Category Archives: Investment

Changes in Portugal’s Nationality Law

The Assembly of the Republic has approved on July 23, some amendments to Portugal’s Nationality Law. The approved amendments aim to ease the access to Portuguese nationality for grandchildren, spouses or non-married partners of Portuguese citizens.

Those who are Portuguese’s grandchildren, face now two major requirements: the ascendant, who must have Portuguese nationality in the original form; and proof of connection to the Portuguese community will now be proven, provided that the applicant proves to have sufficient knowledge of the Portuguese language.

In the case of acquisition of citizenship by marriage or non-marital partnership, the major change concerns the duration of the marriage or partnership. under the new law approved by the Portuguese parliament the requirement concerning the duration of the marriage or partnership – 3 years—does not apply if the couple has children with Portuguese citizenship.

In addition to the above legal recognition by a court of the partnership is also waived if the couple has a Portuguese child.

Regarding the acquisition of nationality by Sephardic Jews, the Parliament has authorized the Government to implement, within 90 days, objective requirements for proof of effective connection to Portugal. These new rules approved by Parliament mean that, acquisition of nationality by Sephardic Jews will become more difficult.

Last but certainly not least, changes to the nationality also wide de possibility of acquiring Portuguese nationality through jus soli. In accordance with the new rules approved by the Portuguese parliament: individuals born in Portugal, children of foreigners who are not in the service of their State and who do not declare that they do not want to be Portuguese, at the time of birth, one of the parents is legally resident in Portugal or, regardless of the title, has been resident in Portugal for at least one year.

The approved amendments will enter into force on the day following its publication, once presidential assent is given, which is expected to be soon.

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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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Bitcoin

Cryptocurrency Taxation in Portugal

Portuguese Central Bank’s position on cryptocurrencies

Since there is no central entity that guarantees the irremovability and finality of payment orders, virtual currency cannot be considered a safe currency, as there is no certainty of its acceptance as a means of payment. The same is to say that the Portuguese Central Bank (Banco de Portugal) does not technically recognise cryptocurrency as currency per se due to lack of monetary policy regulation.

Portuguese Tax and Customs Authority’s position

It is the understanding of the Portuguese Tax and Customs Authority that, “cryptocurrencies are not technically considered “currency” because they do not have a legal tender or liberating power in Portugal, however, (…) they can be exchanged, with profit, for real currency (…), with specialized companies for the effect, with its value, compared to the real currency, being determined by the online demand for cryptocurrencies”. Its position is, therefore, in line with that of the Portuguese Central Bank.

As such, income resulting from the sale of cryptocurrencies will not be taxable under the Personal Income Tax Code, within the scope of category E (referring to capitals), nor subject to being taxed under category G (referring to equity increases, as capital gain).

Furthermore, it is also the understanding of the Portuguese Tax and Customs Authority that the profits obtained from the sale of cryptocurrencies are not taxable under the Portuguese tax system, unless by their regularity ends up constituting a professional or entrepreneurial activity of the taxpayer, in which case it will be taxed as a qualifying income under the category B (freelancing) of the Personal Income Tax Code.

Last, but not least, the Portuguese Tax and Customs Authority issued clear guidelines in January 2019 providing many answers to questions related to dealing with cryptocurrency, reporting obligations, cryptocurrency invoicing rules, rules for initial coin offerings,etc…

European Court of Justice and VAT

Jurisprudence of the European Union Court of Justice (EJC) on bitcoin, states that  its sale is an onerous activity, subject to VAT, but covered by the exemption, as with other means of payment with a liberating value . “Considering the decision handed down by the ECJ (…) the exchange of cryptocurrency for‘ real ’currency constitutes a provision of services carried out against payment, exempt from VAT”.

Thus, the Portuguese Tax and Customs Authority concludes that although “cryptocurrency remuneration is a service provision subject to VAT”, the VAT code article that defines the exemptions covers “also cryptocurrency transactions”.

