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The Regional Surcharge was approved by Regional Legislative Decree no. 14/2010/M of 5 August, which published the amending budget for the Autonomous Region of Madeira for 2010, amended via Regional Legislative Decree no. 5 A/2014/M of 23 July.

The Regional Surcharge consists of a tax on the part of taxable profit that exceeds €1,500,000, subject to and not exempt from corporate income tax, as calculated by taxpayers who have a head office, permanent management or stable establishment in the Autonomous Region of Madeira.

It should be mentioned that the companies that are established within the scope of the International Business Centre of Madeira on the basis of licenses issued by the end of 2014 benefit from an exemption from the Regional Surcharge with respect to income obtained within the scope of the IBCM and taxed at 5% (Corporate Income Tax).

The companies that are 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 Regional Surcharge for each taxation period with respect to income obtained within the scope of the IBCM and taxed at a rate of 5% (Corporate Income Tax).

As such, the following additional taxes shall apply:

Taxable profit in euros (€) Rate (%)  IBCM Rate (%)
From 1.500.000 to 7.500.000 3 0,6
From 7.500.000 to 35.000.000 5 1
Greater than 35.000.000 9 1,8

 

The part of taxable profit that exceeds €1,500,000:

  1. When greater than €7,500,000 and up to €35,000,000, it is divided into two parts: one equal to €6,000,000, to which a rate of 3% is applied; and another, equal to taxable profit that exceeds €7,500,000, to which a rate of 5% is applied;
  2. When greater than €35,000,000, it is divided into three parts: one equal to €6,000,000, to which a rate of 3% is applied; another, equal to €27,500,000, to which a rate of 5% is applied; and another, equal to taxable profit that exceeds €35,000,000, to which a rate of 9% is applied.

As regards the rules for payment of the Regional Surcharge, this must be paid in three different payments on account due in July, September and 15 December of the year that the taxable profit pertains to, or if an annual taxation period different from the calendar year has been adopted, in the 7th month, the 9th month and on the 15th day of the 12th month of the respective taxation period, and its final payment shall be made during the periodic income declaration (Form 22 of Corporate Income Tax).

Additional payments on account must be made in cases in which, in the previous taxation period, the regional surcharge was payable. The amount of these payments is equal to the amount that results from application of the rates stipulated in the following table, applicable to the part of taxable profit that exceeds €1,500,000 related to the previous taxation period:

Taxable profit in euros (€) Rate (%) IBCM Rate (%)
From 1.500.000 to 7.500.000 2,5 0,5
From 7.500.000 to 35.000.000 4,5 0,9
Greater than a 35.000.000 8,5 1,7

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