Invest in Madeira
There are many advantages for those who wish to invest in Madeira, an autonomous Portuguese Region fully integrated in the European Union, that combines the characteristics of a modern, diversified economy, based in International services, with the benefits of the Madeira Free Trade Zone or International Business Centre of Madeira, a preferential tax regime conceived to attract foreign Investment and foster the internationalization of companies.
Why invest in Madeira?
Companies in Madeira benefit from a very attractive environment for the development of international activities, thanks to a stable and safe legislative environment, full integration in the European Union, social and political stability, state of the art infrastructures, very competitive operational costs and availability of highly qualified employees, fluent in foreign languages.
- The development of the International Business Centre of Madeira was based on principles of transparency, credibility and security, with full observation of the EU and OECD guidelines regarding harmful tax competition. Madeira has never been classified as a tax haven and is not on any international blacklist.
- All principles of the Treaty on European Union are applicable to Madeira companies and their investors, namely the principle of freedom to establishment and to provide services. The European Court of Justice´s ruling on the Cadbury Schweppes case strengthened this principle, since this Court confirmed that a company can be located in a specific Member State solely for tax purposes.
- Madeira´s companies are automatically ascribed a VAT number, which provides access to the intra-Community market without any type of restrictions.
- Madeira is part of the European Monetary System (euro), a fact that provides for reduced operating costs and eliminates exchange rate risk.
- All Community directives are applicable to Madeira, guaranteeing a well regulated and modern legal system that protects investors´ interests.
What are the reasons to invest in Madeira?
Entities operating within the scope of the International Business Centre of Madeira benefit from one of the European Union´s most advantageous tax system (5% rate of tax on profits) guaranteed up to 2027.
Competitive tax regime
Entities operating within the scope of the IBC benefit from one of the most advantageous tax regimes in the European Union:
- Reduced corporate income tax rate: 5% (until 2027);
- Participation exemption regime applicable internationally to dividends, reserves, capital gains and capital losses;
- Exemption from withholding tax in the distribution of dividends to shareholders;
- No withholding tax on interest and other forms of payment for shareholders' loans, capital allowances or advancements made by the shareholders to the company;
- No withholding tax on royalties, services or interest paid to third parties;
- Tax credit for international double taxation, both legal and economic;
- Capital gains tax exemption from the sale of shares in Madeira companies;
- Capital gains tax exemption on the sale of subsidiary companies under the conditions of the participation exemption;
- No withholding tax on dividends, interest and royalties received from associated companies from the EU, providing that the requirements of the parent-subsidiary directive or the interest and royalties directive have been met;
- 80% reduction on the rates of stamp duty, Real Estate Transfer Tax (IMT), Municipal Property Tax (IMI), regional and municipal surcharge, notary and registration fees;
- Reduction of the Special Advance Tax Payment and Autonomous Taxation, in proportion to the applicable corporate tax rate (in this case, a reduction of 75%).
Learn more about the tax regime of the International Business Centre of Madeira.
Double taxation agreements signed by Portugal
Madeira, as an integral part of Portugal, benefits from the large network of Double Taxation Agreements that Portugal is party to.
Portugal has introduced legislation in the last few years aimed at reducing red tape and simplifying procedures in a wide range of areas, such as the legal, statistics, tax and licensing fields, as well as a host of others.
A significant example of this is the fact that since June 2006 it has been possible to perform most legal procedures for companies by private document, without the need for a notary public to intervene. Other significant examples include the formation of a company via the internet and the fact that a capital decrease does not require the approval of a law court, for example.
Modern and efficient infrastructures
In recent years Madeira´s infrastructures have undergone substantial investment, creating modern and efficient infrastructures that make the people of Madeira proud. These infrastructures have been the motor behind the archipelago´s development. Examples include the modern road network, the commercial port beside Madeira´s Industrial Free Zone and the modern communications network with high-quality bandwidth and levels of connectivity.
Madeira, due to its geographical position, is a node for a number of underwater cables connecting the continent of Europe to America and Africa. This fact guarantees the necessary bandwidth and connectivity with the rest of the world.
Other reasons to invest in Madeira
- Even though there are no restrictions on the import of non-resident labour, Madeira has both skilled and unskilled labour, speaking multiple languages and available at relatively low cost.
- Political and social stability.
- Low operating costs compared to other European jurisdictions, particularly in relation to wage levels, telecommunications, facilities, energy and many others.
- Suppliers of highly specialised and efficient professional services, with the capability of catalysing the successful implementation and management of investment projects in Madeira.
- Geographical location, in the same time zone as London.
- Security, living quality, mild climate, natural beauty and all the other characteristics that make Madeira a world-renowned tourist destination.