In the medium-long run

It is expected that, in the medium term, cryptocurrencies will be regulated and their tax regime concretely defined. In fact, its regulation may not imply taxation of the income derived from them. However, it is expected that it may eventually pass through its classification as financial assets, and through its classification as a security or derivative – not as a currency for purchase and sale transactions – with a consequent change in the definition of a security. Should this be the case, the respective income, obtained by taxpayers who do not engage in any activity related to cryptocurrencies, could eventually be taxed as passive income, such as capital income (for examples as dividends in proportion to the original investment) or capital gains.

Conclusion

Although Portugal has great conditions, from a personal income tax and VAT standpoint, for those who income is generated through cryptocurrencies, some uncertainty remains due to the fact that there’s no regulatory framework, which in turns makes it difficult for individuals (and companies) to open bank accounts in the country to be used for the purpose of trading.

Further to the above, crypto traders opting for taking up residency in Portugal, and more specifically Madeira Island (due to is safe haven status during the Covid-19 pandemic) for tax purposes, may combine the above benefits with the ones available under the Non-Habitual Resident taxation regime, under which most the foreign sourced income is exempt.

MCS and its team has more than 20 years of experience in assisting international investors and expats making their move to Portugal and Madeira Island. Should you request our assistance do not hesitate to contact us.

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COVID_19

Getting to Madeira amidst COVID-19

The Government of the Autonomous Region of Madeira (RAM) has defined, in relation to the Standardization Plan for Air Accessibility, to be in force as of July 1, with regard to travelers to the airports of Madeira and Porto Santo:

  1. Filling out and submitting the epidemiological survey
    Survey in portuguese: http://apps.iasaude.pt/s-alerta/questionarios/viagem/questionario.cfm?l=PT
    Survey in other foreign languages: http://apps.iasaude.pt/s-alerta/questionarios/viagem/

All passengers must complete the Regional Health Authority’s (IASAÚDE) form.

The form should be filled in previously to the trip, between 48 and 12 hours before departure.

The survey is available at the Regional Health Authority’s website and, will also be accessible through airlines’ websites that so consent.

Alternatively, the completion of the survey, on paper, may occur on arrival at airports in the Autonomous Region of Madeira.

  1. Thermal Screening

All passengers landed at airports in Autonomous Region of Madeira are subject to thermal screening, even if they carry a negative test for COVID-19 disease, carried out within 72 hours prior to landing, in laboratories certified by national or international authorities.

  1. COVID-19 disease test

Each traveller who disembarks at the airports of the Autonomous Region of Madeira is obliged to alternatively fulfill, and under the supervision and guidance of the competent health authorities, that which is established in one of the following paragraphs:

  1. a) Provide proof of having performed a PCR test to screen for SARS-CoV-2 with a negative result, provided that it is carried out within a maximum period of 72 hours prior to disembarkation;
  2. b) Conduct, through the collection of biological samples upon arrival, a PCR screening test for SARS-CoV-2, to be carried out by the health authority, and remain in isolation, in the respective home or in the intended accommodation establishment, until obtaining a negative result from the test.
  3. c) Carry out voluntary isolation, for a period of 14 days, at your home or at the accommodation establishment where accommodated, and if the accommodation period is less than 14 days, the confinement will have the duration of the accommodation period.
  4. d) Return to the destination of origin or any other destination outside the territory of the Autonomous Region of Madeira, fulfilling, until the time of the flight, isolation at home or in the accommodation establishment where accommodated.

3.1. The PCR screening tests for SARS-CoV-2 considered for the purposes of paragraphs a) and b) are those certified by national authorities and recommended by international health authorities, the European Centre for Disease Prevention and Control (ECDC) and the World Health Organization (WHO);

3.2. The financial costs incurred at the Hotel where the traveller is accommodated, in the cases referred to in paragraphs b) and c) of number 3 are the responsibility of the traveller alone.
Criteria for submission to the SARS CoV2 test in childhood and pre-adolescence:

  • Children from 12 years old, subject to prior decision by the Health Authorities;
  • Children with suspect criteria for COVID 19 disease;
  • Children whose family members or companions are suspected cases;
  • Other situations validated by the Health Authorities.
  1. Monitoring

All passengers will be monitored through an APP (mobile application) “Madeira Safe to Discover” of the Regional Health Authority, of voluntary, but recommended use, or by telephone contact.

