Tag Archives: living in madeira

Investing and Living in Portugal

Portugal is asserting itself as a major start-up destination in Europe, and with that hundreds of techies are willing to relocate to Europe’s oldest country. But it is not just the Web Summit’s new capital, Lisbon, who’s attracting new residents, the Algarve and Madeira are also getting their share. The southern Portuguese most richest regions have an agreement with Saint Peter (all-year-round good weather) and therefore are attracting not freshly retired residents from Central and Northern Europe every year, but also digital nomads looking for good weather and inspiration.

A Land of Tax Opportunities
Smart Tax Incentives for New Residents

The Portuguese Government is not relying on the country’s “good looks” to attract investment, in fact, it has resorted to an interesting tax policy aimed at luring and securing foreign investment in the long term. The tax policy? Portugal’s Non-Habitual Resident (NHR) Regime.

The NHR Regime is a special tax residency status, applicable to all those who fall under the following conditions, regardless of nationality or age:

  • Be a tax resident under Portuguese domestic legislation; and
  • Not have been taxed as a Portuguese resident in the five years prior to taking up residence in Portugal.

Provided you check the previous requirements, you can benefit from a total tax exemption on foreign source employment, professional, dividends, interest, capital gains and rental incomes. As for pensions, these are taxed at a flat rate of 10%. All you need to do is to make sure that those incomes are either taxed at source, in accordance with the applicable tax treaty or that are not deemed as derived from Portugal nor from a tax haven (in the case of dividends, interests, capital gains and rents).

In case you work in Portugal and earn either employment or professional income from a Portuguese source, then those incomes will only be liable to a 20% flat tax rate, provided the job performed is deemed as a high-added value profession by law.

Reduced Tax Costs for International Businesses

Apart from the NHR Regime applicable to anyone relocating to Portuguese territory and complying with the regime’s conditions, digital nomads, freelancers, international consultants and international services providers can reduce their tax-related operational costs through the International Business Center of Madeira. This preferential and highly efficient tax regime grants significant advantages to companies structured in Madeira Island, of which I highlight the following:

  • 5% corporate tax (against mainland’s 21% or Madeira’s 20%), in all international operations.
  • Total exemption from withholding tax on dividend remittances from the Madeira companies, for non-resident shareholders.
  • Exemption on capital gains payments, for non-resident shareholders.
  • Access the participation exemption regime.
Why Madeira, of all other places in Portugal?

Weather: Geographically located off the coast of Africa, Madeira is certainly European.  The currency is the euro, the culture is European and politically speaking Madeira is 100% Portuguese.  And yet the climate is sub-tropical with temperatures rarely dropping below 20 degrees centigrade even in the winter, and a high level of rainfall in the mountainous interior ensures the island is very green for the majority of the year.

Reduced operational costs: Madeira 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.

Connectivity: Business wise, Madeira has a highly qualified workforce and most of the people speak and understand the English. Add that to the fact the its Cristiano Ronaldo Airport connects you to most of European capitals (Paris, Amsterdam, Vienna, Zurich, London, Berlin…) and it is easy to understand why the tech start up scene is developing.

In terms of international communications connectivity, Madeira is connected to a Submarine Cable Station connecting Europe to Africa and the Americas, 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.

Safety: Madeira is Portugal’s safest region, with a criminality rate of just 26 criminal cases per thousand inhabitants.

auctor Miguel Pinto-Correia

MCS has more than 20 years of experience in assisting private and corporate clients making their move to Portugal. Find out how we can help and do not hesitate to contact us.

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A Small Guide to Living in 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.

How’s weather like in Madeira?

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 neighboring 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 and AliExpress deliver to the island and Cristiano Ronaldo Airport connect you to the major European capitals—including Paris, Brussels, London, Berlin, and Zürich…

What language is spoken in Madeira?

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 in Madeira

Cost of living, from accommodations to amenities, are cheaper than in The 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 travelers 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.

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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Madeira: Island Life with a European Flavour

Just under a two-hour flight from Lisbon, Portugal’s Madeira Island was named the “World’s Leading Island Destination” by World Travel Awards in both 2015 and 2016. This archipelago’s primary island is one of the few in the world offering both the zest and vibe of island life and the buzz of a real city.

“Of all islands, the most beautiful and free,” is the island’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.”

Madeira has been receiving international attention since European royalty discovered the wonders of its year-round, springlike climate and the associated health benefits. Empress Sisi of Austria, Emperor Maximilian of Mexico, and, later, Sir Winston Churchill stayed for extended periods, bringing this Portuguese island international status and notoriety.

Before being one of the first tourism destinations in Europe, Madeira was (and still is) famous for its sugar, flowers, and wine production. George Washington himself sipped on Madeira wine to celebrate U.S. independence.

Madeira’s unique climate is characterized by a yearly average temperature of 20°C. Summers tend to be mildly hot with temperatures reaching an average maximum of 25°C. It’s rare to see temperatures above 30°C. If you’re a beach-lover, you’ll be glad to know that Madeira’s sea temperatures are the warmest in Portugal, reaching a pleasant 23.5°C during summer.

Despite its proximity to Morocco, the island’s nearest continental neighbor, Madeira’s climate is humid (around 75% humidity year-round), thanks to its UNESCO World Heritage-protected, prehistoric Laurissilva Forest, which covers 20% of the island’s 741 square kms. This forest has more than 1,600 kms of irrigation channels accompanied by footpaths that once connected the entire island’s countryside.

With a population of 111,892, Funchal is Madeira’s only major city. Home to almost 42% of the four-island archipelago’s population, it’s the economic, cultural, and political center of the islands. Madeira’s other notable cities—Machico, Câmara de Lobos, Santa Cruz, and Santana—have fewer than 50,000 residents.

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 tire of the cultural agenda, you can always find peace on the neighboring 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.

Unlike many island paradises, Madeira’s Cristiano Ronaldo Airport connects you directly not only to Lisbon, Portugal’s capital, but also to every other major European capital—including Paris, Brussels, London, Berlin, and Zürich… one reason Madeira is a favorite holiday destination among British, German, French, and Scandinavians.

Thanks to the strong British presence on the island, most Madeirans speak English, and Madeira was the first territory in Portugal to implement compulsory English education starting with primary school. English, alongside French and German to a lesser extent, is the main second language spoken by locals.

The strong bond with the British community is also seen in Madeira’s medical and law sectors. You’ll have no trouble finding English-speaking doctors or lawyers catering to the expat community.

Cost of living, from accommodations to amenities, are cheaper than in The 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.

All of Portugal offers the non-habitual residence (NHR) tax regime that grants full exemption from tax on foreign-sourced passive income. In addition, in Madeira, you can also take advantage of unique corporation tax benefits. Madeira’s corporate tax rate is just 5%, the lowest in Europe.

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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