Portugal free zones
- The Portuguese government operates two (non-offshore) free trade zones: i) the Madeira International Business Center and ii) the Santa Maria Island Free Trade Zone;
- These FTZs offer advantages including i) corporate tax rate of 5% for profits realized with entities not Portugal-based ii) no property transfer tax iii) no tax on capital gains and dividends remitted to a company based in EU/EEA or a country with a DTA treaty with Portugal and iv) 50% reduction of taxable income for qualifying companies;
- To qualify for these tax deductions, companies must obtain a license by either i) investing in Madeira at least €75,000 on a two years period resulting in 1 job created or ii) creating at least 6 jobs in Madeira. Please note that corporation licensed before December the 31st 2014 are guaranteed the listed fiscal advantages until 2020.
|Free zone comparison||Madeira IBC||Santa Maria FTZ|
|FTZs used mostly by which industry?||Holding & trading companies||Holding & trading companies|
|Average annual Industrial space rent per 1000 sq. m.||€12,500||€10,000|
|VAT standard rate||22%||18%|
|Corporate tax standard rate||5%||5%|
|How long to set the company up?||6 weeks||6 weeks|
|How long to open company bank account?||3 weeks||3 weeks|
|Quality of utilities||Good||Average|
|Allowed to sign sales contracts with Portugal Clients?||Yes||Yes|
|Allowed to invoice Portugal Clients?||Yes||Yes|
|Corporate tax payable in Portugal||Yes||Yes|
|Corporate bank account||Yes||Yes|
|Physical office space required||Yes||Yes|
|Allowed to import raw materials?||Yes||Yes|
|Allowed to export goods?||Yes||Yes|
|Can be wholly foreign owned||Yes||Yes|
|Can the entity hire expatriate staff in Portugal?||Yes||Yes|
|Minimum number of directors||1||1|
|Minimum number of shareholders||1||1|
|Tax registration certificate required||Yes||Yes|
|Individual shareholders allowed||Yes||Yes|
|Corporate shareholders allowed||Yes||Yes|
|Corporate director(s) allowed||Yes||Yes|
|LLC company allowed?||Yes||Yes|
|Annual audited financial statements||Yes||Yes|
Frequently asked questions
How do I register a company in a Portugal free trade zone?In order to start operations in a free trade zone in Portugal, the company must apply for a FTZ permit with the Portugal authorities. This permit can be obtained provided that some investment thresholds are met. Kindly refer to the detailed information above for more details on these requirements.
Can I sell my products and services from a free trade zone if my Clients are based out of Portugal?While this is technically possible, a FTZ company trading with Portugal will not benefit from tax incentives on sales made with local customers.
Will the company registered with a Portugal FTZ be totally exempt from corporate income tax?No, but our Client will benefit from a reduced corporate tax rate of 5%.