Law 73/2013 of 3 September, which establishes the financial regime of the local municipalities and inter-municipal entities, stipulates that municipalities may annually decide to implement a surcharge up to a maximum limit of 1.5% on taxable profit, subject to and not exempt from corporate income tax.
A reduced Municipal Surcharge rate can be applied for companies with a turnover of less than €150,000 during the previous taxation period. The Municipal Surcharge applies to taxable profit before deduction of reportable tax losses.
In the municipality of Funchal, where NEWCO has its head office, the Municipal Surcharge rate is 0.5%, and taxpayers whose turnover during the previous year did not exceed €150,000 are exempt.
It should be mentioned that the companies established at the International Business Centre of Madeira on the basis of licenses issued up until the end of 2014, benefit from exemption from Municipal Surcharge with respect to income obtained within the scope of the IBCM and taxed at a rate of 5% (corporate income tax).
Companies established within the scope of the International Business Centre of Madeira as of 2015 shall be subject to a limitation of 80% with respect to the Municipal Surcharge for each taxation period, the effective rate being 0.1%.