The main foundation purposes of the Madeira International Business Centre (MIBC), aka Madeira Free-trade Zone (MFTZ), were to encourage the regional and national economic growth by the reinforcement of entrepreneurial competitiveness and, on the other hand, to attract productive factors, sponsoring domestic and foreign investment.
MIBC stands out in the European environment for the wide range of business activities that can be operated on its institutional scope – covering operations in the industrial, commercial, maritime and international services areas – carefully structured to provide the investor a global package of benefits and synergies.
To optimize the international business strategy throughout a tax efficient mechanism fully integrated under the Portuguese law and European Union regulations.
No. The licensed entities are under the same legal system as any other Portuguese company. It is a transparent, regulated and supervised jurisdiction with a good international reputation, which tax regime is being considered by the OECD and the European Commission as a best practice model of low taxation regimes.
Tax savings. The companies licensed under the MIBC benefit from reduced taxation on the profits of the business operated on global market (sales and provision of services to non-residents in Portugal and between MIBC licensed companies).
- Reduced corporate tax of 5% until at least the end of 2027
- Partial exemption (76%) of autonomous taxation and advanced special payment (only tax rate proportional liability – 5%/21%)
- Partial exemption (80%) of capital duty, property tax, property transfer tax, municipal and regional tax
- Exemption of withholding tax in distribution of dividends (participation exemption regime)
- Exemption of withholding tax in the payment of royalties, services and interests
- Tax exemption on capital gains resulting from the sale of Madeira company or its subsidiaries
- Patent box regime – additional reduction in 50% of the corporate income tax
- Tax credit applicable to international double taxation
- Access to EU Directives and Regulations and the Portuguese double taxation avoidance agreements signed by Portugal (over 70 DTAA’s)
- Automatic VAT registration
- Exemption on payment of notary and registration fees
- Meet the eligibility requirements (Portuguese Tax Benefits Bylaw)
- License application (to the Regional Bureau of Finance)
- Pay application and operating fees
- Company formation
Licensing can be granted for a new company or for an existing one from any nationality and operation in any legitimate economic activity, excluding purely financial activities (banks and insurance companies).
- Create of one to five jobs in the first 6 months of operation and undertake a minimum investment of €75,000 in the acquisition of fixed assets (CAPEX), in the first two years of operation. The assets do not have to be acquired in Portugal or to Portuguese suppliers neither be in Portuguese territory
- Create six or more jobs in the first 6 months of operation.
Not necessarily. Non-resident workers or non-resident directors (board members) also count as “job posts”, regardless if they are remunerated or not, in Portugal or abroad, or if there is withholding taxes and social security contributions to be paid in Portugal or not. Furthermore, current workers from other group/related companies who will also participate in the activities to be licensed may be formally assigned as well to the MIBC company’s workforce.
No. Only if created less than 6 jobs.
No. Where produced/processed outside Madeira, shipment is made directly by the producer/ manufacturer..
Is exactly like the Portuguese general regime. VAT exemption or reverse charge is applied on the producer/manufacturer’s invoices for trading company and from trading company for the client.
Yes. Under the current legislation, the reduced corporate tax rate of 5% is applicable up to a ceiling placed upon the annual taxable profits (not turnover), which varies according to the number of jobs created. Where six or more jobs maintained, the profits limit to benefit from the tax reduction is €21,870,000. If the threshold is exceeded, the surplus amount will be taxable without reduction (tax rate 21%)
For trading and international services entities:
- MIBC Application Fee and Guarantee Deposit: €1,270 (one-off payment at licensing application)
- MIBC Operating Fee: €1,800 (annual payment)
No. There are some procedures which, not being mandatory, are highly recommended to be adopted under the economic substance fundamentals. BALDOCK provides tax advice, accounting and management support services thereby ensuring full compliance with all necessary requirements and guidance to the implementation of an international business structure.