Buying vs. Starting a Business in Madeira: Pros and Cons

At a glance

Buying vs. starting a business in Madeira is a choice between acquiring an operating company (with its revenue, staff and contracts, but also its liabilities) and incorporating a clean new one (with full control, but no track record). Buying is faster to cash flow and can secure an existing Madeira International Business Centre (MIBC) licence before the 31 December 2026 window closes; starting is cheaper upfront, carries no inherited liabilities and lets you design the structure from scratch. The right answer turns on speed, risk appetite, financing and the MIBC timeline. This guide sets out the pros and cons of each, for foreign investors and entrepreneurs considering Madeira.

This article is written for foreign investors and entrepreneurs weighing how to enter the Madeira market, whether to buy an existing local company or to incorporate and build a new one. The legal and corporate framework is national (the Código das Sociedades Comerciais applies in Madeira exactly as on the mainland), so the choice is the same in form as anywhere in Portugal. What makes Madeira distinct is the MIBC, the 5% corporate tax regime whose licensing window closes at the end of 2026, and that single fact often tips the buy-or-build decision in a way it would not elsewhere.

State the conclusion first: there is no universally correct answer. Buying suits those who want an operating platform quickly and can absorb the diligence cost and the inherited risk; starting suits those who want control, a clean balance sheet and a lower entry cost, and who have time before the MIBC deadline. The sections below give the pros and cons of each, the tax and liability differences that drive the decision, and a side-by-side comparison.

Buying vs. starting a business in Madeira: the two routes

At the highest level there are two routes into a Madeira business. You can buy an existing one, or you can start a new one. Each then has its own mechanics, its own cost profile and its own risk profile, and the MIBC regime sits across both. Before comparing the pros and cons, it helps to be precise about what “buying” actually means, because in Portugal it can take two quite different legal forms.

First, what “buying” means: share deal or asset deal (trespasse)

When you buy a business in Portugal there are two structures, and the distinction matters more than most first-time buyers expect.

A share deal means acquiring the quotas or shares of the company itself. You step into the existing legal entity, and it keeps its assets, its contracts and, critically, its liabilities and contingencies, including historical tax, labour and litigation exposure. The entity does not change; only its ownership does.

An asset deal, usually structured as a trespasse, means acquiring the going concern, the operating establishment as a complete economic unit, rather than the legal entity. You take the assets and the activity but leave the old company (and, in principle, its historical liabilities) behind with the seller. A trespasse of a whole business, or of an independent part capable of operating on its own, is usually not subject to VAT under Article 3(4) of the CIVA.

Which structure is available and preferable is itself part of the buy decision, and it changes the diligence, the tax and the liability picture set out below.

The case for buying a business in Madeira

The pros of buying are mostly about speed and continuity. You acquire a business that already trades: existing revenue, customers, suppliers, trained staff, premises, and any sector licences or permits the business already holds. You can operate from day one rather than building from nothing, cash flow starts immediately, and an established track record makes bank financing easier to arrange against the company’s own numbers. In Madeira specifically, there is a further, time-sensitive advantage: acquiring an existing MIBC-licensed company can be a route into the 5% regime as the 31 December 2026 licensing window closes, a point developed below.

The cons are mostly about risk and cost. In a share deal you inherit everything, including liabilities that diligence may not surface, so the due diligence burden (legal, tax, labour, financial) is heavier and more expensive. You usually pay a premium for goodwill and the existing client base. Employees transfer with their acquired rights, and there can be a property-tax cost where the target owns real estate (both covered below). And integrating an acquired business, its culture, systems and contracts, takes management time that a clean start does not.

The case for starting a business in Madeira

The pros of starting are control and a clean slate. Incorporating a Portuguese company is fast and inexpensive: through Empresa na Hora a company can be formed in about an hour, yielding its corporate tax number (NIPC) and social security registration, and the minimum capital for a Sociedade por Quotas (Lda) is EUR 1 per quota (a Sociedade Anónima requires EUR 50,000, with 30% paid up). You design the governance, the share structure and the activity from the outset, you carry no inherited liabilities, and you pay no goodwill premium. For an MIBC project you can build the substance (jobs and investment) to fit the regime precisely.

