Madeira International Business Center
Located in the Autonomous Region of Madeira, in Portugal, the International Business Center of Madeira (IBCM) is endowed with its own system of tax benefits, and is made up of three branches of activity: International Services, MAR – International
Shipping Registry and Industrial Free Trade Zone.
As part of Europe’s outermost regions, Madeira provides a pole of attraction for foreign investors through the IBC of Madeira, which is recognized by the European Union as a legitimate asset for the region’s economic development.
The current tax benefits scheme for the International Business Center of Madeira allows new companies to set up, which will benefit from a reduced rate of 5% profit tax (IRC).
The reduced rate applies to profits from operations carried out exclusively with other entities not resident in Portuguese territory or with entities also licensed under the IBC of Madeira.
However, there are no restrictions on the development of operations with other entities resident in Portugal that are not licensed in the IBC of Madeira, and such operations are taxed at the normal tax rate in force in Madeira.
Production and assembly operations carried out by companies located in the Industrial Free Zone, on the other hand, benefit from the application of the reduced tax rate even in operations with entities resident in Portuguese territory.
The Madeira Free Trade Zone (International Business Center of Madeira) was created by Decree-Law number 500 dated October 20, 1980.
Corresponding to “an old aspiration of Madeirans, embodied in numerous interventions by the Region’s own government bodies”, the enactment of the law, according to the text of the DL, is the result of the “repercussion of the people’s feelings”.
Invest in Madeira
Reduced Taxes
IRC 5% on profits from operations outside Portugal
Partners and Shareholders
Exemptions and exclusive advantages for Members and Shareholders
Among many other advantages
Equity Management Activities
IBC companies fully benefit from the Portuguese participation exemption regime, in which dividends received and capital gains made on the transfer of shares do not contribute to determining taxable profit, provided that the conditions laid down in articles 51 and 51 C of the IRC Code are met, namely a minimum holding of 10% for a period of not less than 12 months, among other additional conditions.
Income of another nature will be taxed in accordance with the tax regime in force in the IBC of Madeira.
Partners and Shareholders
Partners and shareholders, natural or legal and not resident in Portugal or in jurisdictions included on the Portuguese blacklist, benefit from exemption from withholding tax on the payment of dividends in the proportion resulting from profits which, at the level of the IBC company, have been taxed at the reduced rate of IRC or which, if not, derive from income obtained outside Portuguese territory.
The exemption from withholding tax also applies to shareholders resident in Portugal, under the terms of the previous paragraph, in the case of dividends paid by maritime transport companies or companies established in the Industrial Free Trade Zone.
In addition, under the Portuguese general regime, profits distributed to partners or collective shareholders resident in Portugal are also exempt from withholding tax for shareholdings of more than 10% held for a period of not less than 12 months, under the terms of Article 97(1)(C) of the CIRC.
Partners and shareholders who are not resident in Portugal are also exempt from withholding tax:
– On the payment of capital gains on the sale of shares in companies licensed in the IBC of Madeira, provided they are paid to non-resident entities in jurisdictions on the Portuguese tax haven list;
– In the payment of interest, royalties and services.
There is full application of the network of Double Taxation Treaties ratified by Portugal.
Requirements Requirements
In order to benefit from the tax reductions, companies licensed in the IBC of Madeira will have to comply with one of the following
requirements:
- Creation of up to five jobs in the first six months of activity and a minimum investment of 75,000 euros in the acquisition of fixed, tangible or intangible assets in the first two years of activity;
- Creation of six or more jobs in the first six months of activity.
On the other hand, the reduced corporate income tax rates will apply up to a maximum limit, applicable to the tax base, determined according to the number of jobs maintained by the companies, as follows:
| Work Stations | Minimum investment | Limit |
| 1 to 2 | €75.000 | €2.730.000 |
| 3 to 5 | €75.000 | €3.550.000 |
| 6 to 30 | – | €21.870.000 |
| 31 to 50 | – | €35.540.000 |
| 51 to 100 | – | €54.680.000 |
| Over 100 | – | €205.500.000 |
Additionally, companies will be subject to one of the following annual maximum limits applicable to the tax benefits provided for in this regime:
- 20.1% of the gross added value obtained annually, or
- 30.1% of annual labor costs incurred, or
- 15.1% of annual turnover.