Two tax frameworks
Standard regional regime. Every Madeiran company starts here. The corporate income tax rate is 13.3%, well below mainland Portugal's 19%, with no municipal surtax in Funchal and most other municipalities.
MIBC preferential regime. Companies licensed by SDM pay 5% corporate income tax, with full withholding tax exemptions on dividends, interest and royalties to non-resident shareholders, plus an 80% cut in stamp duty and property taxes. The trade-off is genuine economic substance: either one to five local employees plus a €75,000 investment in fixed assets within the first two years, or six or more employees with no investment requirement.
Legal forms
Foreign investors in Madeira can use the legal forms provided for by Portuguese company law. The choice depends on the number of members, the ownership structure, the nature of the business, plans to raise capital and corporate governance requirements.
Sociedade por Quotas — Lda. (Private Limited Company)
The Sociedade por Quotas, or Lda., is one of the most common business forms in Portugal. It is the Portuguese equivalent of a private limited liability company. Together with its single-member version, it is the most common form for small businesses.
Share capital is set in the articles of association, with a minimum nominal value of €1 per quota.
This form is widely used for international trade, consulting services, IT activity, operating companies and family businesses.
Key features:
- share capital divided into members’ quotas;
- members’ liability for company debts is, as a rule, limited;
- a flexible management structure;
- foreign individuals and companies can be members;
- no general requirement for significant minimum capital for ordinary activities.
An Lda. suits most small and medium-sized international projects.
Sociedade Unipessoal por Quotas — Unipessoal Lda. (Single-Member Private Limited Company)
A Unipessoal Lda. is a type of limited liability company with a single member. The sole owner can be an individual or a company, subject to the applicable corporate restrictions.
Capital rules are the same as for the Lda.: a minimum nominal value of €1.
This form is popular with sole entrepreneurs, founders of technology projects and foreign investors who need a European operating company without bringing in other partners.
A Unipessoal Lda. is a separate legal entity. It lets the owner structure the business using the standard mechanisms of Portuguese company law.
Sociedade Anónima — S.A. (Public Limited Company)
The S.A., a joint-stock company, is designed mainly for projects with a more complex capital structure.
It can suit large investment projects, corporate groups, businesses with several investors or companies planning to raise further capital.
The standard minimum share capital for an S.A. is €50,000. Shares transfer freely.
Compared with an Lda., a joint-stock structure involves more formal corporate governance and additional administrative requirements. Annual audit by a registered statutory auditor is mandatory. A board is required, although a single director is enough where share capital does not exceed €200,000.
Holding companies — SGPS
Sociedades Gestoras de Participações Sociais (SGPS) hold a special place in Portuguese corporate practice. These structures focus on managing shareholdings in other companies.
An SGPS can be used to own subsidiaries, consolidate investment assets, organise international groups of companies and manage capital strategically.
When setting up a holding company, you also need to consider the rules on taxing dividends, capital gains and international payments, and whether the Participation Exemption regime applies.
Trust (MIBC only) Madeira is the only jurisdiction in Portugal that allows trust incorporation. The settlor sets the governing law and can change it at any time. Income paid to non-resident or MIBC-licensed beneficiaries is fully exempt from Portuguese tax. Mainly used for wealth structuring, asset protection and cross-border succession.
Branch (Sucursal) An extension of a foreign parent, not a separate legal person, so the parent keeps full liability. Used where setting up a separate entity is not warranted. A branch must keep legal representation in Madeira.
Registration
MIBC companies are incorporated through the Madeira Free Zone Private Notary Office, which handles public deeds with full exemption from standard notarial fees and stamp duty, a practical cost advantage specific to the MIBC. MadeiraLab runs the whole process: name approval, articles of association, registry filings, tax registration and the MIBC licence application with SDM. Standard incorporation takes five to ten business days, and MIBC licensing adds two to four weeks depending on SDM processing.
Companies formed elsewhere can move their registered office to Madeira through redomiciliation, keeping their legal history and banking relationships while accessing the MIBC framework going forward.
Contact MadeiraLab for a confidential assessment of the right structure for your goals.