  1. Positive test result for COVID-19 disease

Mandatory confinement, if necessary compulsively, for a period of 14 days, in a health establishment, in the respective home or in an accommodation establishment, by decision of the competent health authorities:

a) For patients with COVID-19 and those infected with SARS-CoV-2;

b) For citizens for whom the health authority or other health professionals have determined active surveillance.

  1. Repatriation

The Government of the Autonomous Region of Madeira collaborates with all Diplomatic Authorities and Operators involved.

All charges related to repatriation operations must be covered by passengers’ travel insurance.

Travellers between Madeira and Porto Santo are currently free from any control by Health authorities.

The Regional Government of Madeira, through the Regional Secretariat for Tourism and Culture, and Madeira Promotion Bureau are working side by side with all stakeholders to relaunch the Destination. Our teams are always available to share information.

​Therefore:

  • We advise that contacts be made with the respective airlines, tour operators, or travel agents to adjust returns.
  • The Archipelago ports’and marinas are closed.

Madeira was the first region in Portugal to implement a “Contingency Plan for Emerging Infections: Coronavirus”, presented on 03 February 2020, a document that is subject to continuous updates.

Link (download): Plano de Contingência para Infeções Emergentes: COVID-19 da RAM  (Contingency Plan for Emerging Infections: Coronavirus – COVID 19  in Madeira Islands) – portuguese version

Please consult the poster with health recommendations regarding Coronavirus – COVID 19: https://covidmadeira.pt/

For more information, browse the IASAÚDE microsite for regular updates at : https://covidmadeira.pt/

For more information on which countries have not been blocked from flying to Portugal, please consult the IATA’s website.

Source: VisitMadeira

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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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Reconversion of Local Accommodation

In recent years Portugal has been considered a safe haven for several expats and foreign investors, who in turn have contributed on a large scale to the improvement of the Portuguese economy, by investing in the real estate sector, sometimes simultaneously associated with the tourism sector, namely in local accommodation (short terms tourist rentals, known in Portugal as alojamento local), or because many wish to relocate  their life and busines activity, permanently, to the country.

Several programs were launched to attract these investors and expats, including programs with attractive tax benefits such as the Non-Habitual Resident (NHR) regime, or the   “Golden Visa“, a residence by investment program of which most of the investments were  made  through the acquisition of real estate property.

In recent years, these programs have led to an exponential increase of real estate acquisition, especially in large urban and tourist areas, which has also contributed emphatically to the growth of the tourism sector, since a  large percentage of real estate acquisition has been  allocated to local accommodation.

Despite the crisis arising from the pandemic outbreak of Covid-19, the “Golden Visa” maintains a good level of adherence and demand by investors. In May of this year, there was a new increase in the value of real estate investment, a total of 137 million euros, the highest monthly investment value since March 2017.

Despite the message of confidence passed on by investors during the crisis, the global pandemic has exacerbated some socio-economic effects that were already worrying the Portuguese government, especially housing in large urban areas.

The strong demand for profitable properties, under the “Golden Visa” program, coupled with the growth of tourism activity in Portugal, and consequently the growing investment in local accommodation, has aggravated the price of housing rentals, especially in the large urban centers where the majority of real estate investment is made, and where the highest percentages of local accommodation.

On June 6, 2020, Resolution of the Council of Ministers No 41/2020 was published, approving the Economic and Social Stabilization Program, which contains measures for the conversion of local accommodation.

There is great uncertainty as to the direction of the tourism sector, how and when it will rise and how the sustainability of housing prices and rentals will be in these times of pandemic. Tourism has held back its breath, and those who have invested in local accommodation may need an oxygen balloon in the short-term.

In view of the urgency of responding to the middle-income population in obtaining affordable housing leases and the fact that the tourism sector, in particular local accommodation, is experiencing major difficulties due to restrictions on international travel, the measure of reconversion of local accommodation could be a response in order to combat both problems.

The measure itself is implemented through the Portuguese government’s support to municipal rental and sub-rental programs for more affordable rents. In these programs public entities pay 50% of the difference between the rental income paid and the rental income received, which will certainly give increased security to the landlord, because 50% of the income is guaranteed by public entities.

