IBCM

International Business Centre of Madeira

BUSINESS SECTORS

The IBCM includes three main business sectors available for investors and corporations, from Portugal and abroad::

       Industrial Free Trade Zone of Madeira (IFTZ), covered by the CIT rate of 5% with the possibility of an effective CIT rate of 2,5% (if some conditions are met).


          International Services covered by the CIT rate of 5% (e.g. trading, e-commerce, shareholding, consultancy, various services, maritime and air transport, intellectual property ownership and management, telecommunications).


    Madeira’s International Shipping Register – MAR

SUBSTANCE REQUIREMENTS

To benefit from the reduced CIT rate of 5% (with the possibility of a 50% reduction on the scope of the IFTZ or for the application of the Portuguese Patent Box regime), the companies licensed in the IBCM will have to comply with one of the following requirements:

    - Creation of one (which may be a director) to five jobs in the first six months of activity and undertake a minimum investment of 75,000 Euros in the acquisition of tangible or intangible fixed assets during the first two years of activity;

    - Creation of six or more jobs in the first six months of activity.

The 5% CIT rate is limited to the following ceilings (increased by 36.7% in IV regime in comparison with the previous one), according to the number of jobs held in each fiscal year:

Taxable income (millions of euros) Number of jobs
2.73 1 to 2
3.55 3 to 5
21.87 6 to 30
35.54 31 to 50
54.68 51 to 100
205.5 › 100

The taxable income that exceeds the limits itemized above is subject to normal taxation in force on the Madeira, currently a 21% CIT rate.

Additionally, the tax benefits are capped at one of the following amounts:

    - 20.1% of the annual gross value-added

    - 30.1% of the incurred annual cost of labour

    - 15.1% of annual turnover

The Director(s) of a company does not (do not) need to be resident in Portugal.

THE ADVANTAGES

In addition to a reduced CIT rate of 5% or 2,5% for companies in the Industrial Free Trade Zone (if some conditions are met), foreign shareholders of companies licensed in the IBCM, whether individuals or companies, are exempted from withholding tax on dividends and interest.

Portuguese resident shareholders, of companies in the IFTZ or sea and air transport companies also benefit from the exemptions described above, for dividends and interest.

The payment of services and royalties, by an IBCM company, to companies or individuals not resident in Portugal, is exempt from withholding tax. This exemption also applies to interest payments to foreign companies.

Even the profits that have exceeded the ceilings that limit the application of the reduced CIT rate of 5% benefit from the exemptions from withholding tax, when distributed.

The IBCM licensed companies benefit from a reduction of 80% in the following taxes:

    - stamp duty

    - municipal property tax

    - municipal property transfer tax

    - municipal and regional surtax

    - local taxes