DOING BUSINESS IN MADEIRA IN 2023
Madeira is an Atlantic island, and an autonomous region of Portugal. Many international entrepreneurs considering register a company in Madeira opt to set up an entity in the International Business Centre of Madeira (IBC). Madeira company provides a tax-efficient solution for international investment or a holding company.
| Compare different Madeira entities | Private LLC | Public LLC | E-business company | Shipping company | Branch office |
|---|---|---|---|---|---|
| Also known as | Sociedade por Quotas | SA | Lda | Lda | Filial |
| Best use of company? | All products/ svcs | To get pub. funding | International business svcs | Maritime transportation | Specific projects |
| How soon to invoice Clients? | 2 weeks | 2 weeks | 6 weeks | 6 weeks | 2 weeks |
| How soon can you hire staff? | 2 weeks | 2 weeks | 4 weeks | 4 weeks | 2 weeks |
| How soon can you sign a lease agreement? | 1 week | 1 week | 1 week | 1 week | 1 week |
| How long to supply corporate bank a/c? | 4 weeks | 4 weeks | 4 weeks | 4 weeks | 4 weeks |
| How long to supply co. reg / tax numbers? | 2 weeks | 2 weeks | 4 weeks | 4 weeks | 2 weeks |
| Corporate tax rate on annual net profits? | 5% | 5% | 5% | 5% | 5% |
| Limited liability entity? | Yes | Yes | Yes | Yes | No |
| Government grants available? | Yes | Yes | Yes | Yes | Yes |
| Govt approval required for foreign owners? | No | No | No | No | No |
| Res. director/partner/ legal rep. required? | No | No | No | No | No |
| Minimum paid up share capital? | €1 | €50,000 | €1 | €1 | None |
| Can bid for Government contracts? | Yes | Yes | Yes | Yes | Yes |
| Corporate bank account location? | Santander | Millenium BCP | Deutsche Bank | Citibank | BNP Paribas |
| Can secure trade finance? | Yes | Yes | Yes | Yes | Yes |
| VAT payable on sales to local customers? | 22% | 22% | 22% | 22% | 22% |
| Average total business set up costs? | €14,750 | €16,950 | €14,750 | €14,750 | €15,300 |
| Average total engagement period? | 3 months | 3 months | 3 months | 3 months | 3 months |
Madeira company registration summary
Press the link headings below to read detailed, relevant, up to date information.
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Advantages of Madeira company registration
- Multi-national Clients use Madeira as a gateway to the European market because:
- Madeira corporation tax is a mere 5% of annual net profits, if certain conditions are met, guaranteed until 2027;
- Madeira is part of the Portuguese territory and has a Portuguese VAT number. Thus, a Madeira company has immediate access to the free circulation of goods and services within the EU market.
- A Certificate of Residence is issued by the Portuguese Tax Authority. As a result, a Madeira LLC can access Portugal’s network of double taxation agreements and EU Council directives.
- Madeira double tax treaties include i) all European Economic Area (EEA) countries ii) Brazil iii) Mozambique iv) Korea and v) Venezuela.
- A Madeira LLC is an excellent holding company because:
- The parent subsidiary directive allows a Madeiran holding company to receive dividends exempt from withholding tax from subsidiaries domiciled in the European Union;
- Income received from non-EU subsidiaries suffer a mere 5% corporation tax;
- There is no Portuguese withholding tax on dividend payments to overseas shareholders;
- There is no Portuguese withholding tax on payments to overseas shareholders relating to intellectual property, technical services, management fees or head office expenses;
- There is no capital gains tax on the sale of shares in international subsidiaries;
- Access to Portugal’s network of double taxation agreements.
- Madeira is an attractive jurisdiction in which to register ships because i) the vessel can fly the Portuguese flag ii) it is included in the EU registrar of vessels and iii) it has unrestricted access to EU waters and iv) all international conventions ratified by Portugal are fully applicable v) the income of a ships’ crew is completely exempt from tax and vi) access to Portugal’s network of double taxation agreements.
- Multi-national Clients use Madeira as a gateway to the European market because:
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Disadvantages of Madeira company registration
- To benefit from low tax benefits, a Madeira LLC must meet the following criteria:
- It must have local economic substance including i) at least one local employee and ii) a physical office address and iii) a minimum paid-up share capital of US$ 75,000;
- Each company director must obtain a Portuguese personal income tax number.
- All directors’ and shareholders’ information is available on an open online register (click link);
- Annual audited financial statements are prepared in Portuguese and available for public viewing.
- Because multi-national companies were allowed to avoid local economic substance requirements, the European Commission is currently investigating Madeira for potential abuse of the corporate income tax reduction scheme. Consequently, there is a risk the 5% corporation tax benefit may disappear before 2027.
- To benefit from low tax benefits, a Madeira LLC must meet the following criteria:
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Useful links for Madeira
