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Madeira Island is an autonomous Portuguese territory which is of growing interest to international investors. According to many experts, Madeira is one of the best locations in the European Union for companies operating around the world.

The International Business Center, also known as the Madeira Free Trade Zone, has made a significant contribution to the island's economic growth - the main tool for attracting foreign investment.

The Center is a state aid program aimed at providing investors with a unique package of tax incentives. Unsurprisingly, the number of entrepreneurs seeking to register a company in Madeira is growing every year.

Madeira advantages

The jurisdiction has full access to the EU market, is part of the European monetary union, complies with all treaties and laws of the EU, has access to international conventions for the avoidance of double taxation, signed by Portugal with more than 50 countries. 

Crucially, Madeira is not included in any official list indicating the territories and regions related to "offshores", tax "havens", "harbors" etc., and has no claims from the EU, the OECD and other organizations to combat money laundering.

Types of business in Madeira

Businessmen who want to start a business on the Portuguese island of Madeira need to know that you can open companies of the following types:

  • PLC (SA).
  • Closed JSC (LDA).

Basic requirements for setting up a PLC in Madeira:

  1. To register an SA in Madeira, a company must have at least one shareholder. He can be both an individual and a legal entity, the residence does not matter.
  2. The amount of the authorized capital must be at least EUR 50,000.
  3. There must be an office in Madeira and at least 1 person hired staff.

Registration of a private JSC in Madeira, features:

  1. At least 1 shareholder (natural or legal person; resident of any country) is needed to establish an LDA in Madeira.
  2. The minimum capital is 1 EUR per shareholder.
  3. Only registered shares can be issued.
  4. No need to appoint a director.
  5. A registered office in Madeira with a staff of at least 1 person.

Madeira taxation

Taxes must be paid quarterly in advance payments.

  • VAT - 12%.
  • Income tax rate of 5% in respect of profits derived from operations carried out within the jurisdiction.

There is no tax on dividends paid by Madeira companies, provided the shareholders are not registered in jurisdictions that are blacklisted by Portugal. There is also no tax on interest and other types of payments on loans from shareholders, depreciation deductions made to shareholders in favor of the company.

Additional Information:

When planning to register a company in Madeira, it is worth knowing that submission of an annual audit report is mandatory. It is also necessary to appoint an auditor if a firm has an annual balance sheet of at least EUR 900,000 within two years after registration and has at least 50 employees. 

For advice on a company set up in Madeira, please contact the IQ Decision UK expert team.