Madeira Island, has asserted itself as a digital nomad paradise not only due to its tax friendly policy towards corporations and individuals, but also due to its internet connection and infrastructure.
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.
Further to the above, and as of 2021m Madeira is also benefiting from the EllaLink connection.
EllaLink is a optical platform offering secure high capacity connectivity on a low latency transatlantic route (<60 ms round-trip delay time between Portugal and Brazil), linking major terrestrial and subsea hubs in Europe and Latin America. EllaLink is a privately funded and independent company committed to providing services on a Carrier Neutral, Open Access basis.
EllaLink will provide telecoms connectivity between Europe and Latin America connecting key financial centres, major data centres and the key population’s areas. EllaLink will be providing the first-ever direct fibers between the two continents with a point of presence in Sines, Madrid, Lisbon, Marseille, Barcelona, Fortaleza, São Paulo and Rio and onward connectivity to the USA, Europe, Asia, and Africa and the Middle East.
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It’s that time of of the year again: Henley & Partners have published their Global Passport Index and with it you will find another reason to apply for Golden Visa in Madeira.
This year Portugal is ranking #6 in the Top 10 of the world’s most coveted passports list. The Portuguese passport currently outranks countries such as Switzerland, United States, United Kingdom, Norway, Belgium, New Zealand, Malta and Austria.
Through investment in real estate, investment funds or bank transfer, third-country applicants (including British nationals) can not only secure residency in Portugal, access the Schengen Area, but also apply for citizenship (on the 6th year residency) with basic knowledge of Portuguese language.
Given the popularity of the Golden Visa program, starting from July 21, the Portuguese Government will no longer allow investments in the Portuguese metropolitan and coastal areas, including Lisbon, Porto, and the Algarve coastline. These new rules mean that the coveted Madeira Island will be receiving most of the real estate investments.
Madeira Island property market is also on the rise. The sector’s agents confirm high sales, strong supply and intense rental demand. Houses traded in Madeira rose 10% in number and 22% in value in the third quarter of 2020.
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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 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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Do I need to file taxes in Madeira? This is the main question that expats relocating to Madeira ask to us as tax consultants. This is the most simple answer we can give: if you are resident, for tax purposes, yes (this includes non-habitual tax residents status holders).
Tax Residency
Tax residency, in the case of expats, is obtained either by having lived for more than 183 days (consecutive or not) in Madeira/Portugal 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.
Taking into consideration the above, residents, for tax purposes, are obliged to file personal income tax in Madeira/Portugal reporting their worldwide income earned, IBAN (or equivalent) number of foreign bank accounts held and corresponding taxes paid (in Portugal and/or abroad).
Fines
According to Article 116 of the General Taxation Infringements System, failure to file a tax return within the legal deadline is punishable by a fine of 150 to 3,750 euros.
If one decides to hand over the tax return on your own initiative, within 30 days of the end of the reporting obligation, one may be left with the minimum fine, which is 25 euros (12.5% of the minimum legal amount). This only applies if the Portuguese Government has not been penalized in its initial declaration (i.e. if it has not received amounts to which it was not entitled).
But if one hands in tax return more than 30 days after the deadline one will have to pay a minimum fine of 37.50 euros (25% of the legal minimum), which can go up to 112.50 euros if, by the time you regularise the situation, the Tax Authority has already initiated an audit.
This reduced fine must be paid within 15 days of notification. If this payment is not made within the time limit, administrative offence proceedings will be initiated and the minimum fine applicable will be EUR 150 to which the costs of the proceedings will be added.
If the failure to make a declaration is delayed, the fine may be as high as EUR 3 750. Also in this context of delay, if the tax authority finds inaccuracies or omissions in its tax return, the fine ranges from EUR 375 to EUR 22 500.
Exchange of Information
Tax authorities in the EU have therefore agreed to cooperate more closely so as to be able to apply their taxes correctly to their taxpayers and combat tax fraud and tax evasion.
Administrative cooperation in direct taxation between the Competent Authorities of the EU Member States helps to ensure that all taxpayers pay their fair share of the tax burden, irrespective of where they work, retire, hold a bank account and invest or do business. This is based upon Council Directive 2011/16/EU which establishes all the necessary procedures, and provides the structure for a secure platform for the cooperation.
Scope: the scope of the Directive encompasses all taxes of any kind with the exception of VAT, customs duties, excise duties and compulsory social contributions because these are already covered by other Union legislation on administrative cooperation. Also recovery of tax debts is regulated via its own legislation.
The scope of persons covered by particular exchanges of information depends on the subject matter. The Directive covers natural persons (i.e. individuals), legal persons (i.e. companies), and any other legal arrangements like trusts and foundations that are resident in one or more of the EU Member States.
Exchange of Information: the Directive provides for the exchange of specified information in three forms: spontaneous, automatic and on request.
