Category Archives: Corporate Income Tax

Tax Representative and Taxpayer Number

Those relocating to Portugal will soon discover that having a Portuguese Taxpayer Number (locally known as NIF – Número de Identificação Fiscal) is required for conducting business and engaging with governmental authorities for the purposes of almost anything.

To give a rough idea you are required to hold a Portuguese taxpayer identification number for the purpose of engaging the judicial system; opening a bank account; buying, renting or selling real estate property; buying or selling a car; incorporate a company; enrolling your kids in school (yes, your kids do need to have a NIF too); applying for membership with a professional guild; applying for residency; registering a trademark or patent; receive inheritance; celebrate any type of contract, etc…

Notwithstanding the above it is important to take into account that taxpayer number numbers are associated with one the following tax residency status:

  • Non-Resident
  • Resident: generally speaking those who have lived for more than 183 days (consecutive or not) in Portugal in any period of 12 months starting or ending in the relevant year; or having a house, at any time throughout the 12-month period, in such conditions that allow to presume the intention to hold and occupy it as the habitual place of residence.

Those qualifying as non-resident, or being registered as such, are required under to law to appoint a a tax representative, who can be a and individual or an entity with tax residency in Portugal. The only exception to this rule is those taxpayers residing in another European Union Member-State.

The consequences of the lack of a tax representative are close to those concerning the lack of NIF. In other words, anyone who is non-resident taxpayer abroad and does not have a appoint tax representative in Portugal cannot exercise the rights of complaint, appeal or challenge. Furthermore, “the Portuguese Tax and Customs Authority may rectify the tax residency of non-residency on its own initiative based on the information at their disposal”, with all the tax and reporting obligations that such action may incur.

Given the above the appoint a tax representative is of the utmost importance for those qualifying as non-residents outside the European Union and should establish tax representation through contract with an experienced representative. We at MCS have been providing such service for more than 20 years to international investors and expats alike.

Do not hesitate to contact our team should you have any questions.

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Golden Visa in Madeira

Golden Visa in Madeira is on the rise. Here’s why.

According to Investment Immigration Insider, “Portugal’s golden visa performed admirably; though program investment recorded a 13% reduction, the number of applications approved during the year (1,182) was only 5% lower than that of 2019. Total investment in the program for 2020 amounted to EUR 647 million, a slight reduction from the EUR 742 million raised last year.”

But unlike previous years, 2020 was marked by an “astonishingly sharp rise in interest among Americans”, which according to industry insiders reflects:

  • Dissatisfaction with Trump;
  • Apprehensions about Biden;
  • Poor handling of the pandemic;
  • Political instability and unrest; and last, but certainly note least
  • Concerns about taxation.

In addition to the above, high mobility individuals were also frustrated by not being able to travel to Europe, therefore obtaining a residency permit became priority.

Taking into account the above and the investment flexibility provided by the Golden Visa, Portugal become the option for many Americans. However, changes to the Golden Visa law are coming very soon, by June 2021, investments made in Lisbon, Porto and coastal mainland municipalities will no longer be available.

This is why considering a Golden Visa in Madeira may be an option. According the legislative authorization issued by the Assembly of the Republic to the Government, the latter will allow Golden Visa related investment in Madeira to be carried out.

Offering sophisticated and affordable island living, the Pearl of the Atlantic proves to be a sucessfull Golden Visa destination given it’s lower corporate tax rates, its International Business Center and the availability of the non-habitual resident tax regime.

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Madeira to reduced its corporate tax

The Regional Government of Madeira is set to reduce the Autonomous Region’s corporate income tax from the current 20% rate to a 14,7% rate (the Portuguese current mainland CIT is 21%).

Madeira’s Regional Budget for 2021, which foresees the CIT reductions, was presented on November 30 the Legislative Assembly of the Autonomous Region of Madeira and is expected to be approved by the Government’s coalition.

If the CIT of 14,7% is approved by Madeira’s parliament, Madeira will have a more attractive CIT than major European economic power houses such as: Austria (25%), Germany (aprox. 25%), France (30%), Italy (27,9%), Luxembourg (25%), Netherlands (25%), etc…

This new 14,7% CIT, combined with Madeira’s internet infrastructure, full EU law compliance and friendly expat environment, makes the island the perfect location to conduct international business in Portugal and Europe. Furthermore, special incentives such a the Madeira International Business Center (a reduced 5% CIT) and a 10-year tax holiday for expats looking into to relocate to the island, can be also available, provided that several conditions are met by the investors.