To the above benefit there is also an important advantage concerning personal income tax and corporate income tax exemption, on rental income resulting from the lease or sub-lease, as stipulated by Article 20 of Decree-Law No. 68/2019.

This option concerning the conversion of local accommodation into long term rentals may be even more appealing, considering the amendment to Article 3(9) of the Personal Income Tax Code, carried out by the 2020 State Budget. Such change foresees that the local accommodation does not generate a capital gain when the property is transferred back to the owner’s estate, if said property is immediately assigned to generated long term rental income.

With this measure, a potential solution remains open for investors who have earmarked their real estate investments for local accommodation, and who now want to secure a source of income,  which although not as attractive as that obtained in many cases through local accommodation, is in the current scenario of economic crisis, a more sustainable and stable source of income.

auctor Pedro Marrana

MCS and its team has more than 20 years of experience in assisting corporate and private clients wishing to relocate to Madeira. For more information on our services please do no not hesitate to contact us.

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Reconversão de Alojamento Local

Nos últimos anos Portugal tem sido considerado um refúgio seguro para diversos expatriados e investidores estrangeiros, que por sua vez têm contribuído em grande escala para a melhoria da economia portuguesa, quer pelo investimento feito no sector imobiliário, ou do imobiliário simultaneamente associado ao sector turismo, nomeadamente apostando no alojamento local, ou ainda pelo facto de muitos realocarem a sua vida e atividade, de uma forma permanente, para o território português.

Foram lançados diversos programas para a captação destes investidores e expatriados, contemplando programas com aliciantes benefícios fiscais como é o caso do regime do Residente Não Habitual, ou programas de “Golden Visa”, onde é atribuída autorização de residência através do investimento no território nacional, tendo a maioria do investimento sido realizado através da aquisição de imóveis.

Nos últimos anos, os referidos programas promoveram um aumento exponencial na aquisição imobiliária, especialmente nos grandes meios urbanos e turísticos, o que também contribuiu de forma enfática no crescimento do sector do turismo, acima de tudo pelo facto de vasta percentagem da aquisição imobiliária ter sido alocada para o sector do alojamento local.

Apesar da crise instalada por conta do surto pandémico da Covid-19, o “Golden Visa” manteve um bom nível de adesão e procura pelos investidores, visto que em Maio do corrente ano, ocorreu um novo aumento no valor do investimento imobiliário, na ordem dos 137 milhões de euros, tendo sido o valor mensal de investimento mais elevado desde Março de 2017.

Não obstante a mensagem de confiança passada pelos investidores em plena situação de crise, a pandemia global veio a agudizar alguns efeitos socioeconómicos que já vinham a preocupar o Estado português, especialmente no campo da habitação dos grandes meios urbanos.

A forte procura por imóveis rentabilizáveis, por parte dos investidores do programa dos “Golden Visa”, aliado ao crescimento da atividade turística em Portugal, e consequentemente do crescente investimento no alojamento local, veio a agravar a crise na sustentabilidade do arrendamento habitacional, especialmente nos grandes polos urbanos onde é efetuado a maioria do investimento imobiliário, e onde se encontram as maiores percentagens de alojamentos mobilados para turistas.

A 06 de Junho de 2020, foi publicada a Resolução do Conselho de Ministros n.º 41/2020 na qual foi aprovado o Programa de Estabilização Económica e Social, onde consta uma medida de Reconversão de Alojamento Local.

A realidade atual é de uma grande incerteza quanto ao rumo do sector do turismo, de como este se irá reerguer, em quanto tempo, e como será a sustentabilidade do alojamento local nestes tempos de combate à pandemia. O turismo susteve a respiração, e quem investiu no alojamento local poderá necessitar a curto-médio prazo de um balão de oxigénio.

Tendo em conta a urgência de dar resposta à população com rendimentos intermédios, na obtenção de arrendamento habitacional, e pelo facto de o sector do turismo, nomeadamente do alojamento local, estar a atravessar grandes dificuldades devido às restrições nas deslocações internacionais, esta medida de reconversão de alojamento local poderá ser uma resposta por forma a combater ambas as dificuldades.

