We wish to inform all interested investors that MIBC licenses for a CORPORATE TAX RATE OF 5% will only be issued until December 31, 2026 (with tax benefits guaranteed until 2033). To ensure smooth processing, we strongly advise incorporating your company before the second week of December. Please take immediate action to avail yourself of the 5% tax rate benefits. The future MIBC regime is still pending negotiations.
Madeira International Business Center
What is the Madeira International Business Center?
The Madeira International Business Center (MIBC) is Portugal’s answer to attracting foreign direct investment in the services sector. Under the MIBC, the Autonomous Region of Madeira, and Portugal, grant the lowest corporate tax rate of the European Union and one of the lowest corporate tax rates worldwide.
With the advantage of operating within the European Union, MIBC dully licensed companies are not characterized as “offshore” and are entitled to benefit from all Double Taxation Treaties (“DTT”) signed by Portugal, as well as from the EU Directives applicable to tax matters.
Incorporation of new companies, or re-domiciliation of existing ones, is subject to license availability under the MIBC applicable rules.
We wish to inform all interested investors that MIBC licenses for a CORPORATE TAX RATE OF 5% will only be issued until December 31, 2026 (with tax benefits guaranteed until 2033). To ensure smooth processing, we strongly advise incorporating your company before the second week of December. Please take immediate action to avail yourself of the 5% tax rate benefits. The future MIBC regime is still pending negotiations.
Madeira International Business Center
Learn more about all the benefits of the Madeira International Business Center (MIBC).
MIBC Tax Benefits for Companies
All companies duly licensed to operate within the MIBC are entitled to benefit from the following tax benefits, provided that the conditions for admission to the mentioned Madeira IBC regime are complied with (Substance Requirements):
- A reduced corporate income tax rate of 5% applicable to profits derived from operations exclusively carried out with non-resident entities or with other companies operating within the ambit of the MIBC;
- Non-resident single and corporate shareholders of MIBC companies will benefit from a total exemption from withholding tax on dividend remittances from the Madeira companies, provided that they are not resident in jurisdictions included in Portugal’s “black list”.
- Portuguese corporate shareholders will also be exempt if holding a participation of at least 10% for 12 consecutive months;
- Full access to the participation exemption regime;
- Exemption on capital gains payments to shareholders not resident in black listed jurisdictions;
- No withholding tax on the worldwide payment of interest, royalties and services;
- Documents, contracts and other operations requiring public registration carried out by MIBC companies will benefit from an 80% exemption on the stamp (capital) duty, provided that other parties involved are not resident in Portuguese territory or are also companies operating within the legal framework of the MIBC;
- Companies licensed in the MIBC will also benefit from an exemption of 80% applicable to municipal property tax and property transfer tax, regional and municipal surtax, and any other local taxes.
MIBC Tax Benefits for Trusts
The following tax benefits apply for a trust incorporate within the MIBC:
- Trusts are fully exempt from taxation on dividends received from shares, royalties or interest received on the deposits.
- All (non-financial) income distributed from the Trustee to the Trust’s Beneficiaries is fully exempt from taxation provided these Beneficiaries are corporate entities licensed to operate within the MIBC or non-Portuguese resident entities/individuals.
MIBC Tax Benefits for Shipping Companies, Vessels and Yachts
In addition, non-Portuguese crew members aboard commercial vessels and yachts registered in the Madeira International Shipping Registry are not obliged to contribute to the Portuguese social security regime provided some form of insurance is guaranteed, public or private.
The general Portuguese social security regime shall mandatorily cover Portuguese nationals or residents in Portuguese territory. In this case, a total contribution rate of 2,7% will be applicable, of which 2,0% shall be borne by the employing entity and 0,7% by the employee.
All crew members will be exempt from personal income tax in Portugal.
Allowed Activities
SGPS companies may have the legal form of an S.A. or a Lda. company and must have as its single object the management of shares held in other companies.
It should be noted that general services companies, nevertheless, may also hold participation in addition to the undertaking of their commercial activity.
Allowed Entities
The Portuguese law foresees the following types of companies that can be incorporated within the MIBC:
- Private Limited Company (Lda.);
- Single Partner Limited Company (Unipessoal Lda.);
- Private Limited Company (S.A.);
- Holding Company (SGPS);
- Limited Partnership Company;
- General Partnership Company.
Nevertheless, the most common types of companies incorporated in Portugal are either a (Single Partner) Private Limited Company or a Private Limited Company; no minimum share capital is required for these types of companies.
