Industrial Free Trade Zone: Manufacturing, Assembly, and Storage

Madeira currently stands as one of the best destinations within the European Union for industrial and distribution ventures, capitalizing on the operational and tax benefits provided by the Industrial Free Trade Zone of Madeira (IFTZ). This industrial park is seamlessly integrated into the legal structure of the Madeira International Business Centre (IBC).

The IFTZ presents appealing tax and customs duty regimes, complemented by competitive operational expenses and top-notch support services and infrastructure. These factors collectively render the IFTZ a highly sought-after destination for establishing regional, national, and international operations.

Industrial Free Trade Zone Activities

While all manufacturing and warehousing activities can leverage the operational and tax conditions available, the Industrial Free Trade Zone (IFTZ) holds particular appeal for the following sectors:

• Logistics and distribution: Situated strategically in the Atlantic Ocean and within the island itself, the IFTZ offers an ideal location for distribution activities. Madeira boasts regular sea cargo connections with Lisbon twice a week, with New York weekly, and with European ports such as Bremen, Hamburg, Antwerp, Rotterdam, and London every fortnight. The international airport provides several daily flights to Lisbon and other European cities like London and Paris. Moreover, the IFTZ’s proximity to the main commercial port, alongside the island’s primary motorway and just 8 km from Madeira’s international airport, makes it a logical choice for warehousing and distribution activities serving the entire island.
• Natural products: With its favorable climate and soil conditions, Madeira offers excellent opportunities for the cultivation and supply of medicinal plants. The Regional Government has prioritized the development of organic agriculture, supported by dedicated services such as natural parks, specialized laboratories, and a local university with expertise in biology.
• Tourism-related goods: Madeira’s significant tourist influx of over 1,000,000 visitors annually presents attractive marketing opportunities for various products catering to the hotel industry. Items like shampoos, soaps, bakery and pastry goods, as well as paper and plastic products, are in high demand among local hotels.
• High-tech production: Additionally, the IFTZ provides an ideal environment for high-tech manufacturing activities. With its modern infrastructure and supportive regulatory framework, companies engaged in electronics, telecommunications, and other high-tech industries can thrive within the zone.

These examples illustrate how manufacturing and logistical companies can benefit from the advantages provided by the IFTZ. With more than 50 companies of diverse origins currently operating in or preparing to set up within the zone, activities range from fish-processing and food products to cosmetics, cleaning products, and electronics.

Setting up Procedures and Requirements

Various types of companies and corporate entities outlined in Portuguese company law, including branches, agencies, or offices, as envisaged, may establish operations in the IFTZ, provided they adhere to the activities outlined in Article 36º-A of the Portuguese Tax Incentives Statute and meet the defined conditions.

Application for License

An official application, in Portuguese, to operate within the Industrial Free Trade Zone must be submitted in duplicate to S.D.M., addressed to the Regional Government of Madeira. The license may be sought by an existing company, whether in Portugal or abroad, a branch, or a company yet to be incorporated. For newly formed companies, incorporation procedures mirror those applicable to any other Portuguese company. To expedite the process, a Private Commercial Registry has been established for this purpose. The license application must comply with Article 17º of the Regulation ratified by the Regional Regulatory Decree no. 21/87/M, dated September 5th, and Article 36º-A of the Portuguese Tax Incentives Statute. It should specify:

• the economic activity’s statistical classification (NACE code) to be undertaken in the IFTZ;
• the total investment envisaged;
• and the number of jobs to be created.

Establishment Process

Simultaneously with the license application, the applicant must initiate the industrial licensing process. This involves classifying the intended activity according to Portuguese law, based on its complexity. A descriptive memorandum and statement of reasons are typically submitted, containing details such as:

• Company name and address or registered office;
• Activity description;
• Total investment and financing sources;
• Desired installation and operation period;
• Indication of the number of jobs to be created;
• Additional information on processes, waste treatment, water and energy usage, architectural plans, equipment, and safety measures.

Companies may opt to establish operations in a pre-built S.D.M. module or pavilion, or on an infrastructured plot with access to essential utilities. To secure the chosen area or building in the IFTZ, formal reservation may be requested from S.D.M., limited to a two-month period.

Upon successful application, the license is granted upon the applicant’s proof of company formation and registration. Supporting documents must be translated into Portuguese and legalized. The license is valid for a minimum of five years.

Following license issuance, the user must provide a guarantee to S.D.M. to fulfill the obligations outlined. The value of the guarantee is determined by the Cabinet of the Regional Secretary for Finance and Public Administration.

Applicable Fees

Companies conducting operations within the IFTZ will incur a license fee of 1,000 euros, along with an annual operating fee. This fee will be calculated based on the area needed and paid upon issuance of the license for the initial year and subsequently in January of each year. For an infrastructured platform or plot, the applicable amount will be determined using the following scale: