A company established in Madeira is, first and foremost, a Portuguese company. It is incorporated under the same code, registered in the same commercial registry, and bound by the same governance and reporting duties as a company in Lisbon or Porto. Portuguese corporate law applies in full. What distinguishes the Madeira International Business Centre (MIBC) is not a separate legal system but a layer added on top of that law: a licence to operate in the Free Zone of Madeira, a reduced rate of corporate tax approved as State aid, and a set of substance conditions attached to it. Understanding the MIBC begins with understanding the national framework it sits within.
This article sets out how Portuguese corporate law governs companies generally, and then how it operates for a company licensed in the MIBC.
The framework: what governs a Portuguese company
The core of Portuguese corporate law is the Código das Sociedades Comerciais (CSC), approved by Decreto-Lei n.º 262/86 of 2 September and amended many times since. It defines the company forms, the rules on share capital and liability, the duties of directors, the rights of shareholders, and the requirements for accounts and corporate decisions. Around it sit the Código Comercial, the rules of the commercial registry (Registo Comercial), the national registry of legal persons (Registo Nacional de Pessoas Coletivas), and the central register of beneficial ownership (Registo Central do Beneficiário Efetivo, i.e. RCBE).
A company in Madeira is subject to all of these without variation. Company law is a matter of national competence, so the Autonomous Region of Madeira does not legislate a separate corporate code; the CSC applies in the Region exactly as it applies on the mainland.
The main company forms
Two forms account for most commercial activity.
The sociedade por quotas (Lda.) is the private limited company and the most common vehicle. Liability is limited to the share capital, which is freely set, with a minimum of one euro per quota. It can be formed by two or more quotaholders, or as a sociedade unipessoal por quotas with a single quotaholder. It is managed by one or more gerentes.
The sociedade anónima (S.A.) is the public limited company, used for larger undertakings, regulated activity, or structures that anticipate outside investors. It requires a minimum share capital of 50,000 euros and, as a rule, at least five shareholders, although a company may hold all the shares of a wholly owned subsidiary S.A. It is administered by a board and is subject to a defined supervisory structure, including a statutory auditor.
Other forms exist, including the sociedade em nome coletivo and the sociedade em comandita, but they are comparatively rare in international structuring.
Incorporation in practice
Incorporating a Portuguese company involves clearing a firm name with the Registo Nacional de Pessoas Coletivas, executing the articles of association, registering the company with the Registo Comercial, and obtaining a corporate tax number (NIPC). Same-day incorporation is available through the Empresa na Hora regime, although with some limitations. Beneficial ownership must be declared to the central register, and the company must appoint management, adopt accounts, and register for tax and, where relevant, social security. None of this changes because the company will operate in Madeira.
Governance and reporting
Once incorporated, a Portuguese company carries continuing obligations: keeping proper accounting records, approving annual accounts, filing the annual Informação Empresarial Simplificada (IES), submitting the standard audit file (SAF-T), and meeting its corporate income tax (IRC) duties. Directors owe duties of care and loyalty under the CSC, and breaches carry personal liability. These duties apply identically to a company in the MIBC, which is the point most often missed: the tax regime does not dilute the corporate-law obligations, it adds to them.
How Madeira fits within Portuguese corporate law
Because company law is national, a Madeira company is governed by the CSC and registered through the ordinary commercial registry, here the registries within the Region. It is a resident Portuguese company for corporate purposes, fully within the EU legal order, and not an offshore entity in any technical sense. The expression “offshore”, still sometimes attached to Madeira, is inaccurate and unhelpful: the companies are onshore, EU, Portuguese-law companies.
What the Region adds, through the MIBC, is a tax regime authorised under EU State aid rules. That regime does not displace Portuguese corporate law; it is a fiscal layer that a qualifying company elects into and must then maintain.
The MIBC and its legal basis
The Madeira International Business Centre, in Portuguese the Centro Internacional de Negócios da Madeira (CINM), operates within the Free Zone of Madeira (Zona Franca da Madeira). Its tax benefits rest on Article 36.º-A of the Estatuto dos Benefícios Fiscais (EBF) and on the State aid authorisation granted by the European Commission, most recently under Decision SA.51983 (2021).
