IN107 - The Dixcart Data Centre Madeira - Frequently Asked Questions

Why should I use the Dixcart Data Centre in Madeira or recommend its use to my clients?
For companies supplying digitalised services to customers in the EU, the Dixcart Data Centre offers substantial VAT saving advantages.

From 1st July 2003 VAT on digitalised services has been charged at the rate of VAT applicable in the EU country where the company supplying the digitalised services is registered. With VAT at 14%, Madeira has one of the lowest standard rates of VAT in the EU. Rates in other countries are as high as 25% in Denmark, Hungary and Sweden.

What do you mean by digitalised services?

Digitalised services are services or goods that can be delivered via an electronic link, through for example the Internet or digital television. Such services include:

• Website supply and hosting
• Supply of software and updating of programmes
• Supply of images
• Supply of music
• Films and games
• Provision of distance teaching
• Telephone connectivity

For an EU vendor of digitalised services what specific benefits does Madeira offer?

As stated above, Madeira offers one of the lowest rates of VAT within the EU, at 14%.

If digitalised services are supplied from outside of the EU – surely there is no need to apply VAT?

The regulations that came into force in July 2003 apply to vendors outside the EU as well as those based in the EU. A non-European supplier of digitalised services must now register in each of the countries where supplies are being made, or establish a business in one of the member states of the EU, and apply the relevant rate of VAT to sales. Registration for VAT in Madeira simplifies the process in terms of only one uniform rate of VAT needing to be applied, and at 14% the rate in Madeira is one of the lowest in the EU.


But what happens if we don’t bother?

It has been suggested that if a business from outside the EU is supplying these services, how will the EU know? This may be an evaluation of the current situation, but the supply does still attract a VAT liability. If the supplier is not dealing with this properly and the situation is subsequently revealed, there will also potentially be interest and penalties to pay. This could affect ongoing supplies, and with payments often being made through EU based credit card and payment service suppliers there is the potential for VAT authorities to look to those funds for the settlement of any debts.

Are there any other reasons why I would choose the Dixcart Data Centre in Madeira?

The Madeira Free Trade Zone Legislation enables companies trading from Madeira to pay a reduced rate of corporation tax until 2011. This rate varies from 3% down to 0% depending on when the company was registered and other criteria. In addition to savings on VAT, therefore, a much reduced rate of corporation tax may also be enjoyed.

There is also no withholding tax on the distribution of funds from a Madeira company.

Dixcart has operated in the Free Trade Zone of Madeira for over 15 years. We are the only corporate service provider able to offer the services of an in-house ISP from Madeira. This enables us to provide a cohesive, co-ordinated service to clients wishing to trade via the Internet from Madeira.

Do the servers providing the digitalised services need to be located in Madeira?

Management of the servers providing the digitalised services can be outsourced anywhere in the world. An element of the service should be provided from servers in Madeira and invoicing for these services needs to be made by a Portuguese company, registered in Madeira.

What if I need more than Internet connectivity and server hosting in Madeira?

Dixcart is experienced in setting up companies in Madeira with the minimum delay. If required, Dixcart can also help find office space, recruit employees and provide IT, management, accounting and company secretarial services.

What types of space configuration are available in the Dixcart Data Centre?

Server Hosting space is available in 4U, ½ rack, full rack and multiple rack configurations.

What are the options for Internet connectivity?

DixcartNet.pt can provide connectivity by way of Quality of Service (QoS) on a shared leased line connection, or via a dedicated leased line, which is available for requirements above 1Mb.

What happens if there is a problem with the server or if there is a power failure?

Advanced monitoring systems within the Dixcart Data Centre, check not only that each server is available, but that all of its services, such as web, email etc., are running too.

Power for all equipment runs via a UPS and, as an additional security measure, a dedicated diesel generator is available, with an automatic “fail over” in the event of extended power outages.

Additional information

If you require any additional information about the Data Centre in Madeira, please speak to Robert Homem at the Dixcart office in Madeira or to your usual Dixcart contact.