A medida em si é concretizada através do apoio do Estado Português a programas municipais de arrendamento e subarrendamento com rendas mais acessíveis, sendo que as entidades públicas comparticipam em 50% a diferença entre a renda paga e a renda recebida, o que dará certamente uma segurança acrescida ao senhorio, pelo facto de 50% da renda ser garantida pelas entidades públicas.

Ainda acresce uma importante vantagem pela isenção de tributação em sede de IRS ou IRC, sobre os rendimentos prediais resultantes do contrato de arrendamento ou subarrendamento, conforme estipulado pelo artigo 20.º do Decreto-Lei n.º 68/2019.

Esta opção pela reconversão do alojamento local para o arrendamento poderá ser ainda mais apelativa, tendo em conta a alteração do n.º 9 do artigo 3.º do CIRS, levada a cabo pelo Orçamento de Estado de 2020, passando a não ser considerada como mais-valia a transferência para o património particular do empresário de bem imóvel habitacional que seja imediatamente afeto à obtenção de rendimentos da categoria F.

Com esta medida, fica em aberto uma potencial solução para os investidores que destinaram os seus investimentos imobiliários ao alojamento local, e que pretendam agora garantir uma fonte de rendimento, que embora não seja tão atractiva como a que era obtida em muitos casos através do alojamento local, é no atual cenário de crise económica, uma fonte de rendimento mais sustentável e estável.

auctor Pedro Marrana

A equipa da MCS conta com mais de 20 anos de experiência em consultoria fiscal a empresas e indivíduos. Se necessitar da nossa assistência entre em contacto connosco.

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Madeira is open for business

Starting July 1, Madeira and Porto Santo, Portugal, will be open to international travelers. To ensure security for both visitors and residents, all people traveling to the Atlantic islands will have to either present a negative test done within 72 hours prior to departure or be tested upon arrival (without any costs; COVID-19 tests on arrival will be paid for by the Madeira Government).

The Madeira Islands, Discover Madeira says, are focused on being a COVID-safe destination and are working with SGS, a world leader in certification, to ensure good practice across the destination to minimize risk in the wake of COVID-19 (coronavirus).

In May, Madeira developed a good practices document to deal with COVID-19. These measures are intended to provide comfort to those who travel and, ultimately, for the wellbeing of all. These three initiatives—to cover testing costs, partner with SGS in certification and develop a good practices document—form the destination’s plan to ensure a safe vacation for all visitors.

Good to know: According to Discover Madeira, the Portuguese island had very few cases of COVID-19 and acted quickly to control the virus on the archipelago. Portugal, overall, has been commended for its response to coronavirus. At present, Madeira has registered 90 positive cases of COVID-19, 67 recovered cases and no deaths.

Of volcanic origin, its location provides a mild climate and sea all year round, in addition to scenery of mountains, valleys and cliffs, all covered by the Laurissilva vegetation, named Natural Heritage of Humanity by UNESCO. The archipelago is formed by a set of islands, the main and only inhabited being Madeira and Porto Santo.

in Travel Agent Central

Offering unique corporate and personal tax advantages to expats and digital nomads, Madeira is a reference in Portugal for those looking to work and live in the sun. We at MCS have more than 20 years of experience in assisting companies, expats, digital nomads and entrepreneurs relocating to the Pearl of the Atlantic.

 

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Portugal and Madeira are “Safe Travels”

Portugal

Portugal was awarded the “Safe Travels” seal by the World Travel & Tourism Council (WTTC), which aims to certify destinations that comply with hygiene and safety rules and aims to give confidence to those who travel after restrictions to avoid the spread of covid-19. “This seal aims to recognize destinations that comply with health and hygiene protocols aligned with the Safe Travel Protocols issued by the WTTC, helping, above all, to instil confidence in consumers, so that they feel they can travel safely as soon as restrictions raised, “explains the Ministry of State, Economy and Digital Transition, in a statement. The Secretary of State for Tourism, Rita Marques, considers that the award of the seal comes to reward the effort made in the country. “Portugal was a pioneer in the launch of the Clean & Safe seal. This WTTC seal comes to reward the effort that was made by all. The best destination in the world is also understood as the safest in the world”, said the minister. The WTTC also published guidelines for other sectors, such as restaurants, street shopping, aviation, airports, congress centers, meetings and events. The seal can be obtained through the World Travel & Tourism Council website.

in Expresso

Madeira Island

According to the Regional Government, Madeira is the first tourism region to have a destination certification process underway by an internationally recognized multinational.

