Madeira International Business Center (IBC)

The Madeira International Business Center (IBC) offers a compelling suite of advantages, combining tax incentives with operational benefits, all within a highly regulated and carefully monitored economic environment. It focuses on three key sectors: International Services, the Industrial Free Trade Zone, and the MAR – Madeira International Ship Registry.

Located in the Madeira Archipelago, an autonomous region of Portugal and part of the European Union, the IBC enjoys a strategic position on the Atlantic coast, 900 km southwest of Lisbon. The capital, Funchal, is lively and bustling, hosting approximately 105,000 residents, while the total population of Madeira reaches around 254,000, characterized by its stable political and social framework, supported by autonomous legislative and executive branches.

Madeira’s appeal as a destination for business investment is significantly enhanced by its International Business Center. The IBC is a magnet for international investors, celebrated by the European Union for playing a vital role in the economic upliftment of the island.

Embedded within the Portuguese and European legal frameworks, the Madeira International Business Center is identified as a prime location for investments. It is lauded by the OECD as a benchmark business center, operating under strict regulatory standards.

The income tax rate in Madeira IBC is 5%. The EU approved the extension of this regime until 2033, which allows long-term planning of your business. Please note that in addition to the reduction in corporate tax to 5% on the annual profit generated by the Company from activities conducted exclusively with non-resident entities or other companies operating within the scope of the IBC of Madeira, there are no limitations on engaging in business activities with Portuguese companies. Such activities will be subject to the standard corporate tax rate in Madeira, which currently stands at 14%.

Furthermore, double taxation avoidance agreements are available with over 70 countries worldwide. This means that, for instance, you can benefit from exemptions on dividends and capital gains received and paid within the EU (European Directives) and with all countries that have active agreements in place.

Moreover, a significant benefit lies in the approval of a personal exemption from dividend taxation for individual direct shareholders in the distribution of dividends, provided that they are not residents of Portugal and do not have a tax presence there.

To qualify for a tax reduction, companies registered in Madeira must comply with the pre-established requirements:

• Creation of one to five jobs (residents of Madeira) in the first 6 months of operation and undertake an investment of at least €75.000 in the acquisition of fixed assets in Madeira, tangible or intangible, in the first two years of operation;

Or:

• Creation of six or more jobs (residents of Madeira) in the first 6 months of operation.

The discounted corporate tax rates are subject to a cap on the yearly taxable income, determined by the total number of employees, in the following manner: