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Company Formation Madeira: 5% Corporation Tax
Incorporation Madeira: tax haven in the EU
Next to the Canary Islands Special Zone (ZEC) Madeira is also an EU Special Zone that is promoted especially. Capital companies are only taxed with 5% in Madeira. However a few requirements have to be met in order to enjoy the low tax rate.
Quick Facts for Madeira Incorporation Advantages
Madeira is supported by the EU as the island has a locational disadvantage due to its outskirts location in Europe. This is meant to be counterbalanced with the help of the free trade zone. The law for the free trade zone on which the companies are based, is well-thought-out and is in accordance with the European commissions’ guidelines. All companies are registered in the Portuguese Commercial Registry have a regular tax number and are supervised by the Bank of Portugal as well as the government. They are regular companies which only differ from other companies because of the tax advantage. Therefore Madeira is not considered a cheap tax haven.
Company Formation Madeira and requirements, procedure
Except financial services and insurances all business activities are currently accepted. In order to receive a license for 5% taxation the general rule is:
Company Formation Madeira: Requirements for Jobs
Over a specific period the following jobs have to be created in correspondence with the profits:
Company Formation Madeira: Overview Lda. and SA
Company Formation Madeira and Fees
The fees depend on the services, we are happy to send you a fee schedule.
Company Formation Madeira: According to tax law, when is the permanent establishment of the company recognized in Madeira?
The avoidance of an unlawful intermediate company in Madeira is crucial. Such an unlawful intermediate company exists in case of a mere letter box company, without substance-escape and/or if it can be assumed that the corporation is “remotely managed” from abroad (e.g. from Germany), as long as the fiscal permanent establishment in Madeira is defined through the “place of management” (Article 5 Double Taxation Agreement).
In case the place in Madeira is a production facility, a site for mineral extraction, an agricultural or forestry business, a construction site that lasts longer than 9-12 months or a fixed place of business in which the business activities take place (e.g. a hotel): Then the permanent establishment is always in Madeira, regardless of the place of management.
Otherwise the existence of the fiscal permanent establishment is defined through the “place of management”:
Permanent Establishment in Madeira:
A mere registered office is not a permanent establishment (suspicion of a “letter box company. In many cases a virtual office at a business center is sufficient (company name plate, individual phone number, personal call reception with name of the company, fax, deliverable mail also for registered mail, mail forwarding, the possibility to rent fully equipped offices/conference rooms for periods of time or permanently). Formally the needed organizational structure of the permanent establishment in Madeira depends on the “arm’s length principle”.
Services Madeira Incorporation
Company formation Madeira: DTAs
At the time of writing, the following countries have double-tax treaties with Portugal (an * indicates that the treaty is under negotiation or awaiting ratification):