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Budget of the Autonomous Region of Madeira 2021
On December 31, 2020, the Regional Legislative Decree (18/2020/M) that approves the Budget of the Autonomous Region of Madeira for the year 2021 was published. This budget proposal introduces many changes in the tax codes for the Autonomous Region of Madeira, focusing, among other social and administrative measures, on the effort of recovering from the economic downturn and combat the global pandemic situation.
We highlight the significant reduction in the normal corporate tax rate to 14.7%, which represents the fourth lowest nominative rate of corporate income tax in the European Union. We also remind that, for companies registered on the International Business Center of Madeira, the corporate tax rate remains at 5% until the end of 2027.
We present below the most important changes at the tax level.
Changes in fiscal nature
Corporate income tax (IRC)
The normal rate of corporate income tax applicable in Madeira was lowered to 14.7%. To taxable persons who practice an economic activity of an agricultural, commercial, or industrial nature and who are classified as small or medium-sized enterprise the rate of 11.9% shall be applied to the first 25,000€ of taxable income. Companies duly registered at the International Business Centre of Madeira (IBCM) continue to benefit from the 5% IRC rate.
Personal income tax (IRS)
The IRS rates applicable to taxpayers residing in Autonomous Region of Madeira were updated, and the following tables are in force:
|
IRS |
||
|
Taxable Income (€) |
Normal Rate (%) |
Average Rate (%) |
|
Up to 7. 112 |
10,15 |
10,15 |
|
of 7. 112 to 10. 732 |
16,1 |
12,157 |
|
of 10. 732 to 20. 323 |
24,51 |
17,986 |
|
of 20. 322 to 25. 075 |
32,55 |
20,747 |
|
of 25. 075 to 36. 967 |
34,78 |
25,261 |
|
of 36. 967 to 80. 882 |
44,78 |
35,859 |
|
Over 80. 882 |
48.00 |
- |
Regional Surcharge
The regional surcharge is a tax on the share of taxable profit exceeding 1,500,000€, subject to and not exempt of, corporate taxpayers with its head office or permanent establishment in Madeira. The payment of this tax must be calculated by the difference between the regional surcharge due and the additional payments on account made in the same tax period. If the amount of additional payments on account made in that tax period exceeds the amount due in regional surcharge, the difference is refunded. Companies incorporated in the IBCM are subject to reduced rates of regional surcharge in each tax period, in relation to income obtained in the IBCM and taxed at the rate of 5% (IRC). The following rates apply, starting from the 1st of January 2021:
|
Regional Surcharge |
||
|
Taxable profit in euros (€) |
Rate (%) |
Rate in IBCM (%) |
|
From 1.500.000 to 7.500.000 |
2,1 |
0,42 |
|
From 7.500.000 to 35.000.000 |
3,5 |
0,7 |
|
Over 35.000.000 |
6,3 |
1,26 |
Additional payments on account
Additional payments on account are due by IRC taxpayers who have calculated a taxable profit of more than €1,500,000 in the previous tax period. Additional payments on account must be made in July, September and 15 of December of the same year to which the taxable profit relates; or, if an annual tax period different from the calendar year has been adopted, on the 7th, 9th, and 15th of the 12th month of the respective tax period. Its final settlement is carried out in the periodic income statement (Model 22 of the IRC). Here are the new rates in force from this year onwards:
|
Additional Payments on Account |
||
|
Taxable profit in euros (€) |
Rate (%) |
Rate in IBCM (%) |
|
From 1.500.000 to 7.500.000 |
1,8 |
0,36 |
|
From 7.500.000 to 35.000.000 |
3,2 |
0,64 |
|
Over 35.000.000 |
6 |
1,20 |
Payment of Municipal Property Tax (IMI)
Through a Resolution passed by the Legislative Assembly of the Autonomous Region of Madeira (1/2021/M), the IMI Code was altered. For properties located in Madeira, the payment of the tax due can be made through:
- 1 instalment, (in May), when its amount is equal to or less than 50€.
- 2 installments (in May and November) when the amount due is between 50€ and 100€.
- 5 installments (in July, August, September, October, and November), when the amount payable is more than 100€.
For more detailed accounting and tax information on the Autonomous Region of Madeira click here, or contact us.