JULY 2015

Portugal Approves the New Madeira International Business Center (IBC) benefits

On July 1, through law number 64/2015, the Portuguese Government approved the fourth fiscal benefits regime of Madeira’s International Business Center.

The regime, as it was accepted by the European Commission, allows companies registered at the Madeira International Business Center to benefit from a reduced corporate tax rate of 5% until 2017. This way the Madeira IBC keeps one of the most competitive and attractive regimes worldwide for a new 12-year period.

Additionally, companies that take advantage of this regime will benefit from the withholding exemption on dividend payments, interests, and royalties.   General rules of the Portuguese tax system, such as the Holding regime based on the participation-exemption principle and a 50% exemption on corporate tax for income from the Portuguese Patent Box regime, will apply.

It is important to highlight that this regime has included new activities, such as air transportation, as long as the income that does not come from passengers’ transportation nor cargo between local airports.

Furthermore, the Madeira Free Zone benefits from most double taxation agreements signed by Portugal, as well as, EU directives.  

Given all the advantages of this Regime, we may conclude that it will reinforce the credibility, stability and attractiveness of the Madeira IBC and that the main objective of the Madeira Free Zone is the development of international activities and attracting direct foreign investment.