APRIL 2015

The European Commission Extends Madeira’s International Business Center Regime until 2027

In March 2015, the European Commission extends the tax benefits of the Madeira Free Zone (MFZ) until 2027.

The new regime maintains the current regime’s conditions regarding to profit bands, investment, job creation, and allowed activities, as well as the 5% income tax. 

Madeira´s regulatory authorities (Sociedad para el Desarrollo de Madeira) has indicated that the new regime introduces, among others, no withholding tax on dividends payments, only when effective headquarters and management are not in Portugal (except for MFZ) nor in a tax heaven.

The tax benefits will be limited to the application of one of the following: 

• 15,1% of business turnover,

• 20,1% of GVA (gross value added), or

• 25,1% of the labor mass.

However, the Portuguese Government still has to approve the proposal sent by Madeira’s authorities.