MCS and its multi-disciplinary team, with more than 20 years of expertise, is read to assist you in incorporating your business on the island. Feel free to contact us.

 

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Invest in Madeira

Madeira is a Portuguese archipelago in the Atlantic Ocean, situated 625 miles (1 000 km) from Mainland Portugal and 545 miles (900 km) from North Africa. It consists of four islands: Madeira, Porto Santo, Desertas and Selvagens. Madeira and Porto Santo are the only inhabited islands, while the Desertas and Selvagens islands are uninhabited natural. Madeira’s unique forest has been declared a World Heritage Sites by UNESCO.

Madeira Island is the biggest and most important island of the archipelago with an area of 741 km2. Due to its subtropical climate and landscapes, it is known worldwide as an all year round tourist destination, thanks not only to its culture, but also spring-like climate.

Although it is an integral part of Portugal and subsequently of the European Union, where all laws applicable on the mainland also apply, Madeira is an Autonomous Region with its own government and parliament.

The population numbers approximately 267 785 inhabitants and its capital is the city of Funchal. Madeira’s Cristiano Ronaldo International Airport serves several daily flights to Lisbon and other major European cities. The official currency is the Euro and it is a civil law jurisdiction. A considerable part of the younger population is fluent in English.

Madeira’s economy is based on tourism, wine production and the International Business Centre of Madeira (MIBC). Created at the beginning of the eighties, the MIBC has proved to be a success and currently represents around 21% of the Regional Gross Domestic Product. This highly advantageous tax regime, for corporations and individuals, in addition to competitive operating costs, makes Madeira an attractive centre for international investment.

Under the MIBC scheme international services activities benefit from a reduced corporate rate (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. There are no restrictions, nevertheless, on the development of business activities with Portuguese companies which will be taxed at the general corporate tax rate in Madeira, currently 20%.

Further to the above, Madeira offers incredible internet speeds, when compared to mainland Europe. This is because Madeira benefits from a Submarine Cable Station, hosted in the “Madeira Datacenter”, operating several international optical submarine cables, allowing interconnectivity with national and international SDH networks and providing, as such, significant advantages in terms of quality, cost, bandwidth and scalability.

Another available infrastructure is the Internet Gateway provided by Marconi Internet Direct (MID). This MID offers international Internet access without any kind of contention and using diversity in the access to international backbones.

The IP platform has its international connectivity distributed by: 3 PoPs (London, Amsterdam and Paris), peering connections with hundreds of major international ISPs and IP transits to Europe and the USA.

Madeira also offers low operational costs when in comparison with other European countries. In fact, the cost of human resources and the price of several goods and services are very competitive when directly compared with other European locations, allowing companies to face considerably lower costs when establishing operations in Madeira.

In addition to the above, a superb work-life balance is available to those wishing to make Madeira their home. This unique European island life-style sought by many is the reason for Madeira’s success.

If you are considering investing in Madeira, our team has more than 20 years of experience in assisting international investors and expats to make the right move. For more information please visit our website or contact us.

Source: SDM – Sociedade de Desenvolvimento da Madeira

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Starting a Business in Portugal

There are several ways one can start a business in company in Portugal, as the Portuguese Government aims at reducing bureaucracy for investors and as such it has implemented some quicker ways for investors to start a business.

Starting a business in Portugal (or Madeira), i.e. opening a company, is an easy process and we our team at MCS is ready to assist you. Nevertheless, regardless of the path you choose for your business you will always need the following documentation: a Portuguese Taxpayer Identification Number (also known as NIF) and a Portuguese Social Security Identification Number (also known as NISS).

Apart from all the standard bureaucracy associated with the process of starting a business in Portugal, potential investors ought to be aware of the corporate tax benefits existing in in the country, especially if they intend to mainly engage non resident clients (B2B or B2C), i.e. located outside Portuguese territory. In this regard the Madeira International Business Center, located in Madeira Island, offers a unique set of tax advantages in whole Europe, including the lowest corporate rate in the entire continent: 5% on all profit derived from non-resident entities.

When compared with the Portuguese mainland, Madeira Island offers better conditions for the purpose of starting a business than the rest of the Portuguese territory, not only from a tax stand point but also from an IT infrastructure standpoint and better work-life balance for investors and workers.