The cons of starting are the mirror image of buying. There is no existing revenue, no customer base and no staff, so you build all of it, and the business must reach profitability from a standing start. You arrange every licence, contract and supplier relationship yourself. And there is a timing risk unique to Madeira: a new company aiming for the 5% rate must be licensed in the MIBC by 31 December 2026, so the incorporation, licensing and bank-account sequence has to begin with enough runway, in practice by around November 2026.

The MIBC factor: the 5% licence and the 2026 deadline

For most foreign investors the MIBC is the reason Madeira is on the list at all. A company licensed in the Madeira International Business Centre accesses a reduced corporate income tax rate of 5% under Article 36.º-A of the Estatuto dos Benefícios Fiscais, in force to the end of 2033, provided it is licensed by 31 December 2026 and meets the regime’s substance conditions (broadly, one to five jobs plus a minimum EUR 75,000 investment, or six or more jobs, carried on genuinely in the Region).

This deadline shapes the buy-or-build decision. If you start a new company, you must complete incorporation and secure the MIBC licence before the window shuts. If that runway is tight, buying an existing, already-licensed MIBC company can be the faster route into the regime, because the licence already exists. The catch is substance: the 5% rate depends on real activity and real jobs in Madeira, so acquiring a licensed shell that does not meet substance does not preserve the benefit. Any acquisition of an MIBC company therefore needs diligence on the licence status and on actual substance compliance, not just on the financials. We can assist, subject to scoping, in checking both.

Tax and liability: the differences that drive the decision

Two technical points often decide between the routes.

First, property transfer tax. Buying the shares of a company is not normally an IMT event, but there is an important exception: under the Código do IMT, IMT can apply to a share acquisition where, as a result, one shareholder comes to hold at least 75% of the capital of a company whose assets are more than 50% Portuguese real estate not used in an agricultural, industrial or commercial activity (real estate trading aside). If the target is property-rich, a share purchase can trigger IMT just as a direct property purchase would, so the asset composition of the target matters.

Second, employees. Where a business or establishment is transferred (typically in an asset deal or trespasse, and in substance in many share deals), Article 285 of the Código do Trabalho transfers the employment contracts to the acquirer with all acquired rights and seniority. The transferor remains jointly liable for employee credits for two years, and affected employees have a limited right to object. Staff costs and liabilities therefore travel with the business and must be priced into the deal.

These are the kinds of exposure that careful structuring and diligence address before signing, not after.

Buying vs. starting a business in Madeira: side by side

How to choose between buying vs. starting a business in Madeira

In practice, the decision on buying vs. starting a business in Madeira comes down to four questions. How quickly do you need to be operating and generating cash? How much risk and diligence cost can you absorb in exchange for a running start? How much do you value control over the structure and a clean balance sheet? And where do you stand against the MIBC clock, do you have runway to incorporate and license a new company before 31 December 2026, or is acquiring an already-licensed company the more reliable path into the 5% regime?

Buying tends to win where speed, an operating platform, hard-to-obtain sector licences, or securing an MIBC licence before the deadline are decisive. Starting tends to win where control, cost and a clean slate matter more, and where there is still time before the window closes. Many investors should price both routes before deciding, because the better answer is often clearer once the diligence cost of a specific target is set against the build cost of a specific plan.

How MCS can help with buying vs. starting a business in Madeira

Madeira Corporate Services advises on both routes. On the buy side, MCS coordinates legal, tax and labour due diligence, advises on share-deal versus asset-deal (trespasse) structuring, checks IMT exposure where the target holds property, and verifies MIBC licence status and substance compliance before you commit. On the build side, MCS handles incorporation, the MIBC licensing application through the regime’s procedures, substance planning, and the NIF, banking and registration sequence. We can assist, subject to a review of your objectives and timeline, in pricing both routes and sequencing whichever you choose so it completes cleanly, and, where the MIBC is the goal, before the 2026 licensing window closes.