- Spontaneous exchange of information takes place if a country discovers information on possible tax evasion relevant to another country, which is either the country of the income source or the country of residence.
- Exchange of information on request is used when additional information for tax purposes is needed from another country.
- Automatic exchange of information is activated in a cross-border situation, where a taxpayer is active in another country than the country of residence. In such cases tax administrations provide automatically tax information to the residence country of the taxpayer, in electronic form on a periodic basis. The Directive provides for mandatory exchange of five categories of income and assets: employment income, pension income, directors fees, income and ownership of immovable property and life insurance products. The scope has later been extended to financial account information, cross-border tax rulings and advance pricing arrangements, country by country reporting and tax planning schemes. These amendments which extend the application of the original Directive are loosely based on the common global standards agreed by tax administrations at international level, notably at the OECD. However, they sometimes go further and importantly they are legislative rather than being based on political agreement without legislative force. The Directive provides for a practical framework to exchange information – i.e. standard forms for exchanging information on request and spontaneously, as well as computerised formats for the automatic exchange of information – secured electronic channels for the exchange of information and a central directory for storing and sharing information on cross-border tax rulings, advance pricing arrangements and reportable cross-border arrangements (“- tax planning schemes”). Member States are also required to provide a feedback to each other on the use of information received, and to examine together with the Commission how well the Directive supports the administrative cooperation.
- Other Forms of Administrative Cooperation: The Directive provides for other means of administrative cooperation such as the presence of officials of a Member State in the offices of the tax authorities of another Member State or during administrative enquiries carried out therein. It also covers simultaneous controls allowing two or more Member States to conduct simultaneous controls of person(s) of common or complementary interest, requests for notifying tax instruments and decisions issued by the authority of another Member State.
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Americans are relocating to Madeira Island, Portugal, in search of not only good weather, but a safe island cosmopolitan life in Europe. Find out why, American pensioners and digital workers/nomads are choosing Madeira.
“Of all islands, the most beautiful and free,” is the Madeira’s motto. Backing up this assertion, H.N. Coleridge once said: “I should think the situation of Madeira the most enviable on the whole earth. It ensures every European comfort with almost every tropical luxury.”
Living in Madeira
Where is Madeira?
Madeira is an archipelago, and a Portuguese Autonomous Region, in the Atlantic Ocean. It is interesting to know that the island is closer to northern Africa than it is to Portugal’s mainland. It is 400 km (249 miles) from the Canary Islands, 800 km (497 miles) from Africa and 1,200 km (746 miles) from Lisbon.
Madeira’s unique geographical location is what turned Portugal into the first global empire in the 15th century. It is the meeting point between three continents – Europe, Africa and America. Cristiano Ronaldo International Airport (FNC) connects the island to international airports an to the Portuguese mainland.
Madeira’s Eternal Spring
In terms of climate, Madeira is characterized by an all year-round spring-like weather which make it so famous among its residents and visitors. During Summer, Spring and Fall, temperatures vary between 17ºC (62.6ºF) and 24.ºC (75.2ºF). As for the Winter months temperatures will vary between 14.ºC (57.2ºF) and 20.ºC (68ºF).
Last, but not least, note that the number of hours of sunshine per year reaches values as high as 3300, a 70% larger value than the ones found in northern Europe.
Given the above it is easy to understand why Madeira is famously known as the “Pearl of the Atlantic”.
What is life like in Madeira?
Just 55 minutes from Funchal, you can explore the wild coastal north and the town of Porto Moniz. Or, in 40 minutes, you can reach the sunny and peaceful village of Jardim do Mar, which both kisses the vast Atlantic Ocean and is walled by mountains.
Day-to-day life in Madeira is stress-free for locals, expats, and tourists alike, and the cultural offerings are immensely diverse for an island. Museums with Flemish and religious art, churches hosting organ music festivals, monthly symphonic orchestra and chamber music concerts, gastronomical and traditional folk festivals throughout the year, and recurring art exhibitions are just some examples of Madeira’s active cultural scene.
If you tired of the cultural agenda, you can always find peace on the neighbouring island of Porto Santo. A two-hour ferry trip takes you to one of Portugal’s “7 Natural Wonders”—Porto Santo’s 9 kms of healing-sand beach.
If you’re not up for a boat trip, you can indulge in a weekend at Reid’s Palace—Sir Winston Churchill’s outstandingly glamorous hotel of choice.
Having that said Madeira has a lot to offer to its residents. All most everything you need is possible to find on the island.
And if you cannot find what you need, do not stress about it. Amazon, Ebay, AliExpress, Wish and Joom deliver to the island and Cristiano Ronaldo Airport connects you to all the major European capitals—including Paris, Brussels, London, Berlin, and Zürich…
Portuguese is the Language, but English is everywhere
Portuguese is the official language and spoke by all on the Autonomous Region and due to being a tourist destinations since the 19th century English is very common all across the Madeira and Porto Santo, a certainly a given in the capital of Funchal.
