Madeira, Portugal’s Little Secret
By mcs editor
It is no secret that Portugal offers,
right now, the best program of residency by investment in Europe. Nevertheless,
what might surprise some is that Madeira, a Portuguese Autonomous Region, just
900 km of the coast of Portugal (just one and half hour away by plane form
Lisbon), might be one of the best places in Portugal for its Golden Visa.
Due to being an all year round
tourist destination, due to its unique history, culture and mild climate,
Madeira Island has a vibrant real estate market (where prices are more
contained than in the Portuguese mainland) and a unique system of corporate tax
benefits duly approved by the European Union.
The above means that one can access the Portuguese Golden Visa either by investing in the Madeiran real estate market where demand from locals tourists (mainly from Western, Central and Northern Europe) and expats can provide an interesting return on investment through rental income or opt to incorporate a company to conduct their international business through Madeira. Under the later a Golden Visa will be granted if the company is incorporated with a share capital of 1 million euro or if one employs at least 10 people.
Should one opt to go down the route to incorporate a company, then applying for a license to operate within the Madeira International Business Centre (MIBC) is the smartest thing to do. An MIBC license will grant the company the following tax benefits (among others): a reduced corporate tax rate of 5%, applicable on the taxable income derived from operations exclusively carried out with non-resident entities or with other companies operating within the framework of the MIBC; full exemption from withholding tax on dividend remittances from the Madeira companies to non-resident single and corporate shareholders; and no withholding tax on the worldwide payment of interest, royalties and services.
It is important to mention that the
abovementioned tax benefits will only be granted if the company creates at
least 1 full-time local job (the visa applicant can qualify if he/she opts to
live permanently in Madeira) in the first 6 months of operation and undertake a
minimum investment of €75.000 in the acquisition of fixed assets, tangible or
intangible, in the first two years of operation; or create 6 or more full-time
local jobs in the first 6 months of operation.
Having the above in consideration one
can see how the MIBC requirements match those of the Portuguese Golden Visa
when it comes to company incorporation and employing local workers. One can
also opt to invest in real estate through a company (as a sole shareholder of
said company) and use that investment to fulfil the requirements of both the
Portuguese Golden Visa and the MIBC, therefore getting “the best of both
worlds” in terms of business and real estate investment.
Further to the above, Portuguese
Golden Visa application in Madeira Island is the fastest in Portugal,
especially when compared to the Portuguese mainland immigration offices. This
is due to the current low level of applications, which in turn allow government
officials not to be overworked and comply with deadlines foreseen in the law.
Last but not least, all be above
programs can also be combined with the Non-Habitual Resident tax scheme which
allows for a 10-year tax holiday, on foreign income, for those meeting the
staying requirements in Portuguese territory and non-residency in the previous
5 years before arrival.
One can say, right now, that Madeira
is Portugal’s little secret when it comes to residency by investment.