Portugal free zones in 2023
Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) company registration in Portugal Free Trade Zones (FTZs) ii) tax and accounting obligations in FTZs and iii) permits and licenses to operate in FTZs.
- The Portuguese government operates two non-offshore FTZs and they are the Madeira International Business Centre and the Santa Maria Island FTZ.
- These FTZs offer advantages including i) corporate tax rate of 5% on non-Portugal entities’ profits ii) exemption of property transfer tax iii) exemption of tax on capital gains and dividends remitted to a company that’s based in the EU/EEA or a country with a Double Taxation Agreement (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 at least €75,000 in a two year period which results in creating one job or ii) creating at least six jobs in Madeira.
- Because of delays in approving the renewal of these tax benefits in Madeira FTZ (due to Covid and a political crisis in Portugal), any company registered after 31 December 2021 in the FTZ will not be eligible for the tax breaks. It is, however, possible that approval will be granted with the approval of the Portuguese budget (expected in June 2022).
|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%.