The headline benefit is a reduced corporate income tax rate of 5 per cent on income derived from the company’s licensed activity. Following the most recent extension, entities licensed to operate in the Free Zone between 1 January 2015 and 31 December 2026 may benefit from this rate until 31 December 2033. The window for new licences currently runs to the end of 2026; proposals to extend that licensing deadline further have not, at the time of writing, been approved, which makes the timing of any new structure a live planning consideration.
Beyond the headline rate, MIBC companies may access further benefits within the regime and the general Portuguese system, including the participation exemption on qualifying dividends and capital gains, reductions or exemptions on withholding tax on payments to non-residents, and reductions on stamp duty and certain regional and municipal charges, each subject to its own conditions. Madeira also operates the international shipping register (Registo Internacional de Navios da Madeira, MAR), which has its own framework.
Substance: the condition that now governs everything
The reduced rate is not automatic and not unconditional. It is tied to genuine economic substance in Madeira, and this is where careful structuring is decisive.
To qualify and to keep the 5 per cent rate, a licensed company must meet job-creation and investment conditions and stay within annual ceilings. In outline:
- It must create employment in the Region within the period set by the regime, with the jobs held by workers tax-resident in Madeira.
- A company creating fewer than the higher job thresholds must also make a minimum investment in fixed assets located in Madeira within the first years of activity.
- The income eligible for the 5 per cent rate is capped by ceilings (plafonds) keyed to the number of jobs created, rising in tiers as employment increases.
- The benefit is further limited by aid-intensity caps expressed as percentages of the value added, labour costs, or turnover generated in the Region, with the maximum annual benefit being the lower of the applicable measures.
Two principles run through the substance test and are worth stating plainly. First, the activity must genuinely be carried on in Madeira through an adequate structure; a licence attached to an empty shell does not qualify. Second, work performed outside the Region does not count: income attributable to substantive activity executed abroad is not treated as generated in Madeira for the purposes of the rate, and full outsourcing of the real work defeats the benefit. The company must also be able to document all of this, because the Portuguese Tax and Customs Authority (AT) can test it years later.
This is the modern reality of the MIBC. The regime rewards companies that put real people, real decisions and real operations in Madeira, and it withholds its benefits from those that do not. For a properly substantiated business, the combination of EU membership, full Portuguese corporate law, and a 5 per cent rate is difficult to match. For a paper structure, it is a liability.
Compliance: national duties plus the substance file
An MIBC company carries the ordinary obligations of any Portuguese company, the IES, the SAF-T, the IRC return, proper accounts and corporate governance, and adds to them the evidential burden of the regime: records of jobs, residence, investment, and the location of the activity that proves entitlement to the rate. Good structuring builds that evidence from the outset rather than reconstructing it under audit.
Who the MIBC suits
The regime fits internationally oriented activity with the ability and intention to locate genuine operations in Madeira: services delivered across borders, holding and intellectual-property structures with real management in the Region, industrial and logistics activity in the Free Trade Zone, and shipping under MAR. It is less suited to those seeking nominal presence without substance, for whom the regime no longer offers shelter and the compliance burden outweighs the benefit.
How MCS can help
MCS advises on the full corporate lifecycle in Madeira: choosing the right company form under the CSC, incorporating and registering the company, obtaining the MIBC licence, and structuring the operation so that the substance conditions for the 5 per cent rate are met and documented. We also coordinate the continuing corporate, accounting and tax compliance that follows, subject to a review of each client’s circumstances. For groups weighing Madeira against other jurisdictions, the starting point is an assessment of whether the intended activity can carry real substance in the Region, because that, rather than the headline rate, determines whether the structure holds.
This article is general information on Portuguese corporate law and the Madeira International Business Centre, not legal or tax advice. The MIBC regime rests on Article 36.º-A of the EBF and on European Commission State aid Decision SA.51983; rates, ceilings, licensing deadlines and substance conditions are subject to the regime’s terms and to change. MCS can advise on company formation and structuring in Madeira based on your specific circumstances.
Lília has graduated in 2002 with a law degree from Universidade Nova de Lisboa. She joined MCS’s legal team in 2003, providing support to the legal department in corporate and shipping… Read more
