Madeira Island was discovered in 1419, at the dawn of European maritime global expansion, by the Portuguese navigators João Gonçalves Zarco, Tristão Vaz Teixeira and Bartolomeu Perestrelo.
Madeira, which is officially designated the Autonomous Region of Madeira, is a Portuguese archipelago endowed with political and administrative autonomy, ruled by the Political Administrative Statute of the Autonomous Region of Madeira, contemplated in the Constitution of the Portuguese Republic. Since 1976, Madeira is an autonomous region of the Portuguese Republic with self-government and its own Legislative Assembly.
The Portuguese State is represented in the region by the Representative of the Republic for the Autonomous Region of Madeira. Madeira is an integral part of the European Union as an outermost region of the European Union, as per Article 299-2 of the European Union Treaty.
The archipelago lies in the Atlantic Ocean between 30° and 33° north latitude, 978 km southeast of Lisbon and at about 700 kilometres from the coast of Africa, at almost the same latitude as Casablanca, relatively close to the Strait of Gibraltar.
With a volcanic origin, the archipelago comprises the islands of Madeira, with 740.7 kilometers², Porto Santo (42.5 km²) and the inhabited islands of Desertas and Selvagens.
The main access to the Madeira Island is the International Airport of Funchal, to and from where arrive and depart scheduled flights from most of the major European capitals. The sea port of Funchal receives several ships, especially cruise ships, and is also served by a regular shipping line of passengers and goods, linking the port of Funchal to Portimão, Algarve, in mainland Portugal. The Desertas and Selvagens Islands are nature reserves.
Despite having a population density (about 300 inhab./km²) higher than the national average, and even than the EU average, 75% of the population of the island of Madeira only inhabits in 35% of the territory. The population is mainly concentrated on the south coast, where the city of Funchal, capital of the Autonomous Region of Madeira, is located, concentrating 45% of the population (130 000), with a population density of 1.500 inhab./km². Most of the hotels are also located in this area.
UMS, is a company duly licensed by the Madeira Secretary of Planning and Finance to operate as a management company within the scope of Madeira International Business Centre. We are specialized in providing consultancy services to investors wanting to take advantages of the Madeira IBC tax regime and incentives. For more than 10 years we have been offering a wide range of services related to Madeira IBC companies. In order to ensure that companies under our management attend to all statutory, accounting, auditing, administrative and legal requirements, UMS aggregates lawyers; accountants and auditors among its professional staff.
Designed administrative policies have also been developed to ensure the good standing of our management services and protect the client’s interests. We have a strong commitment towards the quality and efficiency of our services.
We also provide fiduciary services to our clients, namely:
- Nominee shareholders
- Local nominee directors
- Domiciliation of companies
- Appointment of local tax representatives
- Custody of corporate books
UMS United Management Services
United Management Services
Consultadoria Fiscal Lda.
Rua dos Aranhas, 53 - 3ºH
T (+351) 291 207 080
F (+351) 291 207 089
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A guide to Madeira
International Business Center
A guide to Madeira
International Ship Registry
A guide to Madeira
International Yacth Registry
THE INVESTMENT TAX CODE
NON REGULAR TAX RESIDENTS (NRTR)
The Investment Tax Code, created by Decree-Law n.249/2009, approved on September 23rd, implemented a Personal Income tax system for the non-regular resident, with the purpose of attracting to Portugal non resident professionals qualified for activities with high added value intellectual or industrial propriety or knowhow, as well as beneficiaries of pension schemes granted abroad.
The non-regular resident tax regime is available for citizens meeting the following conditions:
• Deemed resident on Portuguese territory for tax purposes, according to any of the criteria defined under Art. 16, paragraph 1 or 2 of the Portuguese Personal Income Tax Code (CIRS), in the year to be taxed as a non-regular resident. To be deemed resident in Portugal, the applicant must:
a) Have remaining in the Portuguese territory for more than 183 days, in a row, or interpolated;
b) Not having remaining for more than 183 days, possesses, at 31st of December of that year, an accommodation in such conditions that would lead to the assumption that it is kept and occupied as habitual residence
• Has not been deemed resident on Portuguese territory during the five years prior to the year pretended to be taxed as a non-regular resident.