It is therefore no surprise that many expats opt to start a business in Madeira while choosing to live either on the island or on the Portuguese mainland. The is especially true when considering digital nomads, IT workers and other entrepreneurs that are not physically bound to a place to generate their income.

Madeira is a Portuguese archipelago in the Atlantic Ocean, situated 625 miles (1 000 km) from Mainland Portugal and 545 miles (900 km) from North Africa. It consists of four islands: Madeira, Porto Santo, Desertas and Selvagens. Madeira and Porto Santo are the only inhabited islands, while the Desertas and Selvagens islands are uninhabited natural. Madeira’s unique forest has been declared a World Heritage Sites by UNESCO.

Madeira Island is the biggest and most important island of the archipelago with an area of 741 km2. Due to its subtropical climate and landscapes, it is known worldwide as an all year round tourist destination, thanks not only to its culture, but also spring-like climate.

Although it is an integral part of Portugal and subsequently of the European Union, where all laws applicable on the mainland also apply, Madeira is an Autonomous Region with its own government and parliament.

The population numbers approximately 289,000 inhabitants and its capital is the city of Funchal. Madeira’s Cristiano Ronaldo International Airport serves several daily flights to Lisbon and other major European cities. The official currency is the Euro and it is a civil law jurisdiction. A considerable part of the younger population is fluent in English.

Madeira’s economy is based on tourism, wine production and the International Business Centre of Madeira (MIBC). Created at the beginning of the eighties, the MIBC has proved to be a success and currently represents around 21% of the Regional Gross Domestic Product.

The highly advantageous tax regime, for corporations and individuals, in addition to competitive operating costs, makes Madeira an attractive center for international investment.

The founding of Madeira Corporate Services (MCS) dates back to 1995. MCS started as a private and corporate service provider in the Madeira International Business Center and rapidly became one of the leading management firms. As a result of its position in the market, the quality of the services it has been providing for over a decade and full compliance with business ethics, MCS was awarded the Merit Certificate by SDM – Sociedade de Desenvolvimento da Madeira.

auctor Miguel Pinto-Correia

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Economic Substance

Opening a Company in Portugal

There are several ways one can open a company in Portugal, as the Portuguese Government aims at reducing bureaucracy for investors and as such it has implemented some quicker ways for investors to open a company.

In this blog post we will discussing the “traditional” procedure of opening a company Portugal, a procedure that is followed by most investors who at the time of incorporation cannot be present in country to perform all the required diligences or who prefer to have assurance of a legal team in dealing with the Portuguese bureaucracy.

Opening a company in Portugal (or Madeira) starts with the filing for the name approval certificate. The filing shall be done by one of the future company’s shareholders or by its legal representative and must clearly identify the company’s denomination, detailed corporate object (i.e. economic activities to be carried out by the company), and Portuguese address of the company’s registered office.

Application for the name approval certificate is usually completed online with the Institute of Registries and Notaries and once issued it is valid for a 3-month period as from its issuance date or renewal date.

For the name approval procedure, we recommend the shareholders suggest at least 6 different company names, in case the initial 3 are refused by the National Register of Legal Entities. A formal requirement, in case of name refusal, can be filed for with Institute of Registries and Notaries, however such procedure is time consuming and may include providing duly certified and translated documentation proving that shareholders have a solid claim for the name they have applied for.

Once obtained the company’s name approval certificate, shareholders wishing to open a company within the Madeira International Business Centre (MIBC) must submit a formal application (in Portuguese language) to Sociedade de Desenvolvimento da Madeira, the official concessionaire of the MIBC, in two copies, addressed to the member of the Regional Government of Madeira responsible for the MIBC in the name of an existing company, in Portugal or abroad, or of a company to be incorporated. All relevant information concerning the activity to be performed by the company must be included in the licence application, namely: company name and address; activity to be undertaken and corresponding NACE codes (European nomenclature of the economic activity);  total value of the investment; foreseen number of full-time tax resident job posts to be created.

Once the document(s) mentioned above are produced, the opening of the company is formalized by means of the execution of the incorporation private act which will contain detailed information on the share capital, its shareholders, its directors, the binding rules, and the articles of association of the company. The grantors’ signatures (shareholder(s) or legal representative(s)) must be legally recognized, in the presence of a notary or a lawyer with express declaration of intent to open the company.

All shareholders and members of the corporate bodies must hold a Portuguese Taxpayer Identification Number (known as NIF) and those who are not EU-Residents must also appoint a tax representative in Portugal.