Apart from the above, the MIBC is the only jurisdiction in Portugal allowing trusts to incorporate.
Under the law, in a Madeiran Trust, the Settlor shall expressly designate the law that will regulate the trust. Furthermore, and if desired, it is possible to substitute the chosen law at any time during the trust’s existence.
The above means that any material change in the elected law of the trust will allow that the Trust Deed is amended and another Law preferred to regulate the same. If, on the other hand, the trust would be located in said (initial) jurisdiction, this would mean that the trust would have to be re-domiciled (if permitted) or extinguished.
Nevertheless, trusts are not allowed to have directly, pure financial activity.
Economic Substance Requirements
- Creation of one to five full-time job post(s) (the job posts must be filled in by residents, for tax purposes, in Madeira, regardless of their nationality) in the first six 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
- Creation of six or more full-time job posts (the job posts must be filled in by residents, for tax purposes, in Madeira Island, regardless of their nationality) in the first six months of operation.
On the other hand, the reduced corporate tax rates are applicable up to a ceiling placed upon the annual taxable income, which varies according to the number of employees, as follows:
| Number of Full-Time Job Posts | Minimum Investment | Ceiling |
| 1 – 2 | €75,000 | €2,730,000 |
| 3 to 5 | €75,000 | €3,550,000 |
| 6 to 30 | – | €21,870,000 |
| 31 to 50 | – | €35,540,000 |
| 51 to 100 | – | €54,680,000 |
| More than 100 | – | €205,500,000 |
The entire economic activity of the MIBC licensed company must be carried out solely by the above required employees who qualify from an immigration and taxation standpoint as residents on the Autonomous Region.
As for the investment on fixed assets, tangible or intangible: said investment shall be realised in assets located or received within the scope of the MIBC, used within said MIBC and which are necessary to the carrying out of the business activities cundected within the scope of the MIBC. Furthermore the assets acquired must remain within the MIBC during the entire period in which it enjoys this status, or during its useful lifetime, whichever period may be shorter, without being transferred. Nor may such assets be leased or ceded to third parties for their use, unless the corporate purpose or business activity of the MIBC is such lease or cession, and provided always that there is no direct or indirect link with the lessee or transferee of the said property. It shall be understood that this requirement is not infringed when the goods are transferred and the sum of money realized is reinvested in new fixed assets under the same conditions within the space of one year. In the case of used assets, these may not have been previously applied for the purpose of an MIBC investment of another company.
The above requirements are based in the current MIBC’s regulations, advice from the Portuguese Tax and Customs Authority and best practices. Different interpretation by the European Commission, in case of audit, may apply given the state aid nature of the regime.
Limits to the Tax Benefits
In order to prevent abuse of the existing tax benefits within the MIBC, all dully licensed companies will be subject to one of the following maximum annual limits applicable to the tax benefits of the present regime:
- 20,1% of the annual Gross Value Added, or
- 30,1% of the annual incurred labour costs, or
- 15,1% of the annual turnover.
Help
Frequently asked questions about Madeira International Business Center
What is the Madeira International Business Centre (MIBC)?
The Madeira International Business Centre (MIBC), also known as the Madeira Free Trade Zone or International Business Centre of Madeira, is a Portuguese special tax regime for companies licensed to operate in Madeira. It is designed to support international business activities and regional economic development.
Subject to the applicable eligibility requirements, qualifying income of licensed MIBC companies may benefit from a 5% Portuguese corporate income tax rate until 31 December 2033, provided that the relevant licence is obtained by 31 December 2026 and that the company satisfies the applicable activity, employment, investment, substance and benefit-limit requirements.
An MIBC company is a Portuguese company operating within the Portuguese and European Union legal frameworks; the MIBC is not a separate offshore jurisdiction. However, MIBC status does not automatically guarantee access to every double-tax treaty or EU tax benefit. Any treaty or directive-based relief must be assessed under the relevant instrument and may depend on conditions such as tax residence, beneficial ownership, genuine economic activity and applicable anti-abuse rules.
Is an MIBC company considered offshore?
An MIBC company is a company incorporated or established under Portuguese law and operating within the Portuguese and European Union legal frameworks. The MIBC is not a separate offshore jurisdiction.
However, MIBC status does not automatically guarantee access to every benefit under Portugal’s double-tax treaties or EU tax legislation. Eligibility for treaty or EU tax relief must be assessed under the relevant treaty, directive or Portuguese implementing legislation and may depend on the applicable legal conditions, including the company’s activities, tax status and compliance with applicable anti-abuse requirements.
