Tax advantages

Companies registered in Madeira, as one of the autonomous regions of Portugal, have a base corporate income tax rate of 14.7%.

In turn, all companies licensed to operate within the Madeira International Business Center (IBCM) are entitled to additional tax benefits, namely:

1. Corporate income tax rate of 5%.
2. No tax on capital gains and dividends.
3. Non-resident individual and corporate shareholders of IBCM companies are exempt from dividend tax, provided that they are not residents of jurisdictions with more favorable tax climate related to “tax havens”.
4. Corporate shareholders – citizens of Portugal are also exempt from dividend tax if they own a share of at least 10% for 12 consecutive months.
5. Capital gains tax exemption if the shareholder is not a tax haven resident.
6. No tax on interest, royalties and services worldwide.
7. Validity of all double taxation treaties.
8. Companies licensed by IBCM will also receive 80% exemption from municipal property tax and property transfer tax, regional and municipal income tax, and any other local taxes.

Organizations wishing to enjoy the IBCM tax benefits must meet one of the following requirements:

1. Creation of one to five jobs in the first six months of activity and the implementation of a minimum investment of 75,000 euros in the acquisition of tangible or intangible fixed assets during the first two years of activity;
2. Creation of six or more jobs during the first six months of activity.
   

The specified tax rate applies to certain amounts of annual taxable income, which depends on the number of jobs created by the company in Madeira:

2.73 million euros – creation of 1 to 2 jobs;

3.55 million euros – creation of 3 to 5 jobs;

€ 21.87 million – creation of 6 to 30 jobs;

35.54 million – to create from 31 to 50 jobs;

54.68 million euros – creation of 51 to 100 jobs;

205.5 million euros – creation of more than 100 jobs.

Tax credits are also subject to one of the following annual maximum limits:

20.1% of the gross value added received annually, or
30.1% of annual labor costs, or
15.1% of the annual turnover.