Request to the tax authorities the statute of non regular tax resident on the year the non regular tax residence occurs, or, before the 31st of March of the following year.
NRTR TAX BENEFITS
PORTUGUESE INCOME SOURCE
A citizen deemed non-regular resident has the right to be taxed for a period of 10 consecutive years, from the year of the registration as a resident on Portuguese territory and as long as continues to be deemed resident in each of the 10 years, at a reduced individual tax income rate of 20% in relation to the income obtained in Portugal as a result of value added activities performed in Portugal. The right to be taxed according to the non-regular resident tax regime in each year of the above mentioned period depends on the fulfillment of the condition of being deemed resident on Portuguese territory. Whenever the citizen has not benefited from right to be taxed according to the tax regime defined for non-regular residents in one or more years of that 10 years period, still may benefit again from that same right in any of the remaining years of that period, provided the citizen still has a resident status for income tax purposes.
The reduced special tax rate of 20% is only applicable to the Net income of category A (employment) and B (self-employment) obtained from the high added value activities, of scientific, artistic or technical nature mentioned above, obtained by non regular residents on Portuguese territory.
NON PORTUGUESE INCOME SOURCE
The tax treatment for the non Portuguese income source depends on the type of income.
1. Category A income (employment)
The exemption method is applied to category A income obtained abroad by non-regular residents on Portuguese territory, provided one of the conditions is accomplished:
a) Person taxed by the source State (Nation), according to the convention to eliminate double taxation entered into by Portugal and the source State (Nation); or
b) They can be taxed in another country, in cases where the convention to eliminate double taxation has not been held, as long as the income obtained is not considered to have been obtained in Portuguese territory, according to Art. 18, paragraph 1 of the Personal Income Tax (IRS) Code.
2. Income in category B (Self Employment), E (Capital Income), F (Real State Income) and G (Increase in Wealth)
Income in category B (Self Employment), obtained through high added value rendering of services of a scientific, artistic or technical nature, or from intellectual or industrial property, as well as, from providing information regarding an experiment carried out in the commercial, industrial or scientific areas, and those in category E, F and G, obtained abroad by non-regular residents, are exempt if alternatively:
a) They are taxed by the source State/nation, according to the convention to terminate double taxation entered into by Portugal and the source State; or
b) They can be taxed in another country, in cases where the convention to terminate double taxation has not been held into under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as it is not a territory subject to privileged tax systems (defined by Ordinance n. 292/2011, November 8) and, as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per Art. 18., n. 1 of the CIRS of the Personal Income Tax (IRS) Code.
3. Income in category H (pensions)
Portuguese non-regular residents that have obtained category H incomes in foreign countries, have exemption if these incomes are from contributions that have not been deducted under Art. n. 2 of Art. 25. of CIRS and if the conditions below are met:
a) They are taxed by the source State/nation, according to the convention to eliminate double taxation held by Portugal and the source State; or
b) They cannot be considered to have been obtained on Portuguese territory.
4. Other income obtained abroad
Concerning other kind of income, such as interests, dividends, real estate income and capital gains, obtained outside Portugal, these shall be exempted from taxation in Portugal, provided these incomes may be taxed in the country of origin in accordance with the convention to eliminate double taxation held by Portugal and the source State, in case there is one; or in case there is no Convention:
i) These may be taxed at the country of origin in accordance with OECD tax convention model for the income and patrimony;
ii) This income should be considered as an income obtained in Portugal territory, under the scope of the Portuguese Individual Income tax Code, and;
iii) The country or region, of origin of the income is not listed on the Portuguese List of tax heavens.
SCHEDULE OF COSTS (euros)
- Professional fees for the incorporation of the company (1)
- Official licensing fee
(1) Price includes all legal services related to the licensing, incorporation and registration of the company as well as all inherent expenses.
Annual maintenance fees
SCHEDULE OF COSTS (euros)
- Governmental official annual fees
- Registered office & administrative services
- Nominees Shareholders (1)
- Nominee Directors (2)
- Statutory auditors (3)
(1) Price includes the designation up to 5 nominee shareholders.
(2) Price includes the designation up to 3 nominee directors.
