EnglishSomewhere in the heart of the Atlantic Ocean, about an hour and a half from the Portuguese capital lies an island unique in beauty. The island of Madeira is an autonomous region under the police of Portugal endowed with political and administrative autonomy through the law of the Autonomous Region of Madeira, which is enshrined in the Constitution of the Portuguese Republic. Along with tourism and wine, Madeira’s economy is mainly based on business activities, especially as a result of the establishment of Madeira’s International Business Center (MIBC) in the early 1980s. The MIBC was created to be an attraction for international investors, offering competitive operating costs due to its efficient tax regime, which accounts for about 21% of Madeira’s gross domestic product. In 2020, the general corporate tax rate in Portugal was 21%. Under the Madeira tax regime, the proceeds from operations with authorized entities in the free trade area or from non-Portuguese territories were taxed at a rate of only 5%. It is important to emphasize that also in the development of activities with Portuguese resident companies the corporate tax rate was lower, with 14.7% in Madeira compared to 20% in the rest of the country. Under Section 36º-A of the Tax Incentives Act, originally written in Portuguese, entities may incorporate Madeira’s special tax regime by the end of 2021, and the reduced corporate tax rate benefit will be granted by the end of 2027. Today, Madeira has 2,434 companies in its territory. In 2020, 127 new entities were registered in the MIBC, corresponding to a growth of 5.5%. This demonstrates how the benefits offered by the special tax regime make an attractive option for those considering investing abroad. Want to know more about Madeira’s unique tax regime? We recommend visiting the Free Trade Zone website https://www.ibc-madeira.com/en/tax-benefits.html If there are more questions of course feel free to contact us.