The opening of a company (and the appointment of the members of the corporate bodies) will then be subject to public accessible registration. Once opening of the company is concluded, an access code to the on-line commercial registry certificate of the company is generated by the Commercial Registry Office.

The opening of the company then becomes effective for operational activity and tax purposes (including VAT) by registering the company with the Portuguese Tax and Customs Authority (AT), done by filling specific forms with the Portuguese Tax and Customs Authority which must be signed by Certified Accountant (which all companies are obliged to have under bookkeeping rules and regulations) together with the company’s legal representatives. The deadline for such procedure is 15 days after registration with the Commercial Registry Office.

Registration of the company with the Portuguese Social Security must take place within 10 business days after filing the registration with the AT and by providing the following documents: commercial registry certificate; evidence of the commencement of activity for tax purposes; document appointing corporate bodies (incorporation document or relevant minutes of the competent corporate body’s resolution); and taxpayer number of members of corporate bodies.

Directors may be exempt from social security contributions in Portugal provided they present proof of social security contributions made in country of residence with which Portugal has entered a Social Security cooperation agreement.

Our multidisciplinary team of lawyers, economists and accountants has more than 20 years of experience and is able to provide you an integrated approach to your investment and relocation to Madeira Island by operating as one-stop-shop.

The founding of Madeira Corporate Services (MCS) dates back to 1995. MCS started as a private and corporate service provider in the Madeira International Business Center and rapidly became one of the leading management firms. As a result of its position in the market, the quality of the services it has been providing for over a decade and full compliance with business ethics, MCS was awarded the Merit Certificate by SDM – Sociedade de Desenvolvimento da Madeira.

auctor Lília Caldeira & Miguel Pinto-Correia

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Madeira Tech Hub

Madeira as a Low Tax Tech Hub

Madeira Island, Portugal, is affirming itself as a tech hub for European and American entrepreneurs. The main reasons? Low taxation, good weather, fast internet connections (above European and American mainland averages) and a steady supply of high-skilled work force in the IT sector.

Taxation is one of the main reasons that hinder economic growth of a startup and finding the correct jurisdiction for your rising business can be troublesome. That is why Portugal has come up with a taxation business that is startup-friendly.

Madeira Island, is located 1h 30min by plane from Lisbon, as offers a 5% corporate rate on all income derived from profit with non-Portuguese companies, full exemption from withholding tax on dividend remittances from the Madeira, among other tax benefits.

The MIBC is a tax benefit scheme granted under the Portuguese Tax Benefits Statute and duly approved by the European Commission.

Since the MIBC is governed by Portuguese and European Law, it offers the required legal certainty to its investors. All companies duly licensed to operate within the MIBC comply with all legal requirements to operate in Portugal, and therefore in the EU.

Given the above, all e-commerce directives have been duly transposed into Portuguese law, including those relating to electronic billing, digital signatures and data protection.

Such facts make it clear that, in addition to being a completely transparent tax incentive, the MIBC also allows a for an effective tax saving that can be used in the internationalization of the licensed company.

In addition to all the above-mentioned benefits, companies that are duly licensed in the MIBC may cumulatively apply for European funding and other financial instruments available to companies based in the Autonomous Region of Madeira.

Apart from the above, employees of startup companies and other technological companies might also be entitled to a 20% flat rate on their salary for a period of 10-years and a 0% tax rate on the foreign income they earn. These incentives not only allow you easily bring your team to live in on the world’s most beautiful islands, but also to attract the best of the best worldwide.

Startups looking into expand their international business, have access to a skilled workforce (namely IT engineers), good and speedy internet connections should be looking into locating their business in Madeira Island, Portugal.

Madeira enjoys the existence of a modern dedicated building designed to host telecommunications and data equipment, such as Data Centres and Internet Service Providers, among others. The Data Centre offers: uninterrupted power supply; An intrusion and a fire detection systems; A specialised air conditioning system; Computerised access control system; redundant telecommunications network; and technical support by dedicated personnel.

Madeira is also a hub for several international optical submarine cables, operated by the Submarine Cable Station also hosted in the Data Centre. Such allows inter-connectivity with national and international SDH networks and providing significant advantages in terms of quality, cost, bandwidth and scalability.

