Madeira is a Portuguese autonomous region that is part of the EU, along with the Azores. As a result, the jurisdiction is one of the most sought-after locations for foreign investors looking to establish a low-tax company in Europe.
The primary benefits of establishing a business in Madeira
There are numerous business advantages that make the jurisdiction so popular among entrepreneurs:
- As an outlet to the European market, the region is popular among customers from various countries.
- Communication networks were created.
- High-quality telecommunications infrastructure, as well as a favorable location for establishing an e-commerce business in the EU due to lower taxation.
- A VAT number for Portugal is provided.
- Entrepreneurs can establish a company in an international free trade zone (FTA).
- The corporate tax rate for establishing an IBC is only 5%.
- English is the dominant language in the business world.
- Non-residents can transfer dividends through the company without being taxed.
- Opportunity to start a business online.
- Vessels registered in the region can sail under the Portuguese flag, which is one of the key factors attracting foreign investors.
The fundamental requirements for registering a business in Madeira
The following are the basic requirements for forming a company:
- Choosing a distinctive name for the company. The title must include the full abbreviation or abbreviation of the legal form. There are some words that can only be used in the names of businesses with the permission of the appropriate authorities (for detailed information on this aspect, you should contact the relevant specialists).
- Having a minimum of two shareholders.
- A registered local office with a valid address and the contact information of a local agent for document preparation and processing.
- The presence of at least one director (no restrictions on nationality or residence) and one auditor.
- The minimum capital for establishing a business is 5,000 EUR, which is divided into shares.
- Payment of corporate tax, the rate of which is 5%.
- An annual general meeting is required.
- There is no need to audit.
Madeira's organizational and legal structures
The following are examples of popular corporate structures:
- Ltd. (Lda).
- Stock corporation (SA).
- FTA firm.
- Individual entrepreneurs have the status of a general partnership (SC) or a limited partnership (SCS).
- Net Holding Company in Portugal (SGPS).
- Рutting the ship under the Madeira flag.
The Portuguese Companies Code is the regulatory tool for managing business activities on the island.
This is the most common type of enterprise. To establish such a structure, one shareholder and a minimum amount of capital, divided into shares with a par value of 1 EUR per shareholder, are required. As a minimum, a capital of EUR 1,000 is required. The presence of a Lda does not imply the presence of a director; instead, a manager is appointed to manage the business entity.
The procedure for forming a joint-stock company
The second most common legal structure is a joint-stock company, which requires 5 shareholders and a minimum capital of 50,000 EUR. The capital is made up of freely transferable bearer shares.
The company is run by a board of directors, whose rights and responsibilities are outlined in the Charter. The presence of only one director is implied by the authorized capital not exceeding 200 000 EUR. A reserve fund (20% of authorized capital) should be established. SA accounts are subject to the most stringent audit by a certified auditor to ensure they comply with regulatory requirements.
Other types of commerce in Madeira
- There are no strict conditions regarding the size of the minimum capital in a branch. The primary reason for establishing a branch is to issue invoices to customers, enter into local contracts for trading activities, and receive revenue from local customers. Foreign companies establish representative offices in order to expand the parent company or conduct marketing research.
- SGPS - These firms are typically SA or Lda, and their primary purpose is to control the shares of other organizations.
- Sole proprietorships can be of three types:
- Unipessoal Lda: only one shareholder.
- Establish an Estabelecimento Individual de Responsabilidade Limitada (EIRL): is only liable for the assets transferred for the business.
- Individual trader or independent professional authorization: has unlimited liability.
How to Form an IBC in Madeira
The organizational structure of international business companies is appealing because of the benefits it provides in the field of international services: low tax rates, modern infrastructure, efficient support services, and low operating costs.
The jurisdiction is totally implemented into the judicial systems of Portugal and the EU, ensuring the IBC's dependability, clarity, and consistency. So it ensures the receipt of a Portuguese VAT number and the ability to use international DTA agreements.
Madeira has no special requirements for shareholders' nationality, citizenship, or status. The jurisdiction's legislation allows shareholders to independently manage the enterprise or designate a person as the firm's manager. IBCs must have a registered office in the region, and branches should have legal assistance.
The following activities are on the list of permitted activities:
- international commerce;
- electronic commerce;
- services in management and consulting;
- SGPS-based equity participation.
Madeira company registration procedure
To register any business model, you must first:
- Request the registration of a name.
- Open a bank account in Madeira and deposit the required minimum capital.
- Go through the business enrollment process with the tax authorities.
- You must sign up quasi staff members with the Ministry of Labor if you employ them.
- Finish the business registration process with the appropriate authorities.
- Register in the appropriate register.
- Submit the Articles of Association to the regulatory authorities for review.
- Accounting documents should be filed in the appropriate register.
Requirements for Documentation
You will need the following documents to start a business:
- Each manager's personal information.
- Secretary's personal information (if any).
- Sample signatures and data from those who signed the bank account.
According to the law, documents submitted for registration is in Portuguese, Spanish, French, or English. In exercise, however, every file should be preceded by a notarized transcription into Portuguese.
The registration package includes both identification papers and corporate identification: passport, TIN, Certificate of Incorporation, certified copies of corporate documents, and others.
- Corporate tax rate of 5% is in effect until 2017.
- VAT - a 22 percent rate that can be reduced under certain conditions.
- Dividend tax is 25%; shareholders who are non-residents of countries not on the blacklist may be exempt.
- Interest is taxed at a rate of 20%.
Redomiciliation of the project
A company incorporated in Madeira has the right to relocate its operations to a jurisdiction with appropriate legislation. An important consideration in this case is that this can only be done if at least 75% of the shareholders agree. The same rules apply to redomiciliation of a company in Madeira.
Consultation with a specialist
YB Case experts can advise you on doing business in Portugal and accompany you through the entire incorporation process. There is also the option of purchasing a ready-made company with a Madeira account. Fill out the feedback form below, and one of our experts will contact you.
Questions and Answers
The following documents are required at the very least:
- name of the future enterprise;
- shareholder information;
- director information;
- confirmation of the registered address;
- bank statement.