Madeira - Key Characteristics

Madeira is the name of an archipelago of islands, belonging to Portugal, including the island of the same name, Porto Santo, Desertas and Selvagens. It is situated in the North Atlantic, about 700 kilometres from the African coast and 1,000 kilometres from Lisbon, sharing approximately the same latitude as Casablanca and Gibraltar.

The island of Madeira is the largest of the group and is one of Europe's most popular holiday destinations, where its outstanding natural beauty more than compensates for its lack of beaches.

Of the total population of roughly 270,000, over half of these live in Funchal, which is both Madeira's principal town and main port. Many of Funchal's fine old buildings have survived, thereby preserving the charm of the old town.

The island is believed to have been discovered by Joao Goncalves Zarco sailing under orders from Prince Henry the Navigator. The Prince had Cypriot and Cretan vines planted on the island as well as sugar cane from Sicily. The resulting fine quality wine and sugar attracted merchants from all over Europe and this was the trade which first made Madeira famous.

It was the British, however, who were the main developers of Madeira, making it a regular stopping point en route to the Cape of Good Hope and India. Military personnel and their families returning from long missions in the tropics would stay for a few weeks in Madeira to rest and acclimatise before returning to Britain.

During the Napoleonic Wars the British occupied Madeira for nine years and many made their homes there. British connections are still strong amongst Madeira's trading houses.

Law

Madeira is an autonomous region of Portugal with its own Government and legislative assembly. The assembly may not, however, overrule decisions made by the Lisbon Government or undermine political unity with Portugal.

Madeira is essentially a civil law jurisdiction whose private law, including inheritance and succession law, is largely derived from, and inspired by, the Napoleonic code.

European Union/Currency

As Madeira is part of Portugal, it is classed as a full member of the European Community.  Therefore, the currency used in Madeira, is the Euro.

Taxation

Individuals who are resident in Madeira for more than six months in any tax year are liable to Portuguese income tax on their worldwide income. A non-resident is liable to Portuguese taxation on certain types of income derived from sources within Portugal.

For companies incorporated under the International Business Centre Legislation certain taxes are not levied by the island, these include:

NO capital gains tax (only for companies licensed prior to 2001)

• NO property transfer tax
• NO investment income tax
• NO stamp duty
• NO death or inheritance taxes

In addition Portuguese companies registered in the International Business Centre of Madeira have access to the EU Parent-Subsidiary Directive for dividends and to the EU Interest and Royalties Directive for interest and royalty payments. 

Corporation Tax and VAT

Companies registered within the International Business Centre of Madeira enjoy low rates of corporation tax guaranteed until 2020. The rates that apply to companies incorporated in the following years are: 

Companies licensed prior to 31 December 2000 will continue to enjoy a total exemption from corporation tax until the end of 2011. From the year 2012 the new tax regime will also apply to these companies.

Full details of the rates and conditions are available from any Dixcart office.

With VAT at 16% Madeira is an ideal location for a data centre providing digital services to Europe. DixcartNet.pt is the Dixcart Data Centre in Madeira.