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Madeira
Madeira is an island of approximately 270,000 inhabitants, 700 kilometres from the coast of North Africa. The island is an autonomous region of Portugal and is therefore a full member of the European Union (EU). Local language is Portuguese and currency is the Euro. By legislation approved in Lisbon, and in Brussels by the EU, tax advantages have been extended to companies registered in Madeira under the International Business Centre legislation. These advantages, which are currently guaranteed until 2020, provide for a low-level of corporate taxation for companies licensed after 31st December 2000. Companies licensed before this date will enjoy a full exemption from taxation until 2011.
Companies may be formed as either Private Limited Liability Companies (Lda) or Stock Corporations (SA). The 'Lda' is the more popular vehicle for international, commercial activities, the main features of which are as follows:
- A minimum of one shareholder, known as a 'quotaholder'.
- Shares ('quotas') must be registered. Bearer or no par value quotas are not permitted.
- A minimum of one director, which must be an individual.
- No restriction as to the location of meetings.
- Annual accounts must be prepared in the Portuguese format and currency for submission to the local authorities.
- No requirement to disclose beneficial owner to the local authorities.
- Incorporation may take up to 6 weeks. Companies are available that have already been incorporated and have had no activity.
- Companies automatically receive a VAT registration number, which is advantageous for trading in Europe.
- No taxation, other than a fixed licence fee of €1,500 or €1,000 per annum, depending on whether the services of an operating management company are used. This fee allows the company to operate within the Free Trade Zone of Madeira.
- A minimum share capital of €5,000 which must be fully paid up.
- Foreign company names are permitted, but the principal activity of the company must be described in Portuguese.
The services of a legal representative are required in Madeira, as is a registered office.
A particular form of holding company, known as an SGPS, may take advantage of the EU directive eliminating withholding taxes between parent and subsidiary companies within the EU. For SGPS companies licensed prior to 31st December 2000, these dividends are exempt from tax. For SGPS companies licensed after 31st December 2000 the dividends received will be subject to a low-level of corporate tax. There is no withholding tax on dividends paid out of the SGPS.
Madeira has access to the numerous double tax treaties negotiated by Portugal.
For more detailed information on this jurisdiction, click on the link below.
Madeira Jurisdiction Note