companies) have until the end of July of each year to report to the Taxation and Customs Authority the transfer and sending of funds to an entity located in a tax haven.

If you have any questions about the International Business Centre please do not hesitate to contact us.

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