Madeira International Business Centre (MIBC).

Madeira in the European and international corporate system

Legal status of the autonomous region

Madeira is an autonomous region of the Portuguese Republic. It has its own regional governing bodies and a degree of financial and administrative autonomy.

This autonomy allows the region to apply special economic development tools, including differentiated rates for certain taxes and investment incentives.

At the same time, companies registered in Madeira are Portuguese legal entities. Their activity is governed by Portuguese national law and the applicable regulations of the European Union.

The advantages of a European jurisdiction

This legal position is fundamental for international business. Unlike offshore territories, Madeira does not create a separate corporate system outside common European regulation. Companies set up here are integrated into the EU’s legal, tax and economic space.

In particular, Madeiran companies can benefit from:

• European law on freedom of establishment and freedom to provide services;
• access to the EU single market, subject to sector-specific requirements;
• Portugal’s international double taxation treaties;
• European mechanisms protecting investment and intellectual property;
• Portuguese banking and payment infrastructure;
• company law that provides limited liability for members and internationally recognised corporate governance mechanisms.

Opportunities for foreign investors

For an investor, this means being able to structure international operations through a European company with a clear legal status and predictable corporate administration procedures.

Key tax advantages

• 5% corporate income tax (IRC), one of the lowest rates in the EU
• 0% withholding tax on dividends, interest and royalties paid to non-resident shareholders
• 0% capital gains tax on qualifying share disposals (Participation Exemption)
• 80% exemption on stamp duty, property tax (IMI) and property transfer tax (IMT)
• No municipal surtax in most Madeiran municipalities, including Funchal
• Access to Portugal's network of 79+ double taxation treaties
• Full use of the EU Parent-Subsidiary and Interest & Royalties Directives
• The only jurisdiction in Portugal where trusts can be incorporated

Standard regime vs MIBC

Standard and preferential tax regimes

One of Madeira’s key attractions is the choice between two regimes. The first is the ordinary Portuguese corporate tax regime, applied at regional rates. The second is the special MIBC regime.

In 2026 the standard IRC corporate tax rate in Madeira is 13.3%. The general rate in mainland Portugal is 19%.

Companies eligible for the MIBC regime can apply a 5% rate to qualifying profits from the relevant international operations.

The final tax burden, however, depends on a combination of factors. These include the nature of the activity, where counterparties are located, the income structure, headcount, the limits that apply to the benefit and any additional taxes.

A worked example of the tax burden

Take a hypothetical company that provides international consulting services and earns taxable profit of €500,000 a year.

This calculation shows the regime’s potential tax efficiency. It does not account for staff costs, the required corporate presence or administrative support. That said, these costs are generally lower than the economic benefit gained.

In practice, tax efficiency should be assessed in a full financial model. That model should cover not only the tax rate but also the cost of maintaining the whole corporate structure.

Which activities suit the MIBC

The International Business Centre is aimed mainly at companies that do business with foreign counterparties. Depending on the nature of the operations and the applicable requirements, the regime may suit the following areas:

• International trade. Export and import operations, international supply, product distribution and trade intermediation.
• Information technology. Software development, technology solutions, SaaS products, digital platforms and certain types of IT consulting.
• Logistics and international transport. Certain types of transport, maritime and related activities.
• Professional services. International management, technical, organisational and business consulting.
• Intellectual property. Managing certain rights in intangible assets and commercialising intellectual property, subject to special tax restrictions.
• Holding activity. Owning shareholdings, managing investments and taking part in international groups of companies.
• Real estate investment and development
• Shipping and yacht ownership companies, via the MAR ship register
• Industrial and warehousing activities, via the Industrial Free Trade Zone

Pure financial services provided to third parties, specifically banking, insurance and brokerage, do not qualify for the 5% rate. Companies in these sectors can still incorporate in Madeira, but income from those activities is taxed at the standard rate.

Certain financial, investment, insurance and other regulated services need a separate analysis of whether they can be licensed. Having a company in the MIBC does not replace the special authorisations required by financial or sector regulators.

SGPS and holding structures

A common MIBC structure is the SGPS (Sociedade Gestora de Participações Sociais), a Portuguese holding company whose only statutory purpose is managing shareholdings in other companies. An SGPS can be set up as an Lda or an SA, and it can also provide services to, and in some cases lend to, its subsidiaries. Combined with Portugal's Participation Exemption, an MIBC-licensed SGPS can receive dividends and capital gains from EU and international subsidiaries largely free of Portuguese tax.

