Важная финансовая информация о стране Corporate in Madeira

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Corporate in Madeira

Madeira was not populated when Portuguese voyagers discovered it in the 15th century.

And 600 years later, the marvels of this islands are still undiscovered.

Madeira is immediately associated with romance, its gorgeous port, and its mouthwatering cuisine. Yet, for those who know the arcane mysteries of corporate structuring, Madeira holds a more significant meaning.

Of course, we are talking about the Madeira International Business Centre. This is, by far, one of the best, if not the best, free economic zones in Europe. A 5% corporate tax rate with no other significant withholding or dividend taxes.

And no, it is not too good to be true. Madeira is a first-level corporate destination.

Why? Simple.

Privileged access to the European trading, financial and payment entryways through Portuguese bank fully compliant with substance requirements thanks to your duly-licensed and compliant corporate structure in Madeira.
Taxes are lower than many midshore jurisdictions like Cyprus and Hong Kong and only slightly higher than some offshore jurisdictions but without the blacklisting
A low-cost yet knowledgeable labor force. With a minimum investment of €75,000 you only need one employee, and if you have six (we can help you with the headhunting), you will not have to comply with any minimum investment requirements.
Madeira is accepted by the OECD as an onshore compatible free trade zone. This means that payments in and out will not be as scrutinized as a blacklisted jurisdiction.
Madeira is perfect as a second home and office destination. You have a welcoming local population, it is a gorgeous place, it is relatively low-cost, and it is almost free of COVID-19.

The International Business Centre of Madeira (IBCM)

Madeira has one of the most prominent free zones in the EU: The IBCM.

When Portugal joined the CEE (now EU), it agreed that Madeira would offer tax breaks to attract foreign investments, to improve the development of the island’s economy. This paved the way for the IBCM.

The IBCM attracts most of the island’s FDI and over half of its corporate tax’s revenues.

Its textbook success plus its full integration within the EU economy makes it a first-level investment destination in Europe. It is an efficient, optimized jurisdiction, with solid and transparent regulations.

The wide range of activities that can be conducted in the IBCM prove it was designed to attract investors who want a reliable, yet beneficial environment that accepts a wide range of activities, from manufacturing, to e-businesses and shipping.

Madeira can serve as an entryway to the European market for foreign companies. They can use it as their main base of operations for tax optimization in a steady environment. Meanwhile, you will have duty-free access to a market of almost 500 million people.

IBCM companies are subject to a reduced tax rate of 5%, at least until 2027, if they comply with substance requirements (We will explain them ahead). Plus, the IBCM has way lower operational costs than other European countries. Just to name an example: the average office monthly cost in a premier location in Funchal is €20/m2, while in Lisbon is €25/m2 and in Madrid, it is closer to €35/m2. Thus, the yearly rental costs of a 200 m2-office in Funchal is around €48,000 while in the other two cities would be €60,000 and €84,000, respectively.

Plus, Madeira offers the following:

An intercontinental airport with daily connections with Lisbon and weekly connections with London, Paris, Berlin, and Zurich.
A multilingual population.
A young and prepared workforce: the University of Madeira has 300 graduates per year and most Madeirans study in mainland Portugal. Plus, more than a third of the population is under 24 and there are no restrictions over foreign staff hiring.
Excellent quality of life with low cost of living

How to set up an IBCM company?

Incorporating a structure in the IBCM is relatively simple with a helping hand.

The first you should know is that you need to comply with substance requirements to receive the preferential tax rate:

The company must being its activities within six months of licensing or one year if its an industrial or shipping company.
Make an investment of €75,000 in tangible or intangible assets within two years of activities and create one to five jobs during its first six months of activity.

Create six jobs during its first six months without any minimum investment amount.

Plus, the special 4% tax rate has brackets depending on the number of employees:

Job Creation	Minimum Investment	Applicable taxation base
1-2	€ 75.000	€ 2.73 million
3-5	€ 75.000	€ 3.55 million
6-30	-	€ 21.87 million
31-50	-	€ 35.54 million
51-100	-	€ 54.68 million
Over 100	-	€ 205.5 million

If the applicable tax base is beyond the limit, the income will be taxed at the normal 20% corporate tax rate.