Practical takeaways on buying vs. starting a business in Madeira

1. Decide the structure of any purchase early: a share deal inherits liabilities; an asset deal (trespasse) generally leaves them behind.
2. Budget for due diligence on any acquisition; the inherited-liability risk in a share deal is the main reason buying costs more than the headline price.
3. Check IMT exposure before buying a company that owns Portuguese real estate; a 75%-plus share acquisition of a property-rich company can trigger it.
4. Price employee transfers; staff move with acquired rights under Article 285 of the Código do Trabalho, and the seller stays jointly liable for two years.
5. Starting is cheap and fast to incorporate (about an hour, EUR 1 capital for an Lda), but you build revenue, staff and licences from zero.
6. Mind the MIBC clock: a new company needs its 5% licence by 31 December 2026; buying an already-licensed company can be the faster route in, subject to substance.
7. Price both routes against a specific target and a specific plan before deciding.

Frequently asked questions

Is it better to buy or start a business in Madeira?

Neither is universally better. Buying is faster to cash flow and can secure an existing MIBC licence, but it inherits liabilities and costs more upfront. Starting is cheaper and gives full control and a clean balance sheet, but you build everything from scratch and must meet the MIBC licensing deadline. The right choice depends on speed, risk appetite, cost and the MIBC timeline.

Can I buy an existing MIBC company and keep the 5% tax rate?

Often yes. An existing MIBC-licensed company can be acquired, and because the licence already exists this can be a faster route into the 5% regime than incorporating and licensing afresh before the 31 December 2026 window closes. The benefit only holds if the company continues to meet the substance requirements (real jobs and activity in Madeira), so licence and substance diligence are essential.

Do I pay IMT when buying a company that owns property in Madeira?

You can. Buying shares is not normally an IMT event, but under the Código do IMT, IMT applies where a shareholder comes to hold at least 75% of a company whose assets are more than half Portuguese real estate not used in an agricultural, industrial or commercial activity. The target’s asset composition therefore needs checking before a share purchase.

What happens to employees when I buy a business in Madeira?

Where a business or establishment is transferred, Article 285 of the Código do Trabalho moves the employment contracts to the buyer with all acquired rights and seniority. The seller remains jointly liable for employee credits for two years, and employees have a limited right to object. Staff liabilities should be priced into any deal.

How long does it take to start a business in Madeira?

Incorporating a Portuguese company can take about an hour through Empresa na Hora, producing the corporate tax number and social security registration. Adding an MIBC 5% licence, a bank account and substance takes longer, so for a 2026 licence the process should begin with several weeks of runway before the year-end deadline.

Buying vs. starting a business in Madeira: which costs less?

Starting almost always costs less upfront: an Lda needs only EUR 1 of capital plus formation fees. Buying costs more because you pay for an operating business and its goodwill, plus due diligence. The trade-off is that buying delivers immediate revenue, which starting does not.

The information in this article is provided for general guidance only and reflects the legal and tax framework in force at the date of preparation (June 2026). It does not constitute legal, tax or investment advice and should not be relied upon as such. The choice between acquiring and incorporating a business, the structure of any acquisition, and the tax and labour consequences described depend on the specific facts, including the target’s assets, liabilities and licence status, and on the interaction of several Portuguese diplomas (the Código das Sociedades Comerciais, the Código do IMT, the CIVA, the Código do Trabalho and the Estatuto dos Benefícios Fiscais). Tax rates, the MIBC regime and its deadlines may change. Madeira Corporate Services accepts no liability for action taken on the basis of this article. Professional advice should be obtained before any decision. We can assist, subject to a review of your circumstances.

Ambrósio Jardim

Ambrosio Jardim has, since 1998, worked mainly in the areas of commercial law (corporate, mergers and acquisitions, joint ventures, restructuring and planning), national and international tax law and real estate…. Read more