What tax benefits do MIBC companies get?
Subject to the applicable eligibility requirements, licensed MIBC companies may benefit from a 5% Portuguese corporate income tax rate on qualifying income derived from activities carried on within the scope of the MIBC regime, including certain operations with entities established in the Madeira Free Trade Zone or with non-residents in Portugal. The benefit is subject to conditions concerning the company’s activity, employment, investment and the applicable statutory limits.
Certain dividends and shareholder-loan income paid to eligible shareholders may also benefit from an exemption, subject to conditions concerning the proportion of qualifying profits, the shareholder’s tax status and other statutory exclusions.
MIBC companies may further benefit from reductions of up to 80% in stamp duty, municipal property tax, property transfer tax, regional and municipal surcharges and certain fees, subject to the conditions and limits applicable to each tax or charge.
Other tax consequences (including withholding tax, participation exemption, interest, royalty and services payments) must be assessed under the relevant Portuguese tax rules, applicable treaties and EU law. They should not be presented as automatically exempt merely because a company is licensed in the MIBC.
What are the substance requirements to qualify for the MIBC 5% rate?
To meet the employment and investment eligibility requirements, an MIBC company must satisfy one of the following alternatives:
Create one to five jobs within the first six months of activity and make a minimum investment of €75,000 in tangible or intangible fixed assets within the first two years; or
Create six or more jobs within the first six months of activity, without a minimum investment requirement under this alternative.
The jobs must be properly attributable to the licensed MIBC company and must be counted in accordance with the statutory rules. Employees who are fiscally resident in Madeira generally qualify; employees who are not resident there may also be counted where they exercise their activity in Madeira, subject to the applicable rules. Part-time and intermittent employment is counted proportionally, and nationality is not the determining criterion.
A further point is that the benefit is subject to annual limits and the broader EU State aid framework; meeting the employment and investment test alone does not make all company income eligible for the 5% rate.
Is there a cap on the MIBC reduced tax rate?
Yes. The reduced rate applies up to a ceiling on annual taxable income that varies with the number of full-time jobs: €2,730,000 for 1 to 2 jobs, €3,550,000 for 3 to 5, €21,870,000 for 6 to 30, €35,540,000 for 31 to 50, €54,680,000 for 51 to 100 and €205,500,000 for more than 100 jobs.
Part-time and intermittent workers are counted proportionally under the statutory rules. In addition, the regime is subject to overall annual limits based on the company’s value added, labour costs or turnover generated in Madeira. Income exceeding the applicable ceiling, or otherwise outside the scope of the regime, is not taxed at the reduced rate.
What activities are allowed in the MIBC?
The MIBC regime may apply to a broad range of eligible activities, including certain industrial activities, wholesale trade, transport and communications, information and telecommunications services, management and consultancy, leasing and business services, real estate activities, education and certain collective services. Non-financial holding-company activities may also qualify, including activities carried on through an SGPS, subject to the applicable Portuguese company-law and tax requirements.
The precise eligibility of an activity depends on its applicable NACE classification, the activity actually performed by the company and whether the relevant income is within the scope of the MIBC regime. Financial intermediation, insurance, certain auxiliary financial activities and certain intragroup services (such as coordination, treasury and distribution-centre services) are excluded.
Can I set up a trust in the MIBC?
Madeira has a specific legal framework under which trusts or fiduciary-management arrangements may be constituted for purposes of the MIBC. The trust is constituted under a foreign law designated by the settlor and is administered by a company or branch authorised to provide trust or fiduciary-management services in Madeira.
The settlor may reserve in the trust instrument the power to replace the governing law with the law of another jurisdiction, subject to the applicable statutory requirements. The settlor and beneficiary must generally be non-resident in Portugal, and the trust may not concern immovable property located in Portugal.
Trust or fiduciary-management activity under this regime may not have a financial nature. Certain investment operations may nevertheless be permitted, subject to the governing law, the trust instrument and the applicable MIBC rules.
What are the limits to the MIBC tax benefits?
To prevent abuse, the tax benefits of the regime are capped for each licensed company by one of three maximum annual limits: 20.1% of the annual gross value added, or 30.1% of the annual labour costs, or 15.1% of the annual turnover. These ceilings apply on top of the taxable income limits linked to the number of jobs.
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