Holding activity

Madeira is of interest not only to operating companies but also to corporate groups making cross-border investments.

The Participation Exemption regime

Portuguese tax law provides mechanisms that, under certain conditions, exempt certain income from subsidiaries from corporate tax. In particular, the Participation Exemption regime can apply to qualifying dividends and capital gains.

International tax planning

In international structures, EU directives and Portugal’s double taxation treaties may also be relevant.

However, the tax outcome depends on many factors. These include the subsidiaries’ country of residence, how long the shareholdings are held, the size of the stake, genuine business purpose and whether specific anti-avoidance rules apply.

This is why designing a holding structure needs a comprehensive analysis covering company law, taxation and international control rules.

Legal framework and timeline

Legal basis and key features of the regime

The Madeira International Business Centre is a special legal and tax regime. It was created to attract foreign investment, develop the export of services, create jobs and diversify the regional economy.

It is based on Portuguese law and regulated within the European Union’s state aid framework.

The economic rationale for the regime lies in Madeira’s geography and its status as an EU Outermost Region. European law recognises the constraints such territories face: distance from continental markets, extra transport costs and a small domestic economy. As a result, Madeira is allowed to apply special measures to support investment and business activity.

Preferential corporate tax: 5%

The main advantage of the MIBC is a corporate income tax (IRC) rate of 5% on qualifying profits.

How long the tax benefits last

As of October 2026, the law allows licences to be granted under the current regime until 31 December 2026, with the related tax benefits applying until 31 December 2033.

It is important to understand that registering a company in Madeira does not automatically give the right to the 5% rate. To apply the preferential regime, a company must obtain a special licence, meet the required economic conditions and comply with the rules on real presence in the region.

Every company must keep its registered office in Madeira and start activity within six months of licensing (twelve months for shipping, aviation and industrial companies). The MIBC is managed by SDM (Sociedade de Desenvolvimento da Madeira S.A.) under the Madeira Regional Government and the Portuguese Tax and Customs Authority. MadeiraLab works directly with SDM on licensing and ongoing administration.

Substance requirements

Modern international tax planning focuses more and more on proving that companies carry out real economic activity. Madeira is no exception.

Using the preferential MIBC regime requires meeting certain economic substance requirements. Depending on the model chosen, the company must create jobs and, where required, make qualifying investments.

Job creation and investment requirements

There are two main models for accessing the tax benefits:

• Model one: create one to five jobs within the set time frame and invest at least €75,000 in qualifying tangible or intangible fixed assets during the first two years of activity.
• Model two: create six or more jobs, with no minimum investment threshold.

Organising real economic activity

The company’s activity must be organised so that its actual economic functions, staff and operations meet the legal requirements. Particular attention is paid to documenting the activity, the economic substance of transactions and the proper allocation of functions within an international group.

The approach to corporate presence should be decided before the company is registered. A well-designed structure aligns the tax model, staffing policy, investment plan and commercial goals of the business.

Tax transparency and international compliance

Madeira’s appeal today does not come from an absence of regulation. It comes from the ability to lawfully use the tax planning mechanisms provided by European and Portuguese law.

Corporate reporting and beneficial ownership disclosure

Companies registered here must comply with requirements on accounting records, tax returns, disclosure of beneficial owners and anti-money laundering.

International standards of tax control

Depending on the structure and activity, other rules may matter. These include international exchange of financial information, transfer pricing rules, controlled foreign company legislation and anti-abuse provisions on tax benefits.

International groups must also consider the consequences of the place of effective management, the existence of a permanent establishment and the tax residence of their members.

For legitimate businesses, meeting these requirements is an important factor in the long-term stability of the corporate structure.

Licensing fees

Fees are set by the Regional Government of Madeira. Service companies pay a €1,000 application fee and a €1,800 annual operating fee. SGPS (holding) companies pay the same application fee, with a €1,800 annual fee for the first year. From the second year, the annual fee is €1,800 plus 0.5% of the prior year's profit, with the first €1,000,000 of profit exempt and the variable part capped at €30,000.

The licensing window closes on 31 December 2026. 

Contact MadeiraLab to check whether the MIBC regime fits your structure.