The Internet Gateway provided by Marconi Internet Direct (MID), offers international Internet access with no kind of contention and using diversity in the access to international backbones. The IP platform has its international connectivity distributed by: 3 PoPs (London, Amsterdam and Paris); Peering connections with hundreds of major international ISPs; and IP transits to Europe and the USA.

Apart from the above mentioned unique characteristics, the Regional Government is keen in supporting tech companies in moving to Madeira, mainly through its Start Up Madeira and the Brava Valley project, where incubation facilities are available to start ups looking for island life and low taxation.

We know that bureaucracy and costs can slow down your vision and hinder your will to relocate to another jurisdiction, but we at MCS believe that Madeira Island, Portugal, holds the key to its growth.

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MIBC: licensing period extended

The MIBC

The Madeira International Business Center (MIBC) is a set a set of taxation incentives, granted since the 80s with the objective of attracting inward investment into Madeira, recognized as the most efficient mechanism to modernize, diversify and internationalize the regional economy.

Main Tax Benefits

  • Corporate tax rate of 5%, applicable on the taxable income derived from profits of operations exclusively carried out with non-resident entities or with other companies operating within the ambit of the MIBC.
  • Access to the Portuguese participation exemption regime.
  • Non-resident single and corporate shareholders of Madeira’s IBC companies will benefit from a full 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”. Moreover, Portuguese corporate shareholders will also be exempt if holding a participation of at least 10% for 12 consecutive months.
  • 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.

Licensing

Companies wishing to benefit from the above tax benefits need to obtain a license from Sociedade de Desenvolvimento da Madeira which if applied for with the Vice-Presidency of the Regional Government of Madeira. Under the current regime licenses could be applied for until December 31st, 2020. However the European Commission has extended the licensing period until 2023.

The Portuguese Government is expected to legislate on the extension period soon.

Extension Period Background

The European Commission has prolonged, on July 2 the validity of certain State aid rules which would otherwise expire at the end of 2020. In this context, and to take the effects of the current crisis into due consideration, the Commission, after consulting Member States, has decided to make certain targeted adjustments to the existing rules with a view to mitigate the economic and financial impact of the coronavirus outbreak on companies.

To this end, the Commission has adopted a new Regulation amending the General Block Exemption Regulation (GBER) and the de minimis Regulation, and a Communication amending seven sets of State aid guidelines and prolonging those which would otherwise expire on 31 December 2020.

Prolongation of the existing State aid rules

In order to provide predictability and legal certainty, whilst preparing for a possible future update of the State aid rules in the context of the ongoing “fitness check” exercise and of the ongoing evaluation and future review of certain sets of State aid rules set out in the recent European Green Deal and European Industrial Strategy Communications, the Commission has decided to prolong the validity of the following State aid rules, which are due to expire by the end of 2020:

Prolongation by three years (until 2023):

–    General Block Exemption Regulation (GBER) – under which the Madeira International Business Center (MIBC) is regulated.

–    De minimis Regulation

–    Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty

After 2020

The Portuguese Government, together with the Madeira Regional Government, is expected to soon start negotiating the 5th MIBC Regime to be applicable to private and corporate investors wishing to relocate or incorporate their businesses with the MIBC framework.

MCS and its multidisciplinary team have more than 20 years of experience in assisting international private and corporate investors with incorporation, accounting and management of MIBC licensed companies. Do not hesitate to contact us.

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Tax Avoidance Directive

Portugal has effectively transposed the European Corporate Tax Avoidance Directive which introduces rules to prevent tax avoidance by companies and thus to address the issue of aggressive tax planning in the EU’s single market. Madeira, being an outermost region of the EU is subject said directive.

The directive applies to all taxpayers that are subject to company tax in one or more EU country, including permanent establishments in one or more EU countries of entities resident for tax purposes in a non-EU country.

The directive lays down anti-tax-avoidance rules in 4 specific fields to combat BEPS, while amending Directive (EU) 2017/952 (which only covered hybrid mismatches within the EU):

