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NEWCO is a one-stop-shop specializing in the operationalization of foreign investment in Portugal and Malta.

Madeira - perfect location for holding companies
25 Nov 2021 . By Cláudia Vasconcelos - Head of Business Development

Madeira - perfect location for holding companies

Portugal provides a very favorable framework for holding companies. SGPS’s (Sociedades Gestoras de Participações Gerais in Portuguese) - also known as Pure Holding companies - sole contractual object is the management of shareholdings in other companies as an indirect way of carrying out economic activities.

Madeira is an Autonomous Region of Portugal, and an integral part of the European Union. Therefore, when incorporated within the International Business Centre of Madeira (IBCM), pure holding companies benefit not only from the general regime for the elimination of double economic taxation on dividends and capital gains (participation exemption), from the application of European Directives and the network of conventions signed by Portugal, but also from all the benefits conferred by the IBCM.


What are Pure Holding Companies (SGPS)

Pure Holding companies have as their sole corporate purpose the holding of equity interests (shares or quotas) in other companies, as an indirect way of carrying out economic activities.

Holding shares in a company is considered an indirect way of carrying out an economic activity when it is not occasional (held for more than a year) and it reaches at least 10% of the voting capital of the participated company, either by itself or through shares in other companies in which the SGPS is dominant.

Pure holding companies are allowed to provide technical administration and management services to some of the companies in which they hold a participation, and such services must be the object of a written contract, in which the corresponding remuneration must be identified.

Under certain conditions, Pure Holding companies may hold equity interests of less than 10% of the voting capital of the investee company.


Advantageous tax regime for holding companies

In tax terms, Portuguese holding companies benefit from a very competitive regime, which includes:


Advantages of incorporating a holding company in International Business Center of Madeira

Pure Holding companies incorporated within the International Business Centre of Madeira, in addition to the above advantages, also benefit from the special tax regime of the IBCM without being subject to the substance requirements and limits to the benefit applicable to other companies registered in it.

Some of the benefits are:

  • Exemption from withholding tax on the distribution of dividends to shareholders, natural or legal persons
  • Exemption from withholding tax on the payment to shareholders of interest and other forms of remuneration on shareholder loans, bonuses, or capital advances
  • Exemption from withholding tax on payment of royalties, services, and interest to third parties
  • 80% reduction in stamp duty, municipal tax on real estate transactions (IMT), municipal property tax (IMI) and other regional and municipal taxes, notary, and registration fees
  • 66% reduction in the Special Advance Tax Payments and Autonomous Taxation
  • Safe and stable business environment
  • Access to a qualified, productive workforce, fluent in several languages
  • Proximity to European, American, and African markets
  • Excellent infrastructure network, air, and sea access.


The International Business Center of Madeira

The International Business Centre of Madeira is an instrument for the economic development of the Autonomous Region of Madeira, created with the purpose of modernizing, diversifying, and internationalizing the regional economy, as well as compensating for the structural constraints resulting from the small size of the internal market and Madeira's ultra-peripheral status.

Entities operating within the scope of the IBCM benefit from the European Union's most advantageous tax regime, in terms of direct taxes, in an environment of reduced bureaucracy, political and social stability and low operational costs.

Learn more.


How we can help

NEWCO is an inward investment services provider in Portugal and Malta. With 30 years of experience, we are your one stop shop for investment and relocation services in Portugal or Malta.



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Guide: Holding Companies in Madeira