Companies operating in the international tech sector, such as e-business, e-commerce, telecommunications, or software development within Madeira’s IBC, benefit from an attractive tax framework. This includes a notably low corporate tax rate of 5% and an exemption from withholding tax on payments to non-residents of Portugal.

Infrastructures for ICTs and eBusiness

Madeira is home to a range of hosting service providers, including the notable CTM Data Center by MEO, a state-of-the-art facility dedicated to housing telecommunications and data equipment like Data Centres and Internet Service Providers. This Data Center is equipped with continuous power supply, fire and intrusion detection systems, specialized climate control, secure access management, a redundant telecom network, and dedicated technical support staff.

The island serves as a pivotal connection point for numerous global submarine optical cables through the Submarine Cable Station located within the Data Centre. This setup ensures seamless interconnectivity with both national and international SDH networks, offering substantial benefits in quality, cost, bandwidth, and scalability.

Additionally, Madeira features an Internet Gateway through Marconi Internet Direct (MID), providing uncontended international Internet access. This service is bolstered by connectivity spread across three Points of Presence (PoPs) in London, Amsterdam, and Paris, alongside peering agreements with numerous leading international ISPs and direct IP transit routes to Europe and the USA.

With comprehensive fiber optic coverage and the completion of 5G network deployment across all municipalities by June 2022, Madeira boasts the distinction of being the first region in Portugal to offer full 5G service. This advancement supports ultra-low latency and enhanced speeds, fostering the establishment of tech companies within Madeira’s IBC and encouraging the growth of the digital nomad community on the island.

Regional Technology and Educational Institutions.

In recent years, Madeira has seen the establishment of research and development (R&D) and technology support organizations aimed at fostering a local technology ecosystem. These initiatives also aim to contribute to the European Union’s digital transition goals and, through collaboration with the local university, facilitate the development of a skilled workforce in the technology sector.

ARDITI, the regional agency for R&D and technological innovation, oversees multiple research units such as the ITI – Interactive Technology Institute and MARE – The Sea and Environmental Science Centre. It plays a pivotal role in supporting and financing local research and scientific endeavors.

StartUp Madeira acts as a catalyst for local entrepreneurial projects with a high innovation quotient, serving both as an incubator and co-working space, and is recognized with a European Business Network certification.

The University of Madeira (Uma) provides a range of ICT-related degree programs, including Computer Networks and Systems; Information Systems Technology and Programming; Telecommunications; and Computer Engineering, among others. These programs are part of a broader educational offering that also includes degrees in Business and Administration and Accounting and Taxation.

Furthermore, the Carnegie Mellon Portugal program operates on a national scale, collaborating with various universities (including Uma), R&D centers, and companies. Its goal is to position Portugal as a leader in innovation within specific ICT domains.

European Union Grants and Regional Support.

The European Union’s funding schemes for Madeira, spanning from 2020 to 2030, are overseen by IDERAM – the Business Development Institute, focusing on specific categories. Among these, there are incentives specially designed to promote research and development, innovation, and the integration of sophisticated technologies.

The Tech Ecosystem in Madeira

Presently, around 200 ICT sector companies are active within Madeira’s International Business Center (IBC).

Their operations span a wide range of fields including e-commerce, audiovisual content creation, telecommunications, software and application development, digital marketing, VOIP (Voice Over Internet Protocol) services, CMOS (Complementary Metal-Oxide-Semiconductor) image sensor technologies, semiconductor manufacturing, chip design, and IT consultancy services, to name a few.

These companies hail from a variety of countries, showcasing a global mix of origins such as South Africa, Germany, Austria, Belgium, Brazil, Ecuador, Spain, the United States, Finland, France, Israel, the Netherlands, Norway, and the United Kingdom, among others.

To access the favorable tax conditions offered by the Madeira International Business Centre, companies need to undergo a licensing procedure.

License Application

A dual-copy application, written in Portuguese, must be submitted to S.D.M., the designated operator for the IBC of Madeira. This application should be directed to the Regional Government of Madeira on behalf of either an already established company, whether within Portugal or internationally, or a company that is to be set up. Licensing can also extend to branches of existing companies.

Applications for licenses should adhere to the guidelines set out in articles 18 and 19 of the regulation sanctioned by Regional Regulatory Decree no. 21/87/M, dated September 5, and Article 36-A of the Tax Incentives Statute.

The application must comprehensively detail the intended business activities, including:

• The company’s name and address;
• The specific activities planned and the corresponding NACE code (the European system for classifying economic activities);
• The projected total investment;
• The expected number of jobs to be created.

Upon approval, the license is officially awarded to the company following the provision of evidence for the company’s establishment and registration. All supporting documentation for the license application must be accurately translated into Portuguese and officially legalized.

Applicable Fees

Companies authorized to conduct business within the Madeira IBC are required to pay both licensing and yearly fees, as stipulated by Order No. 222/99, issued on December 28th by the Madeira Regional Government.

Firms focusing on services, specifically those registered as Lda. and engaged in telecommunications or e-business, will incur a one-time application fee of €1,000 and an annual maintenance fee of €1,800.

Company Formation

Within the framework of Portuguese law, investors commonly opt for two main types of legal entities: the share company (S.A.) and the private limited company (Lda.) along with the option of establishing a branch, especially for operations within Madeira’s IBC framework.

A private limited company (Lda.) can be established by a single shareholder. Lda requires at least one manager, who is legally empowered to manage the company.

A share company (S.A.) can also be founded by a single shareholder, but requires a minimum capital of €50,000. The governance of such companies is overseen by a board of directors, the size of which is determined by the company’s bylaws. For companies with share capital under €200,000, a single director suffices.

Branches are distinguished by the absence of a minimum capital requirement.

Shareholders in companies within the IBC of Madeira can be either individuals or corporate entities, from within Portugal or abroad. Under Portuguese law, these shareholders have the option to manage the company directly or appoint a separate individual as the manager.

Companies must have their principal office in Madeira, while branches must have legal representation on the island.

The formation process for companies in Madeira’s IBC involves the Private Deeds Registry Office, which offers complete relief from registration fees and notary expenses. Prior to establishment, approval for the company name and a provisional ID must be obtained from the National Company Registrar (RNPC), with the formal public deed to be executed as scheduled by the notary.