(3) The auditors fee’s are established by Decree Law, published in the Official Newspaper. Should you need further details regarding the Official Schedule of Auditors fees, please contact us. The fees indicate correspond to the minimum.
The new regulations are designed to offer a Five Year Residency Permit (Golden visa) for non EU Citizens. The residency permit allows free travel in SCHENGEN countries as well as being able to work or study in Portugal. Additionally, there is the opportunity for a European Passport or permanent residency in the 6th year when simple conditions aremet.
The new simple legislation means that it is now possible for a residence permit to be granted without the need to first obtain a full residency visa for Portugal, if the foreign national makes one of the following investments:
(i) Qualifying investments (Investments maintained for a minimum of 5 years)
- Property Investments - Acquisition of Properties above € 500,000 in total.
- Capital Investments - Transfer of Funds above € 1,000,000.
- Job Creation - Creation of a minimum of 10 jobs.
In order to obtain the residency permit, investor must comply with general requirements established by Law. These requirements are the following:
(i) General requirements
- Minimum stays in Portugal – 7 days first year & 14 days following periods of 2 years.
- Residency Application made within a maximum of 90 days after entry in Portugal.
(ii) Other requirements under General Law:
- Applicants must not have been convicted of a crime punishable with deprivation of liberty exceeding one year.
- Applicants must not be subject of an entry ban in national territory following a removal order from the country.
- Applicants must not be subject of alerts in the Schengen Information System.
- Applicants must not be subject of alerts in SEF’s Information Integrate.
DURATION OF GOLDEN VISA PERMIT
Residency Permit is granted for an initial period of 1 year & renewed for periods of 2 years.
(i) Portuguese Residency For Property Investments (Golden Visa)
- Acquisition of Properties above € 500,000. The law allows the possibility of co-ownership with each co-owner making an investment of a minimum of € 500,000. Promissory Contracts of Purchase and Sale are acceptable for the initial investor residency application, provided that a deposit of a minimum of € 500,000 is paid. In this event, the actual purchase of the property needs to be effected until the time of the first renewal of the residency permit.
- Purchased after 8th October 2012.44
- Acquisition completed before the application for residency permit.
Initially created as an industrial free zone, the International Business Centre of Madeira (IBCM) was designed and established with the main objective of contributing to the economic and social development of the ARM, by upgrading and diversifying the productive structure of the Region, including tourism, responding to the needs imposed by an economy deeply marked by the insularity, ultra-periphery and the economic dependence on a limited number of goods and services. The IBCM regime is framed, in community terms, as an aid of the State for tax purposes, duly authorized by the EU, aiming the regional development. The approval of a system of incentives to the ARM occurred the first time in 1987, comprising at that time an international register of ships, an industrial free zone, a financial services centre and a centre for international services. However, it is important to point out that the ARM is not included in any official list of territories or regions qualified as tax shelters. Indeed, the only singularity of the IBCM regime comparing to the remaining national tax legislation is the allocation of a set of tax benefits explicitly provided for in the Statute of Tax Benefits, according to the different regimes therein.
INTERNATIONAL BUSINESS CENTRE
(1) IP/07/891Brussels, 27th June 2007
State aid: Commission endorses tax reductions for the free zone of Madeira for the period 2007-2013. The European Commission has approved under EC Treaty state aid rules a scheme providing tax reductions worth €300 million until 2020 to companies setting up in the free zone of Madeira (ZFM) between 2007 and 2013. The granting of the aid is subject to requirements to create jobs and strict safeguards as to the implementation of the aid. The Commission was satisfied that the aid was intended to promote regional development in Madeira by enabling companies established in this outermost region to overcome their structural handicaps. Competition Commissioner Neelie Kroes said “The aid will contribute to attract investment and economic activity to Madeira, supporting cohesion in the EU and regional development in this outermost region.” The ZFM comprises an industrial free zone, an international services centre and an international shipping register. New companies licensed to carry on business there between 1 January 2007 and 31 December 2013 will benefit from a reduced tax rate of 3% in 2007-2009, 4% in 2010-2012 and 5% in 2013-2020. Access to the scheme will be restricted to companies which meet specific eligibility criteria, based on the number of permanent jobs created. The tax benefits will be limited by a ceiling placed on the taxable base per company which ranges from €2 million (where less than three new jobs are created) to €150 million (where more than 100 new jobs are created).
