Home
       
 

Madeira

 
   

Executive Summary
Madeira is a Portuguese archipelago located in the Atlantic Ocean, which covers an area of 828 sq km. Only Madeira Island and Porto Santo Island are inhabited islands of the jurisdictions. Madeira is an all-year-round holiday resort, it is known for its wine, flowers and a New Year’s Eve biggest fireworks, according to the Guinness World Records book. Madeira has an important strategic role due to its geographic location, being situated between Europe and the Caribbean Islands.

Funchal is the capital of Madeira which has an important harbor. Portuguese is the official language of the autonomous region.  With the help of establishing of Free Zone, Madeira has created a favourable business environment for small and medium enterprises and general development of industry, infrastructure and international trade. Services sector makes the largest contribution to the GDP, while the importance and contributions derived from agricultural market segment have been declining over the last years. The largest local industries are food, wine and construction. Tourism is another developed sphere in Madeira, which contributes approximately 20% to the GDP. The EU citizens and people from the Schengen Treaty area can enter Madeira with no restrictions.

The Euro (EUR) is used on the territory of Madeira.

Geography
Madeira lies 580 km off the coast of Africa, culturally and ethnically belonging to Portugal. Madeira Island is the largest territory of the archipelago of the volcanic origin, and the Cabo Girao cliff is famous for being the highest in Europe. It has a beautiful landscape with mountainous zones which ensure a pleasant climate due to the altitude. However, weather and climate within different islands can vary significantly. Generally, climate of Madeira is classified as oceanic subtropical with an average annual temperature being approximately 20 degrees C.

Madeira has a rich biodiversity, which represents a mix of Mediterranean, African, Australian and American flora and fauna.

Map, Flag and Coat of Arm


Types of Company

Private Limited Liability Company

At least one shareholder is an obligatory requirement, in order to establish this type of company, the minimum capital of which is EUR 5,000. Bearer shares are not allowed and there should be at least one director who manages a company’s activities. Nominees are permitted.

Stock Corporation (SA)
Stock Corporation or Sociedade Anonima must have at least five shareholders and its minimum share capital is set to EUR 50,000.

In case such a company’s name ends with “Sociedade Unipersonal” it may have only one shareholder if he is a nominee, and if such a company is not the only shareholder in a subsidiary.

When a share capital is fully paid, bearer shares are allowed. Shares of no par value may not be issued. In case a share capital is less than Eur 200,000, only one director can be appointed, while those companies the share capital of which exceed EUR 200,000, any number of director is allowed. Nominees are permitted.

Holding Company
This is a structure which holds at least 10% of the voting share capital of another corporate entity in which it has a participating shareholding for at least 12 months. Both, a Private Limited Liability Company and a Stock Corporation can become a holding company, and in such a case their accounts should be audited and filed on the annual basis. A holding company’s name should end with “SGPS” (“Sociedade Gestora de Participacoes Sociais”). A Holding company may not buy its own shares, make loans to companies in which it does not have any part of share capital, and it may not conduct any activity apart from holding shares of other corporate entities.

Mixed Holding Company
This type of company must conduct a combined type of activities at all times – trading and holding shares of other corporate bodies. However, it may not be involved in trading carried by other financial institutions, which require a specific license. Either a Private Limited Liability Company or a Stock Corporation can become a Mixed Holding Company.

Trust
Following Portuguese law and being a civil law jurisdiction, Madeira did not have the same trust as common law jurisdictions do. However, along with the establishment of the Free Trade Zone, also offshore trusts were launched. A trust property and all the income derived by a trust must be located outside Portugal at all times. If a trust lasts for more than one year, it must be registered within the Free Trade Zone, but the beneficiaries need not be disclosed to the authorities. Only licensed Stock Corporations and equivalent local branches of foreign companies can act as trustees. Trusts are not subject to tax and to exchange controls. Redomiciliation may occur without a specific authorization.

Taxation
A tax year coincides with a calendar year, starting on 1st January and ending on 31st December of every year.

Personal

Personal taxation in Madeira follows Portuguese taxation regime. A person is considered to be resident for taxation purposes if he is physically present within Madeira for at least 183 days during a tax year, or if an individual has his permanent residence, meaning that he is domiciled within the jurisdiction. Residents are liable to pay taxes on their world-wide income derived from employment, self-employment, commercial profits, capital gains, agricultural activities, rents, pensions and several other sources. Non-residents are liable to pay income tax only on income derived from activities conducted in the jurisdiction and Portugal, including income from investments, pensions, employment, commercial activities, scientific artistic or technical services. After having applied various deductions, income tax is levied on a scalable basis, depending on the total income of an individual in a tax year, starting from 10.5% and up to 42%. Tax rates in Madeira are lower than those in Portugal.

Social Security contributions are payable by an employer and employee. Stamp duty is applied to various transactions at different rates depending on a nature of a transaction. Property tax is applied on a property purchase deals on some occasions. Madeira is a member of the EU VAT scheme, but its standard VAT rate is 14%, which is significantly lower than VAT rates of other EU countries.

Corporate
A company is resident in Madeira for tax purposes if it is actively managed from within the jurisdiction or in case its head office is located on the territory of the jurisdiction. Resident companies are taxed on their world-wide income, while non-resident corporate entities are liable to pay taxes only on income derived from activities conducted in the jurisdiction.

A corporate income tax is set at a rate of 25%, plus in average 1.5% of a local municipal tax. Non-resident companies are exempted from paying the municipal tax. Withholding tax is levied at following rates: 20% on interests and dividends, 15% on royalties, rentals and commissions.

 
Back
 
 
Global business gate Global internet marketing consultations Publisher Global networks