Offshore companies in Madeira: what you need to know
The appearance of the Madeira International Business Center (MIBC) is a way to help Portugal interest foreign investors and attract money in the range of services. The island has the lowest corporate tax rate in the EU - 5%, while the jurisdiction is part of the European Union that gives great benefits. Today we will talk about the features of an offshore company in Madeira and under what conditions the benefits are given.
Peculiarities of offshore Madeira
Madeira, an independent political territory of Portugal, has long enjoyed special tax rates for the development of the island economy. This regime is considered state aid under EU law, and therefore there are no problems for companies that are registered here.
Thus, companies that are registered in Madeira, at the same time become businesses that are registered in the European Union and enjoy all the benefits. Plus, they fall under all the agreements that Portugal has signed on the avoidance of double taxation and other cooperation agreements.
What you can do in Madeira
Entrepreneurs who decide to open an offshore in Madeira 2022 should be aware of the restrictions on their activities. If they want to take advantage of the tax benefits, they can work in the following areas:
- international trade;
- electronic commerce;
- consultancy services;
- investments in real estate or ownership of shares in SGPS (limited holding company).
Companies that provide purely financial services - banking, brokerage, and insurance do not fall under the benefits.
As far as fees are concerned, Madeira's tax rates have their own peculiarities. Tax on income that was derived from working with residents on the territory of Portugal is subject to the standard rate - from 13% to 22%. If profits were made outside the country while working with non-residents - 5%.
Other features of Madeira taxes:
- Companies that are registered in Madeira are granted an exemption from withholding tax on dividends. The condition is that the owners must not belong to the jurisdictions that are on the "black list" of Portugal;
- Exemption from capital gains tax for non-resident shareholders who do not belong to blacklisted jurisdictions;
- Transactions that require state registration receive an 80% exemption from stamp duty if the founders do not include Portuguese residents;
- Offshore businesses in Madeira receive an 80% exemption from municipal property transfer tax, property tax, regional and municipal income tax and other local fees.
There are no foreign exchange controls in Madeira. Goods imported into Madeira or exported to other EU countries are not subject to customs duties.
A big plus of Madeira, which may interest IT companies, is the very fast Internet, which the island is obliged to have as an underwater cable station. It provides connection to international and national SDH networks, which gives great advantages in quality, cost, and bandwidth.
An infrastructure available is the internet gateway from Marconi Internet Direct. The IP platform has international connectivity that is distributed through London, Amsterdam and Paris, peering connections with major ISPs. All this makes Madeira a European region with enviable Internet speeds.
Mandatory requirements for offshore companies in Madeira
Only organizations that have created jobs (at least 1 employee) in the first six months can qualify for tax benefits. Employees must be Madeiran residents, regardless of nationality.
- Madeira office;
- Accounting and financial records are mandatory;
- The director must be a resident.
An important requirement is also that the company must have a clear economic structure. It must develop a strategy for risk management, assets, and functions that correspond to its type of business.