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Madeira: Offshore Business Sectors

Introduction

With the active assistance of the Portuguese Government, and the compliance of the EU, the Madeiran authorities have constructed an offshore sector known as the International Business Centre (MIBC). This consists of four sections:

  • The Free Trade Zone, which came first, and was intended for use by manufacturing companies;
  • The International Services Centre, which has no exact location, but allows service companies associated with the Free Trade Zone to establish themselves anywhere in Madeira and take advantage of the Free Trade Zone's exemptions;
  • The Offshore Financial Centre, which provides an equivalent regime for banks, trust management and other financial sector companies; and
  • The Madeira Shipping Register, which provides for ships and shipping companies.

The MIBC regime lapsed in 2001 as regards new entrants, but at the end of 2002 the EU approved a new scheme, which does not however apply to financial services companies.

Companies that, between January 1, 2003 and December 31, 2006, applied for and obtain a proper licence to carry out their activities within the MIBC benefitted from a reduced rate of corporate tax of 1% in 2003-2004, 2% in 2005-2006 and 3% in 2007-2011. However, companies had to create a certain number of permanent jobs. Companies that created more than five jobs had access to the regime without further conditions. Those that created between one and five jobs were eligible only if they undertook a minimum investment of EUR 75,000 during the first two years of operations.

In June 2007, the EU permitted an extension of the preferential tax regime for companies setting up in the Free Trade Zone. This allows new companies licensed to carry on business there between January 1, 2007 and December 31, 2013 to benefit from a reduced tax rate of 3% in 2007-2009, 4% in 2010-2012 and 5% in 2013-2020.

This section of the Lowtax.net site describes the most important types of offshore business activity carried out from Madeira.

 

 

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