Working and Business in Madeira
If you are planning to relocate to Madeira please note that it will be difficult to find a a job, and even if you do it will most likely be in the tourism sector. Also note that is not easy to find a permanent job in Madeira, but still possible.
One way, which is supported by the government, is to open your own business. Here tax benefits are plenty. Those looking into incorporating a company in the services sector and aiming for international clients can benefit from the lowest corporate tax rate in Europe, just 5%, through the Madeira International Business Centre.
If you are fortunate to be a digital nomad or a remote worker, then you can benefit from the tax regime applicable to expats, the Non-Habitual Resident tax regime. Which can be combined the Madeira International Business Centre if you are looking to attract qualified staff.
Cost of living, from accommodations to amenities, are cheaper than in Algarve
With rents and restaurant prices an average 10.5% lower than those in the Algarve where rents and restaurant prices are one of the best bargains in Western Europe. Madeira is one of the most affordable places to spend time in this part of the world. Utility costs are lower here, too—electricity is as much as 21.8% lower than in the Algarve, internet 11.2% less costly.
And VAT is one percentage point lower than on the Portuguese mainland.
Mainlanders find prices in Madeira similar to theirs and some things are even cheaper. As in every place in the world go where the locals go and everything will be cheap.
As for fruit or wine these cost three or four times less than in Europe, for example.
For a term of comparison Portugal ranks in the Top 30 Cheapest Countries in Europe (Numbeo), surpassing Spain, Malta, Greece, and France. Add this to the special tax regime available to new residents and businesses and your savings will increase even more.
As being fully integrated within the European Union, please note that the Autonomous Region of Madeira uses the same currency as the rest of Portugal, i.e. the Euro (€).
Housing in Madeira
Madeira Island’s real estate market has been booming in the last couple of years, offering a wide variety of real estate investment opportunities to those looking for a truly international real estate market and without the inflated prices that have been afflicting the Portuguese mainland.
Official statistics collected from the Portuguese National Statistic Institute and the Directorate of Statistics of the Madeira Regional Government showed that, already in 2018, the median value of rents for new leases of family accommodation in Madeira was EUR 5.15 / m2, which is higher than the value registered for Portugal (EUR 4.39 / m2). These numbers positioned Madeira as the second region among the seven regions with the highest median of rental income, behind the Lisbon Metropolitan Area (EUR 6.06 / m2) and ahead of the Algarve (EUR 5.00 / m2), which came in the third position.
According to the same authorities, the median price of housing in Madeira remained among Portugal Top 3 regions. In 2018 the Algarve (EUR 1,500 / m2), the Lisbon Metropolitan Area (EUR 1,318 / m2) and the Autonomous Region of Madeira (EUR 1,203 / m2) were all above the national average of EUR 984 /m2.
The above mentioned values are sustained by the fact that the Autonomous Region of Madeira is the solely year-round tourism destination in Portugal due not only to its permanent spring-like weather climate, but also because of its tourism history that dates back to the 19th century when it was a coveted destination among European royalty and nobility. Among these illustrious guests you will find Empress Sisi of Austria, Emperor Maximilian of Mexico, and, later, Sir Winston Churchill stayed for extended periods, and more recently Queen Silvia of Sweden and Crown Princess Victoria of Sweden.
Funchal, the island’s capital, is the place to be. The city is not only the prime tourism center, but also the political, economic and scholarly center (all higher education institutions, including the University of Madeira, are located here) of the island. With a population of 111,892, Funchal is Madeira’s major city and home to almost 42% of the four-island archipelago’s population.
In Funchal’s civil parishes of Sé and São Martinho apartment rents can yield a monthly rental income (long-term rental) between EUR 1,800 to EUR 2,000 for a EUR 270,000 investment in 196 m2 apartment. Should you opt for short-term rentals, in the likeness of AirBnB, the same well-located apartment can yield between EUR 500 and EUR 1,000 per week.
Outside the municipality of Funchal, the long term rental income decreases per square meter decreases, namely in the municipalities of Santa Cruz (4.46 € / m2), Câmara de Lobos (3.81 € / m2) and Machico (3.68 € / m2).
However, just like the Madeiran capital, the city of Santa Cruz, especially in the civil parish of Caniço, can yield good short-term rental income (EUR 1,200/week) due to the fact that this area of Madeira is popular with the Germanic market. The trick here is to invest in a villa with a good view over the Atlantic Ocean. In the Caniço civil parish, villas start at EUR 250,000 and depending on the view you have over the ocean they can go up half a million or more euros, specially in the highly coveted Garajau area.
