Trusts in Madeira

The home of Cristiano Ronaldo is best-known for its natural beauties, like Cape Girão.
Yet, avid investors love Madeira for other reasons: its trust regime.
As we have said, madeira is an autonomous region of Portugal. When Portugal joined the CEE (today EU) it agreed with the European Commission that Madeira would offer tax benefits to attract international investment. This gave birth to the International Business Centre of Madeira (IBCM).
Along with this, the Portuguese government created another amazing, and somewhat hidden benefit: a trust regime.
And if you know a bit about asset protection, you are probably wondering how, if Portugal is not a common law jurisdiction, can you establish a trust?
That is a fair question to ask. Portugal is a civil law jurisdiction, meaning its regular legislation does not regulate trusts. Thus, the government came up with a Decree-Law that authorized a trust regime with a creative solution that would not hinder the civil law regulations: When a settlor creates a trust and registers it in Madeira, they must designate the law that will regulate the trust (which can be changed in time without prior authorization). The settlor must designate the jurisdiction that will regulate the trust in the trust deed and can change the law that will establish the interpretation and administration of the vehicle.
Therefore, for example, you can protect your assets by using Nevis’ trust law and settling it in Madeira, giving you the perfect balance between the best trust law in the planet and Portugal’s network of double tax treaties.
Portugal is tough against offshore jurisdictions, but if there is no income deriving from its blacklisted jurisdiction and the main purpose of the trust is succession and asset protection, Nevis is your best choice.
If you want to play safe, our experts regularly work with the UK or Cyprus trust legislation. 
This is an excellent benefit for those who want to protect their assets because it makes the Madeira trust a solid and flexible structure at once.
And, of course, as in the best jurisdictions, Madeira trusts are exempt from taxation on income received from shares, royalties, and interests, if they arise from whitelisted jurisdictions.

Limitations
  • Trusts are not allowed to execute financial activities. Yet, all non-financial income distributed to the beneficiaries is entirely tax-free if the beneficiaries are a) corporate entities licensed within the IBCM or b) non-resident companies of individuals if they are tax residents in whitelisted countries.
  • Portuguese residents cannot use the Madeiran trusts. 
  • Trusts cannot own immovable property in Portugal.
  • All properties and income must derive from foreign sources if the trust wants to receive tax benefits of the IBCM. 
  • If you receive trust income from Portugal, it will be taxed over the trustees because the Portuguese law does not recognize the concept of a trust and does not make a distinction between legal and beneficial ownership from a tax perspective. Yet, there is an exception for IBCM companies. Their income is not consider to arise from Portuguese sources for tax purposes meaning it is not taxed.

Features of a Madeiran trust

Name

A trust cannot have a name similar to another legal entity in Portugal and the word "trust" must be at the end of its name.

Qualifications

To be lawful it must be intended as a trust, its assets must be situated abroad, and it cannot have Portuguese beneficiaries.

Deed

The deed explains the purpose of a trust and the instructions of its management and administration, with info such as:

-             Distribution of income and assets

-             Transfer of assets from the settlor to the trustee

-             Time of existence

-             Who the settlor, trustees, and beneficiaries are

-             The trustee’s powers and liabilities

Registration

Trusts must be registered in the free zone registry. Yet, the name of the settlor and beneficiaries are private.

Settlor

Only foreign, non-resident persons can establish a trust and all properties and assets must be abroad.

Trustee

The trustee must be a licensed IBCM company

Beneficiaries

All beneficiaries must be non-residents of Portugal or corporate bodies licensed within the IBCM to receive tax benefits.

Confidentiality

The trust deed and the names of the settlor and beneficiaries are not public.

Trustees opening a bank account for a trust must disclose the identities, but not their financial information.

Taxes

The trust is tax free on dividends received from shares, interest, and royalties.  

The trustee is taxed at a 5% corporate tax rate or 21% if the income is generated locally.

Audits

Trust companies are audited all years and must keep accounting records of all trusts they handle.


Who are we, and what can we do for you?
In Mundo, along with NTL Trust, we have 25 years working with family offices to do business all over the world.
NTL is the oldest trust-providing company in Nevis. Since then, they have expanded their services all over the world to enhance their freedom. That is why we have built a network of experts that includes our own Portuguese expert team that offers unmatched corporate and financial services, including establishment and management of trusts.
You can choose Saint Kitts & Nevis trust laws for your trust. NTL is the most experienced team for Nevis trust, meaning you will have the best of the best by your side. Nevis is the best option because it will protect your trust against creditors, spouses, and bitter former business partners thanks to its legal framework.
If you want a more conservative strategy with excellent reputation and compliance, you can use the Swiss trust law as the base for your trust.
Our partners can help you with:
  • Setting up a duly licensed trust within the IBCM
  • Acting as a trustee in Madeira
That means our experts will handle all main operations of the trust and will help you with the full process to incorporate it. You usually just need a few KYC documents to register the trust:
  • Certified copy of the photo page of the passport of the settlor and beneficiaries
  • Proof of residence of the settlor and beneficiaries
  • Proof of occupation of the settlor and beneficiaries
  • CV of the settlor and beneficiaries
  • Bank reference
  • Proof of source of funds
Further, our partners will help you open a bank account for your trust in Madeira. Requirements will vary between banks, but our experts also recommend a bank account that goes with the law the trust will be subject to. Also, we can help you open a bank account remotely as long as you go to a Portugal embassy or consulate to recognize your signature.

The perfect structure
Making your Madeira trust subject to the Nevis trust law will give you the best asset protection regime with the European reputation and Portugal’s robust double tax treaties.
Such a structure will protect you against claims by creditors, ex-spouses, and bitter business partners while registering it in a whitelisted jurisdiction.
In Mundo, we can help you protect your assets and your legacy. You are one email away from protecting your legacy for generations to come. All you need to do is contact us right now!


КОНФЕРЕНЦИЯ
3 МАРТА 2022
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