Incorporating an IBCM company is a straightforward two-phase process:

Phase 1: Licensing within the IBCM

Phase 2: Incorporating the company

Our partners request the license before incorporation because it will avoid paying additional notary and registration fees because IBCM structures have their own registration office. Plus, in the strange occurrence that the license is not granted, you will avoid spending more money liquidating the company.

So, Phase 1 starts with an application to the Sociedade de Desenvolvimento da Madeira) in the name of an existing company (foreign or Portuguese) or a company to be incorporated. The application requires the following info:

Company name and address
Articles of association
Activity under its NACE code
Investment value
Number of jobs it will create

Now, Phase 2.

Incorporating a structure in Portugal is simple and can be completed in less than a week. The process to establish a limited private company (the equivalent to an LLC) is the following:

Register at the one-stop-shop. This can be done in-person in less than an hour if you submit the documents, choose a name that is available, and pay the registration fee. Authorities will give you the articles of association and commercial registry and all partners will obtain a corporate ID, SSN, and the original by-laws. For regular Portuguese companies, this can be done only too, but for IBCM companies, you must register in person.
Open a corporate bank account (we can help you with that)
Obtain a declaration of beginning of activities and register for VAT
Register with social security
Get a labor’s accident insurance with a private insurer
Register your employees with the labor compensation fund.

Most common IBCM companies

Service-oriented and holding companies

Madeira is an unmatched destination for service-oriented companies looking to carry out business activities within and outside the EU as they can access the preferential 5% corporate tax rate and receive a complete exception over dividend, interest, and royalty taxes.

Shareholding companies may qualify for the tax exemption regime, which includes dividends and capital gains making Madeira a top tax planning destination.

E-Business companies

E-business company will enjoy tax benefits and Madeira’s wonderful telecommunications and fiber optic cables.

Madeira can offer top support services as many of the best IT companies are established in the island and even for its excellent level, telecommunications and IT services cost lest than the EU average. Madeira has a submarine cable station that provides national and international SDH network interconnectivity, which provides scalability benefits.

Production and assembling companies

Madeira also has an industrial free zone of 130 hectares for production, assembling, and warehousing. Plus, it is just eight km away from the international airport and right beside the port, reducing loading and unloading costs.

These companies can enjoy the regular preferential tax rates of the IBCM and may enjoy an additional 50% exemption over the corporate tax rate if they:

Aid the modernization and diversification of the Madeiran economy
Contribute to hiring high-level human talent
Help to improve the environment of the island
Create at least 15 jobs that are kept for five years.

Vessel and yacht registration

The Madeira’s Shipping Register is a trustworthy register that keeps the EU quality levels with excellent benefits. All companies can register and receive full benefits from its tax regime. It does not matter if they are companies incorporated in Madeira or branches of foreign companies.

They will benefit from the following too:

No nationality requirement for yachts and flexible rules for vessels. Only 30% of the safe manning of the ship must be from Portuguese-speaking countries or the EU, and in some instances, companies can be exempted from this rule.
Crew members are not required to pay income taxes.
If non-Portuguese crew member have a guaranteed insurance, they are exempted from the social security regimes and Portuguese crew members receive partial exemptions.
Vessels can be registered as property of an IBCM company or a foreign company.
Vessels can be registered in the name of an IBCM licensed company or a foreign company.
A VAT exemption if a yacht conducts high sea chartering.

Who are we, and what can we do for you?

Along with NTL, in Mundo, we have over two decades offering first-level financial advice for family offices and HNWI worldwide.

We help our clients with first-level corporate services thanks to our unparalleled network of experts.

And we firmly believe that Madeira is one of the best opportunities in Europe thanks to its simple incorporation process and its tax breaks.

And we can help you incorporate, license, and operate your company within the IBCM. Madeira companies are an excellent long-term investment that will give you excellent tax planning in a solid and transparent business environment.

Our experts in Madeira will help you with:

Incorporation of a company in Madeira.
Registration of a branch of a foreign company.
Help you prepare an application for a license to operate within the IBCM.
Find a proper office space in Madeira
Accounting, tax, and legal support when you start operating

Madeira is simply the best door to access to the EU. It has a thriving, dynamic business environment with excellent tax planning possibilities. What are you waiting for? Contact us immediately and incorporate a company in Madeira!