Companies licensed to operate in the international Business Centre (IBC) of Madeira enjoy a number of tax benefits which are confirmed to the end of 2027.
- Corporate tax rates not exceeding 5% until 2027.
- No stamp duty.
- No capital duty (under certain conditions).
- Madeira is an integral part of Portugal and therefore a full member of the European Union. Companies are automatically registered for VAT.
Additional Commercial Advantages
- Companies incorporation in Madeira are Portuguese companies. They are therefore entitled to the benefits arising from the majority of Double Taxation Treaties currently in a place between and other countries. There are over of 50 such treaties in existence.
- Madeira offers an International Register for ships and yachts. This can provide substantial tax saving opportunities for vessel owners.
Customs Duties and VAT
- Many goods and raw materials imported into the IBC are exempt from customs duties. Companies themselves are automatically registered for VAT and when trading business to business within the EU they can take advantage of the exemptions from VAT on the movement of goods.
Increasingly “substance” requirements need to be demonstrated by subsidiary companies operating from overseas locations. The key for these subsidiaries to continue to enjoy legitimate tax efficiencies is the requirement to demonstrate genuine economic activity.
GSMATIKA recognises the importance of this obligation, which affects enterprises controlled from both within the European Union and outside. Within Madeira we have therefore established the GSMATIKA CENTRE, which offers the opportunity for subsidiary companies to demonstrate a real presence and management organisation within Madeira.
Under the terms agreed with the EC, companies licensed to operate within the framework of the IBCM will enjoy until the end of the year 2027 a reduced corporate tax rate of 5%, one of the lowest in the European Union, among other significant tax benefits.
The regime now agreed with the European Commission will be soon published by the Portuguese Government through the respective internal legislation.
Benefits Provided by Portuguese Investment Protection Treaties
Portugal has numerous Investment Protection Treaties. The two most widely used are those with Venezuela and Angola.
- Companies investing into Venezuela often invest through Madeira to take advantage of favourable political relationship between Venezuela and Portugal.
- Companies often take advantage of the investment Protection Agreement between Portugal and Angola. This provides investments generated by Portuguese companies in Angola with a high degree of protection. There is the added benefit of the use of a common language and close cultural links between Portugal and Angola.
Portuguese Pure Holding Companies (SGPS)
Portuguese Pure Holding Companies (SGPS) qualify for the full participation exemption on dividends derived from their EU participations. This applies providing that the shares in the underlying participation are held for a minimum period of one year. The SGPS holding company is exempt from capital gains under the following conditions:
- Shares are held from a minimum period of one year (or three years in certain circumstances).
- The SGPS has a minimum shareholding of 10%. Dividends received from companies resident outside of the EU are subject to corporate tax of 5% from 2013 to 2020.
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