How to open an offshore company in Portugal: Madeira
If you are looking for a solid offshore jurisdiction, we recommend opening an offshore company in Portugal, specifically in Madeira. The island is located close to Africa, and at the same time is a part of Portugal, which allows to offer benefits that are not available for the EU mainland countries.
Features of Madeira as an offshore
A company registered in the International Center of Madeira (IBCM) is not offshore in the literal sense. It is not enough to start a company by filing the necessary certificates in order to receive tax deductions.
To register an offshore in Portugal 2022, namely Madeira, one of the following requirements must be met:
- Hire up to 5 full time employees during the first 6 months after registration. Also invest at least €75,000 to buy fixed, tangible and intangible assets in the first 2 years of operation;
- Create at least six full-time jobs in the first six months of work;
- All employees must be tax residents of Madeira. In this way Portugal fights unemployment, improves the skills of employees at the expense of foreign investors.
Benefits for Madeira offshore businesses
- Jurisdiction offers the lowest corporate tax rate in the EU, and one of the lowest in the world - 5%. It applies only to income that has been obtained in cooperation with foreigners or other businesses registered in Madeira;
- Withholding tax on dividend transfers. Mandatory requirement - they must not be residents of countries that are "blacklisted" in Portugal;
- There are no levies on capital gains payments to shareholders, interest payments, royalties, service charges;
- Exemption from stamp duty at 80%, if the other parties are not residents of Portugal or businesses that operate within the legal framework of Madeira;
- 80% discount on local taxes.
What is important to know about Madeira taxes
Many European politicians do not like Madeira's tax incentives, so they want to abolish them. Since January 2022 the issuance of licenses to register companies in Madeira Free Zone has been frozen. However, already in May the term was extended until the end of 2023. Therefore, we recommend opening an offshore company in Madeira before the expiration of this time.
Tax benefits for companies registered on the island are valid until the end of 2027. If not extended, the rate will be as in other regions of Portugal - 15-20%.
Features of Madeira offshore registration
Entrepreneurs usually register in Madeira:
- Joint Stock Company (S.A.) - 1 shareholder, minimum capital is €50k. The company must be managed by a board of directors. If the share capital does not exceed €200 thousand, 1 director is allowed;
- Private company with limited liability (LDA.). 1 shareholder is allowed, the minimum capital is €1. This type of company may not appoint directors;
- The main thing is to have a manager, who will manage the firm;
- Branch - no minimum capital requirements;
- The company must have its main office in Madeira. If you open a branch, you need a legal representation. Shareholders can be both individuals and companies (local or foreign). They can also act as a director or manager.
How to register a company in Madeira: instructions
An offshore company is registered through a notary, using the Registry of Private Transactions (acts) with full exemption from fees and notary costs. Before proceeding, one must request a certificate of name approval and a provisional identity card from the National Registrar of Companies (RNPC).
The procedure consists of these following steps:
- Preparation of documents - articles of incorporation, passport details of founders, shareholders, directors, etc. (more specific information will tell our experts);
- Opening of a bank account to pay the share capital;
- Registration in the commercial register;
- Official publication of the company in the JORAM journal;
- Registration at the tax office and obtaining a tax card;
- Registration with the Social Security Administration, registration of employees;
- Getting a license, which must be renewed annually.
Period of registration after all documents are submitted - 30 days.
How to incorporate a company fast
For fast company incorporation in Madeira in 2022, contact IT-OFFSHORE experts.