How to Register a Company in Madeira and Reduce Tax Expenses

Madeira, a small archipelago in the North Atlantic, is an autonomous region of Portugal. It`s well-known not only for its stunning landscapes and unique climate but also as an attractive destination for international business. Its strategic location, developed infrastructure, and stable political environment make it a great place for setting up a company. Madeira offers exceptional economic and tax benefits, making it a prime choice for foreign investors looking to establish a business.

Step-by-Step Guide to Registering a Business in Madeira

Setting up a company in Madeira involves several steps, each requiring careful planning. Below is a detailed breakdown of the process.

Step 1: Choosing and Reserving a Company Name

You must select a unique business name that complies with Portuguese regulations. The name should indicate the company’s legal structure (e.g., Lda or SA). Certain words like “Bank,” “Investment Fund,” or “Guarantee” require special approval. To check and reserve your business name, apply through the Commercial Registry Office (Conservatória do Registo Comercial). The reservation is valid for three months.

Step 2: Defining Business Activities

Your business activity must align with the Portuguese Classification of Economic Activities (CAE). This classification is crucial for tax registration and compliance with regulatory authorities.

Step 3: Preparing the Necessary Documents

Key documents for registration include:

• Company statutes outlining the firm’s structure, objectives, and governance.
• Identification documents of shareholders and directors.
• Proof of name reservation from the registry.

Step 4: Submitting Registration Documents

Submit your documents to the Madeira Commercial Registry, either in person or online via "Empresa Online." A registration fee applies, varying by business structure.

Step 5: Receiving the Business Registration Certificate

Once approved, you’ll receive a Commercial Registry Certificate (Certidão de Registo Comercial), confirming your company’s legal status in Madeira.

Required Documents for Business Registration in Madeira

To legally operate in Madeira, you’ll need the following documents:

• Business Registration Application: Includes company name, location, business type, and shareholder details.
• Company Statutes (Estatutos da Sociedade): Defines company operations, ownership, and governance.
• Company Name Approval: Confirms that the business name is unique.
• Proof of Business Address: A rental agreement or address confirmation.
• Director Acceptance Statement: Confirms directors’ willingness to take on responsibilities.
• ID Documents of Founders and Directors: Passport copies and, in some cases, a criminal record check for foreign investors.

Document requirements may vary based on the business structure and local regulations. Get advice here.

Business Taxes in Madeira

As part of Portugal, Madeira follows Portuguese tax laws. However, businesses registered in Madeira’s Free Economic Zone (MIBC) enjoy special tax advantages:

• Reduced corporate tax rate of 5% on income from licensed activities (not sourced from Portugal).
• No capital gains tax and no withholding tax on dividends.
• No foreign exchange restrictions.
• Double tax treaties with 79 countries.
• Tax information exchange agreements (TEIA) with 16 countries.

To qualify for these benefits, businesses must:

• Ensure income is not linked to Portuguese real estate transactions.
• Invest at least €75,000 in tangible or intangible assets over two years.
• Create at least six jobs in Madeira, with at least one local employee.

Companies licensed under MIBC from January 1, 2015, to December 31, 2020, can enjoy these tax benefits until December 31, 2027.

VAT and Tax Reporting in Madeira

Madeira’s tax reporting follows standard Portuguese regulations:

• The tax year follows the calendar year but may be shorter in some cases.
• By March 31, companies must hold an annual meeting and submit financial reports.
• Audits are mandatory for public companies. Private companies require audits if assets exceed €700,000, turnover surpasses €1,400,000, or they employ over 50 people.
• Financial statements must comply with International Financial Reporting Standards (IFRS) and be prepared by December 31 of the following year.
• Tax returns must be filed within five months of the end of the tax year.

Why Start a Business in Madeira

Madeira offers a stable business environment, attractive tax benefits, and access to European and international markets. Whether you’re launching a tech startup, an online casino, or a financial services firm, the island provides the infrastructure and regulatory support to help your business succeed.

By following the right steps, ensuring proper documentation, and seeking expert legal advice, you can set up a Madeira-based company quickly and efficiently.