Apart from the existing houses and apartments already available for sale, some stakeholders in the Madeiran real estate market are offering once in a lifetime investment opportunities that can turn into great short-term rental income sources: bespoke modern villas and traditional Madeiran manorial houses known locally as Madeiran “quintas”.
While those offering bespoke villas usually require an initial investment of at least EUR 350,000 for a fully personalized villa built from scratch and along the famous banana line, in the municipalities of Ponta do Sol and Ribeira Brava, a Madeiran quinta will never be sold below EUR 1 Million threshold.
The advantage of a bespoke villa project is that with a single investment you get the opportunity to built a house the way you like and, depending on the plot you get, you can built two additional luxury bungalows for short-term renting and with an expected yield of EUR 1.000/week.
On the other hand, Madeiran quintas are usually set in nature, or “hidden” within the city center, and have a particular architecture, which mixes the local style and the British style. They are always surrounded by beautiful gardens, with paths covered with rolled pebbles, among centuries-old trees, flowers, ponds and even modern swimming pools. These type of real-estate has always been favored by Madeiran nobility, merchants and British since the 18th century.
Most of the quintas available for sale in the Madeiran real estate market are superbly preserved and combine history and tradition with modern amenities. Even though few of them are allocated to rental, the yield regarding such investment option is never below EUR 1000/week, due to the peaceful and romantic scenery that inspires rest and happiness among travellers and owners.
Regardless of your investment option and whether you simply wish to diversify your investment portfolio our relocate to Madeira, know that the current Madeiran real estate market is booming with supply and demand, and those looking into rental income investments can count on the fact that a growing number of tourists, currently 13,3% opt for home rentals.
Transportation in Madeira: getting around
Madeira has an extremely good road system, delivered by EU-funding, which connects all parts of the island through a system of fast roads and tunnels. Needless to say that the best way to go around is either by car or bus.
International Schools
Madeira has three international schools, depending on your kids’ needs:
Leisure and Culture
Island life in Madeira is never boring and completely stress-free for locals, expats, and tourists alike, and the cultural offerings are immensely diverse for an island. Museums with Flemish and religious art, churches hosting organ music festivals, monthly symphonic orchestra and chamber music concerts, English language theatre plays, gastronomical and traditional folk festivals throughout the year, and recurring art exhibitions are just some examples of Madeira’s active cultural scene.
Madeira expat community
There are many expats in Madeira and most of them are from the UK, Germany, Austria, France and to a smaller extent Scandinavia, Canada and the US. Moreover, there are a lot of people who are interested in moving to the island, especially from these mentioned countries.
Our team at MCS, with more than 20 years of experience in the sector, is able to assist in your relocation to Madeira. For more information click here, for information our services click here.
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Following the amendment to Ministerial Order No. 150/2004 of 13 February 2004, by Ministerial Order no. 309-A/2020, of 31 December, the Principality of Andorra has been removed from the Portuguese list of countries, territories and regions with clearly more favourable tax regimes (i.e. tax havens).
Given the above, the jurisdictions currently blacklisted by Portugal are the following: American Samoa, Liechtenstein, Maldives, Anguilla, Marshall Islands, Antigua and Barbuda, Mauritius, Aruba, Monaco, Ascension Island, Monserrat, Bahamas, Nauru, Bahrain, Netherlands Antilles, Barbados, Northern Mariana Islands, Belize, Niue Island, Bermuda, Norfolk Island, Bolivia, Other Pacific Islands, British Virgin Islands, Palau, Brunei, Panama, Cayman Islands, Pitcairn Island, Channel Islands, Porto Rico, Christmas Island, Qatar, Cocos (Keeling), Queshm Island, Iran, Cook Islands, Saint Helena, Costa Rica, Saint Kitts and Nevis, Djibouti, Saint Lucia, Dominica, Saint Pierre and Miquelon, Falkland Islands, Samoa, Fiji, San Marino, French Polynesia, Seychelles, Gambia, Solomon Islands, Gibraltar, St Vicente and the Grenadines, Grenada, Sultanate of Oman, Guam, Svalbard, Guyana, Eswatini, Honduras, Tokelau, SAR Hong Kong (China) Trinidad and Tobago, Jamaica, Tristan da Cunha, Jordan, Turks and Caicos Islands, Kingdom of Tonga, Tuvalu, Kiribati, United Arab Emirates, Kuwait, Virgin Islands of the United States, Labuan, Vanuatu, Lebanon, Yemen and Liberia.
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Madeira’s General Corporate Tax
Madeira’s Regional Budget for 2021 has been approved by the Representative of the Republic to the Autonomous Region of Madeira. Under the new budget, the general corporate income tax rate (CIT) is 14,7%. This means that Madeira has 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.
Madeira International Business Center (MIBC)
The Assembly of the Republic has received, and is set to discuss, a bill from the Government of the Republic which will extend the deadline for the application of new company licenses until December 31st, 2021.
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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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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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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