The companies involved will have to start business within a fixed time limit (six months in the case of international services and one year in the case of industrial or shipping activities), beyond which they will lose their licences.
Admission to the ZFM is also restricted to the activities included in a list drawn up by the Portuguese authorities on the basis of the statistical classification of economic activities in the EU. As under the previous scheme, authorised by the Commission on 11th December 2002 (see IP/02/1849), financial and insurance intermediary activities, financial and insurance auxiliary activities and “intragroup services” (coordination, accounting and distribution centres) are explicitly excluded. The Commission has assessed the aid in the light of the Regional Aid Guidelines for 2007-2013 (see IP/05/1653). Under the Guidelines, Madeira is fully eligible for regional aid until the end of 2013.
The fiscal advantages provided by the scheme are qualified as operating aid, which is generally prohibited under EU state aid rules. However, Article 299(2) of the EC Treaty recognises the specific permanent handicaps of the outermost regions: remoteness, insularity, small size, difficult topography and climate, and economic dependence on a few products. Therefore, the new Regional Aid Guidelines allow operating aid for such regions as Madeira provided the aid is limited to offsetting the additional costs for pursuing economic activities in these regions.
The Commission’s examination of the ZFM showed that the aid is targeted at specific handicaps of Madeira and is proportionate to the additional costs resulting from these handicaps. Moreover, in the past the measure has contributed positively to the regional development of Madeira.
- Properties acquired free from any charges or mortgages, however, it is possible to finance the purchase of the property above the € 500,000 investment;
The properties acquired can be freely rented and let for commercial, agricultural and tourism purposes;
(ii) Portuguese Residency For Capital Investment (Golden Visa)
- Transfer of Funds above € 1,000,000.
The applicant for the Portuguese residency for capital investment must provide evidence of having invested the minimum amount required, including stocks or shares of companies. The 1.000.000,00 can be invested either on a long term deposit or on the acquisition of the share-capital of a Portuguese corporate entity.
The golden visa permit will be granted to those who provide:
Declaration of a financial institution authorized to exercise its activity in Portugal certifying: the effective transfer of capital in the amount of not less than € 1 million, to an account demonstrating the investor is the sole or first holder of capital; or, the acquisition of stocks or shares of companies, and
An up-to-date certificate issued by the Commercial Register, certifying that the applicant holds a share in the capital of a company.
(iii) Portuguese Residency For job creation (Golden Visa)
Portuguese golden visa permit will be granted to those who:
- Make evidence of having created 10 job positions with the registration of the employees in the Social Security.
- An up-to-date certificate issued by the Social Security.
- Valid Passport and Schengen Visa.
- Valid travel document and medical insurance.
- Proof of means of income and proof of address.
- Absence of criminal conviction and of interdiction to enter the country.
- Absence of notice from the Portuguese Immigration Authorities or Schengen Services.
Bearers of Investor Residency Permits may travel freely in the Schengen area. The holder of golden visa permit has the possibility of permanent residency after year 5 and nationality one year later. The golden visa program allows family reunification.
- Processing Fee Main applicant (initial application and renewals) – €514,80
- Processing fee for Family Members – €80,04
- Initial Investor Residency Permit – €5.147,80
- Initial Residency Permit for Family Members – €5.147,80
- Renewal of Investor Residency Permit and family members – €2.573,90
GOLDEN VISA PERMIT PROGRAMME
CREDIBILITY AND TRANSPARENCY
In fact, all entities licensed to carry on any activity in the IBCM are subject to the same rules, conditions and requirements for their establishment and operation as any entity established in the rest of the country, without exceptions On the other hand, the regime of the IBCM is characterized by its total transparency (as opposed to what happens in most of tax shelters), translated by an effective supervision, control and fiscalisation, not contemplating any distinguishing specificity in matters of secrecy, in particular as in what regards the exchange of information, regarding the regime in force in mainland Portugal.
Throughout its lifetime, the IBM system has been subject to review by the Community authorities, and as a result it suffered some changes from its initial configuration. The present tax regime that applies to entities licensed between January 1, 2007 and December 31, 2013 is properly approved and consecrated by the European Union, and will be in force up to 2020(1).