In the previous month, the Regional Government of Madeira presented its budget proposal 2024, generating excitement for the proposed tax cuts. It is with great pleasure that we announce the approval of the proposal, which underwent substantial modifications during the deliberation process. The implementation of tax reductions, a cause passionately championed by MCS’s Director Miguel Pinto-Correia in regional media, represents a pivotal milestone in the fiscal framework of Madeira.
Key Tax Cuts in the 2024 Madeira Budget
1. Personal Income Tax (PIT) The PIT rates on dividends and interest income earned in Portugal have been slashed. Specifically, Madeira will implement a reduced rate of 19.6%, compared to the mainland’s conventional 28%. This adjustment applies to the income streams specified in Article 71 of the Portuguese Personal Income Tax Code, significantly easing the tax burden for residents of the Autonomous Region of Madeira.
2. Corporate Income Tax (CIT) For non-residents, the withholding tax rates have been reduced by 30%, from 25% on the mainland to 17.5% in Madeira. This reduction excludes accounts with unidentified holders or capital income paid to entities in blacklisted jurisdictions.
Additional Measures and Tax Cuts
The updated budget confirms other previously reported measures, including:
- Expanded PIT Categories: The maximum 30% reduction, relative to mainland Portugal’s rates, is further promoted as per the Regional Finances Law.
- Incentives for Start-Ups: Certified start-up companies in Madeira will benefit from an 8.75% CIT rate on the first EUR 50,000 of taxable income, with the remaining income subjected to a 14.7% CIT rate.
For more detailed information, please refer to our latest article. The 2024 Madeira Budget has been officially published in the Official Gazette and is now fully effective.
Conclusions
Despite the recent uncertainties due to an atypical timeline, Madeira’s commitment to a more competitive tax framework is evident. The renewed focus on tax cuts positions Madeira advantageously compared to mainland Portugal.
The Madeira International Business Center, with its unique tax regime featuring a 5% CIT rate, stands to benefit significantly from the new 19.7% PIT rate on dividend distributions. The previous 28% rate imposed on Portugal’s tax residents was considered unfavourable, making the new 19.6% rate a welcome change.
These tax cuts reinforce Madeira’s dedication to fostering a favourable economic environment, promising substantial benefits for residents and businesses.
*Views expressed by our Director are done under freedom of expression foreseen in Portuguese law and do not necessarily reflect the views of MCS or its shareholders.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more