“Madeira was the first region in Portugal to have a manual of good referencing practices for the sector, participated by the sector, and it is the first tourism region that we know, until now, with an ongoing certification process”, said Eduardo Jesus, Secretary for Tourism, in an interview with the Portuguese news agency, Lusa.

The Secretary for Tourism pointed out that the epidemiological situation of this autonomous region in the context of the COVID-19 pandemic, with 90 cases, 60% of which were recovered, and the absence of deaths caused by the new coronavirus, make Madeira “a very unique and quite differentiated ”, placing this destination“ on a completely different level from the markets with which it regularly works”.

“We want to have the first certifications in July”, he pointed out, explaining that this process “is distinct” from the seal (Covid Safe Tourism) which has “a more immediate logic”, a “short reach”, just filling out a survey, while “Certification requires the implementation of practices”, depending on the verification of the proper implementation “.

Eduardo Jesus emphasized that certification “is a different commitment and one does not invalidate the other”.

“Here the key is that what you do, you do it well. And to do well is not being able to create a false expectation for the traveller ”, based on three prevention criteria, which“ must always be verified in any circumstance: social distance, use of personal protective equipment and health security ”.

“If we apply these three directories at any point during the trip, we have the process safeguarded. That is, before getting on the plane, on the plane, when leaving the plane, when making the first ground transportation, when going to the accommodation, when circulating inside and outside the accommodation, at all these moments there are three major lines to check orientation ”, he stressed.

The Madeiran government official also maintained that everything that is done must “attend to these three universes: whoever visits, who works and who resides”.

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Netherlands to Change Tax Law

Netherlands to change tax law by introducing withholding tax on dividends.

The change is expected to come into effect in 2024, and to be only applicable to dividends sent to countries that have a corporate tax rate of under 9 percent and are included in the EU’s blacklist of non-cooperative tax jurisdictions.

Still in the draft-making, the proposed tax is foreseen to be implemented in combination with a withholding tax on interest and royalty payments that will be effective in 2021.

According to the Dutch State Secretary for Finance, Hans Vijlbrief, “this additional withholding tax represents another major step in our fight against tax avoidance,” as “financial flows channelled from or through the Netherlands to another country where they are not or not sufficiently taxed, will soon no longer go untaxed.” The State Secretary for Finance also stressed that “it’s now vital to make even better international agreements to prevent other countries being used for tax avoidance purposes”.

This expected change to Netherland’s tax law shows that the Netherlands has ceded to international pressure regarding claims that the country used for tax evasion.

in TaxLink

The Netherlands and the Madeira International Business Center (MIBC)

Although at a first glance one would expect that such measure could ruin international groups of companies where money flows exist between the MIBC (given it 5% corporate tax rate) and the Netherlands it is important to mention the following:

  • The MIBC is not an offshore jurisdiction, but a form of State Aid duly approved and regulated by European Union authorities and Portuguese authorities;
  • Companies operating with the MIBC are subject to state of the art economic substance requirements (without which the 5% corporate income tax rate is not granted);
  • The Netherlands cannot discriminate, under EU-Law, a Member State nor their outermost regions.

Further to the above, once concludes that the foreseen tax changes affecting Netherlands do not affect companies licensed to operate within the Madeira International Business Centre. In fact company formation (or company incorporation) in Portugal, for international services, is much more efficient within the scope of the MIBC.

auctor Miguel Pinto-Correia

MCS and its team has more than 20 years of experience in assisting corporate and private clients wishing to invest in Portugal or within the Madeira International Business Center. For more information on our services please do no not hesitate to contact us.

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