  • Interest limitation rules: where multinational companies artificially erode their tax base by paying inflated interest payments to affiliated companies in low-tax jurisdictions. The directive aims to dissuade companies from this practice by limiting the amount of interest that a taxpayer has the right to deduct in a tax period. The maximum amount of deductible interest is set at a maximum of 30% of the taxpayer’s earnings before interest, tax, depreciation (a measure of how much of an asset’s value has been used up at a given point in time) and amortisation (spreading payments over multiple periods).
  • Exit taxation rules: where taxpayers try to reduce their tax liability by transferring its tax residence and/or its assets to a low-tax jurisdiction, solely for the purposes for aggressive tax planning. Exit taxation rules aims to prevent the erosion of the tax base in the EU country of origin when high-value assets are transferred with ownership unchanged, outside the tax jurisdiction of that country. The directive gives taxpayers the option of deferring the payment of the amount of tax over 5 years and settling through staggered payments, but only if the transfer takes place within the EU.
  • General anti-abuse rule: this rule aims to cover gaps that may exist in a country’s specific anti-abuse rules against tax avoidance, and allows tax authorities the power to deny taxpayers the benefit of abusive tax arrangements. The general anti-abuse clause of the directive applies to arrangements that are not genuine to the extent that they are not put into place for valid commercial reasons that reflect economic reality.
  • Controlled foreign company (CFC) rules: in order to reduce their overall tax liability, corporate groups are able to shift profits to controlled subsidiaries in low-tax jurisdictions. CFC rules re-attribute the income of a low-taxed controlled foreign subsidiary to its more highly taxed parent company. As a result of this, the parent company is charged to tax on this income in its country of residence.

Rules on hybrid mismatches: where corporate taxpayers take advantage of disparities between national tax systems in order to reduce their overall tax liability, for instance through double deduction (i.e. deduction on both sides of the border) or a deduction of the income on one side of the border without its inclusion on the other side. To neutralise the effects of hybrid mismatch arrangements, the directive lays down rules whereby 1 of the 2 jurisdictions in a mismatch should deny the deduction of a payment leading to such an outcome.

For more information on how the Directive might affect your MIBC company or investments in Portugal, or fore detailed information on the transposition mechanism, please do not hesitate to contact us.

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Switzerland

The best of both worlds

In international taxation one can seldomly have the best of both worlds. However, Portugal is proving otherwise, thanks not only to the Madeira International Business Centre, but also to the Non-Habitual Resident (NHR) tax regime.

Created in September 23rd, 2009, the NHR regime is a set of personal income tax exemptions and reduced rates aimed at people wishing to transfer their residence to Portugal. Those qualifying for the NHR regime are entitled to the above-mentioned reduced rates for a period of 10 consecutive years.

Among the several tax benefits deriving from the NHR regime, is the tax exemption on foreign sourced income (interests, dividends, capital gains, income from real estate property (rents), royalties, intellectual property income and business income) provided that: these latter types of income can be taxed in the country of origin under a Double Taxation Agreement signed with with Portugal.

Given the above, potential investors with structures in Malta or Switzerland can relocate to Portugal and have peace of mind with respect to dividends/profits distributed by Maltese and Swiss companies (such as a SICAV type company – investment company with variable capital) to their shareholders benefiting from the NHR scheme.

In fact, the Portuguese Tax and Customs Authority not only applies full tax exemption on income received from the above entities (as generally foreseen in the Portuguese Personal Income Tax Code), but has also established recently binding information to its taxpayers that dividends paid to NHR shareholders of Maltese companies and SICAVs are exempt from personal income tax in Portugal.

In the light of the Double Taxation Treaty concluded with Malta in Portugal, the tax credit provided to shareholders is assimilated to dividends, taking into account the specificity of the Maltese tax system of imputing income to shareholders.

On the other hand, and although the Portuguese Personal Income Tax Code considers the income paid by a collective investment organization, namely a SICAV, to its participants, is as capital income, in light of the Double Taxation Treaty between Switzerland and Portugal, the same income is considered as dividends.

Further to the above, the same treaty establishes a situation of cumulative tax jurisdiction for this income, with Portugal being able to exercise taxation as the State of residence of the beneficiaries, and Switzerland, as the State of the source. Therefore, under the NHR regime, income deriving from SICAVs will be exempt from taxation in Portugal.

The NHR as a stand-alone option, or together with the corporate tax incentives under the Madeira International Business Center, makes available to international investors. a higher degree of international mobility and liquidity, the latter through a low corporate tax rate of 5% applicable to international services companies.

These features of the Portuguese Tax System make it possible for one to benefit from the best of both worlds.

auctor Miguel Pinto-Correia

MCS and its team have more than 20 years of experience in assisting private clients who want to transfer residence or invest in the Autonomous Region of Madeira.

Obtaining RNH status requires a careful assessment of the income structure of the potential beneficiary.

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