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Madeira International Business Company

Madeira - IBC

Synopsis

Madeira IBC SetupMadeira, an integral part of Portugal fully integrated in the E.U., is located in the Atlantic Ocean, 900 km southwest of Lisbon. The archipelago, with a total population of over 250,000 inhabitants, has the city of Funchal as its most important centre. Funchal is a very cosmopolitan city due to a long established tradition in tourism.

One of the main characteristics of Madeira is its political stability, with the Social Democratic Party in power with an absolute majority since 1976. The President of the Regional Government has remained unchanged since 1978.

Madeira has observed a significant development in the last 20 years with substantial investments in infrastructure. Examples of this development are the International Airport, which was expanded in 2000, the new road network and the new harbour, recently concluded.

It should also be noted that Madeira has been classified as an ultra-peripheral region of the E.U., as recognized by article 299°n°2 of the E. U Treaty, granting a Special status to Madeira.

The International Business Companies Ordinance, effective as of January 15th 1990, authorizes the creation of International Business Companies (IBC’s) to conduct offshore business, with no taxation in the Bahamas, except for the annual license fee.

The IBC of Madeira offers a very attractive package of benefits to international services activities:

  • low taxation;
  • state-of-the-art infrastructure
  • efficient local support services
  • low operational costs
  • safety and quality of life

In addition, Madeira is fully integrated in the Portuguese and EU legal systems, providing the IBC with full credibility, transparency and stability and, in addition, providing companies with a Portuguese VAT number and full access to the international treaties to avoid double taxation ratified by Portugal as well as to all EU Directives and Regulations.

The tax regime of the IBC of Madeira is granted until 2027 and formally approved by the European Commission as a legal Regime of State aid, supported on Madeira’s official status of outermost region of the EU and in full compliance with the guidelines set by the EU’s “Code of Conduct on Business Taxation”.

THE MADEIRA IBC

The Madeira IBC has the following characteristics:

Shareholders: The Minimum capital is EUR 1. The Madeira Limited companies do not issue shares. Instead quotas are registered at the Commercial Registry of Madeira and members are issued with notarized extracts from the Commercial Registry of Madeira to record their ownership.

Directors: Minimum number of Director is one. Can be any nationality and need not be resident in Madeira. Corporate directors are not allowed.

Officers: A company needs to have a legal manager to represent the Company towards public and private entities and also the person who has powers to bind the company in the daily activity.

Restrictions on Name and Activity: A name that is similar to or identical to an existing company. A name that in the opinion of the Registrar may be considered undesirable or offensive. A name that may imply an illegal activity. A name that may imply government patronage. All Madeira companies must include words to describe clearly the objects of the company.

A Madeira company cannot undertake any business that is not specified in its Constitution.

A Madeira company cannot undertake the business of Banking, Insurance, Assurance, Reinsurance, Fund Management and Asset Management.

Local Requirements: The company must maintain a Registered Office in Madeira at the address of a licensed management company or law firm.

Timescale: The time to establish a company requires a minimum of 14 working days.

Accounts and Auditing Requirements: A Madeira IBC must keep proper books of accounts and file to the relevant authorities. The official books of accounts should be kept in the Portuguese language and currency (the EURO). Auxiliary records can, however, be kept in any currency.

Audited accounts are not required to be filed.

Annual Filing: Periodical tax returns must be submitted to the Portuguese authorities, through the Portuguese Fiscal Authorities.

Periodical income declaration– to be submitted until the last working day of the month of June

Annual Simplified Company Information (IES)– to be submitted until the last working day of the month of May

Periodical VAT declaration– to be submitted until the 10th day of the second month following the one to which the operations refer to (for a turnover of or above Euro 498,797.90 in the precedent civil year) or until the 15th day of the second month following the quarter to which the operations refer to (for a turnover under Euro 498,797.90 in the precedent civil year)

Taxation:The general rate of 21% will be applicable to income derived from activities carried out with resident entities.

Companies licensed in the IBC of Madeira also benefit from an exemption of 80% applicable to stamp duty, municipal property tax and property transfer tax, regional and municipal surtax as well as any other local taxes.

Capital gains are exempted from tax in Madeira.

Confidentiality: Beneficial ownership is not available on public record.

Company Renewals: The company renewal falls every anniversary date of incorporation.

Documents Required:
KYC Documents for individual Director/Shareholder

  • Passport copy
  • Proof of address (dated less than 3 months)
  • Bank reference (dated less than 3 months with satisfactory record clearly mentioned and also the time period the client has been dealing with the bank: minimum of 2 yrs)
  • Professional reference
  • Detailed CV

KYC for Corporate Director/Shareholder

  • Certificate of Incorporation
  • Registered address and place of business
  • Certificate of Current Standing if incorporated more than 1 year
  • Register of Directors
  • Register of Shareholders
  • Memorandum & Articles of Association

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal, tax or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.