By Miguel Silva Reichinger Pinto Correia No Comments
The International Shipping Register of Madeira – MAR is Portugal’s international shipping register and is among the international registers of the highest quality, having guaranteed adequate measures to ensure an efficient surveillance of all vessels registered.
Founded in the 1980s, MAR is now Portugal’s largest ship registry and Europe’s third largest registry by tonnage. In addition, international conventions ratified by Portugal are fully applicable to and respected by MAR and, as a result, MAR has never been considered as a “flag of convenience”.
With a solid and international reputation, MAR is whitelisted by the Paris Memorandum of understating, the Tokyo Memorandum of Understanding and the Qualiship of the United States Coast Guard.
Apart from fishing vessels, MAR accepts the registration of all types of commercial vessels, including oil rig platforms, as well as commercial and pleasure yachts and is today one of the favourite ship registries by German ship owners and UHNWIs.
MAR also offers a very competitive tax regime, applicable to both vessels and shipping companies licensed within the legal framework of the International Business Centre of Madeira (MIBC).
Being an E.U. Register, MAR allows full access to European waters without any type of restrictions to both commercial and private yachts.
All yachts registered in MAR will fly the Portuguese flag and will benefit from the services of the Private Commercial Register and Notary of Madeira’s IBC.
Why Madeira, Portugal?
Madeira, an Autonomous Region of Portugal and a European Outermost Region, can guarantee the independency and compliance of its tax regime and ship registry through the direct approval of the European Commission. In other words, investors can count with the immediate seal of approval and predictability set by the European Commission itself.
By registering your vessel in MAR, you have immediate access to European cabotage through the Portuguese flag and through Portugal a unique geographic positioning, between the Atlantic and the Mediterranean, as well as Africa and Latin America.
Apart from the benefits associated with MAR and the MIBC, vessels owners can cumulatively enjoy from Portugal’s Non-Habitual Tax Resident (NHR) and the Golden Visa programs.
Regarding the NHR, this program is specifically designed for individuals wishing to transfer their residency to Portugal. In this tax regime foreign sourced income such as dividends, interest, capital gains (duly structured), rental income, occupational pensions, together with self-employment income and professional income can be exempt from personal income tax; and Portuguese sourced employment and self-employment income are liable to a special flat rate of 20%.
On the other hand, the MIBC for effectively low taxes (5% tax rate) for companies providing almost any type of services (holdings, trading, e-business, consultancy, intellectual property management, right of publicity, among others…) to foreign entities.
Finally, Madeira is home to experienced business service providers, accountants and lawyers, with some of them being English native speakers and with more than 20 years of experience in dealing with low tax jurisdictions, including Madeira itself. Traditional commercial and advance tax knowledge is found among business service providers operating in Madeira.
Main benefits of MAR
From an operational point of view the main advantages of MAR rely of the Value-Added Tax (VAT) exemption, under certain conditions, and the crew associated benefits.
There will be a total exemption from VAT on registration, the same applying to repair and maintenance operations, as well as fuel and oil supply in open sea to ocean-going commercial yachts, according to Article 14º of the Portuguese VAT code
Regarding the crew on board commercial yachts there are no citizenship requirements, and it will be exempt from personal income taxes and will benefit from a flexible social security regime. Non-Portuguese crew members are not obliged to contribute to the Portuguese social security regime, provided that an alternative pension scheme is guaranteed. However, the crew may choose the Portuguese voluntary social security regime or any other type of protection scheme, public or private.
On the other hand, Portuguese nationals or residents in Portuguese territory shall be mandatorily covered by the general Portuguese social security regime, with a total contribution rate of 2,7%.
As for yacht owning companies, if these are companies licensed within the legal framework of the MIBC owning yachts engaged in charter activities, these entities will benefit from Europe’s lowest corporate tax rate (5%), on all foreign base profits, until the end of the year 2027, as well as have access to the network of Double-Taxation Treaties ratified by Portugal.
Applicable fees to yacht registration in MAR
Registering fees in MAR vary not only with the type of vessel you intended to register but whether such vessel will be used for personal or business purposes. Note that mixed use of a vessel is not allowed under the European Commission’s rules for MAR.
Therefore, under current Sociedade de Desenvolvimento da Madeira (the regulatory agency of the MIBC), the following fees will apply to those who intend to register a yacht:
- Pleasure yachts, registered for leisure purposes, are subject to:
- An initial fee due for the registration, in the amount of 500 euros;
- An annual fee payable to maintain the registration of:
- 500 euros for pleasure yachts between 7 and 24 meters long;
- 500 euros plus 2 euros per gross ton for pleasure yachts more than 24 meters long.
- Pleasure yachts, registered for commercial purposes, are subject to:
- For the initial registration or registration renewal:
- Fixed fee in the amount of 1,250 euros;
- Variable fee:
- Up to 250 gross tons, 200 euros;
- Above 250 gross tons, 0,75 euros per gross ton.
- An annual fee payable to maintain the registration:
- Fixed fee of 1,000 euros;
- Variable fee:
- Up to 250 gross tons, 200 euros;
- Above 250 gross tons, 0,75 euros per ton
- Yachts owned by entities licensed within the legal scope of Madeira’s International Business Centre are entitled to benefit from an exemption from the initial fee for registration and to a 20% reduction in the annual fee.
Given all the conditions mentioned above Madeira keeps alive the centuries old Portuguese maritime tradition. Although popular with European investors, Madeira is now positioning itself as a leading vessel registration destination thanks to the European Commission’s sanctions on popular offshore jurisdictions related to the maritime sector such as the Marshall Islands.
Our team at MCS, with more than 20 years of experience in the sector, is able to assist you in registering your vessel or yacht within the International Shipping Register of Madeira. For more information click here, for information our services click here. Continue reading