Incorporate a Company in Madeira’s Free Trade Zone IBCM

Nestled in Portugal, the beautiful Madeira islands are home to the respected International Business Center of Madeira (IBCM). This center offers special tax benefits to businesses, allowing them to pay a lower tax rate of 5% on their profits. An ideal solution for establishing and growing your business.

This favorable tax rate will be available till the end of 2028, so long as companies register before December 31st, 2026. It applies to businesses that have analogous structures within Zona Franca da Madeira or are located outside of Portugal. However, if a business is based in Madeira, the tax rate is a bit higher, standing at 14.7%, with 11.9% applied to the first 50,000 EUR of taxable income of the SSMEs and small-mid cap companies. For companies earning money within Portugal, the tax rate is 20%.

If you’re looking to quickly and advantageously set up offshore trusts, international trading companies, or other businesses in Madeira (Portugal), Q Wealth experts are here to help. Look at the costs of our comprehensive service for registering businesses:

• Initial incorporation fee
• IBCM insurance contributions
• Meticulous drafting of foundational documents
• Assistance with smooth company registration with tax authorities and social security institutions
• Application for and acquisition of the IBCM license.

If you want to know exactly how much it will cost you to incorporate an international business company in Madeira and find the best way to do it, talk to Q Wealth experts. As a bonus, take advantage of our free consultation (15 minutes), or a paid, 1-hour session with an expert in company formation, currently priced at 300 euros, reduced from 500 for a limited time.

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Benefits of company incorporation in Madeira for non-residents

Among the various legal options available in Portugal, non-resident companies frequently favor incorporating a Limited Liability Company (LDA) in Madeira. Within the IBCM’s low-tax jurisdiction, such companies gain specific operational benefits:

• Reduced corporate income tax rate of 5%
• Exemption from dividend distribution tax (0%)
• No taxes applied to capital gains (0%)
• Zero tax on royalties
• Adherence to double taxation avoidance agreements
• Potential 80% discount on stamp duty and other Portuguese taxes, contingent upon obtaining an IBCM license.

What is more, Madeira offers an opportunity to obtain a residency permit or even Portuguese citizenship via property investment through its Golden Visa initiative. Be sure to check out the offers they have now and think about talking to Q Wealth experts in immigration who can help you.

Special aspects of company incorporation in Madeira

Before you proceed with incorporating a company in Madeira to benefit from advantageous tax rates in Portugal, it’s a good idea to learn all you can about the rules and limitations in place. To get all the details and have your questions answered, you are welcome to book a personalized consultation with Q Wealth experts.

Limitations of benefits and tax exemptions for certain companies in Portugal

Below, you will find the types of businesses that are not eligible for tax discounts when incorporated in the Madeira free trade zone (Portugal):

• Financial institutions such as banks
• Insurance companies
• Entrepreneurs engaged in cryptocurrency activities and similar ventures.

While it’s possible to incorporate such businesses in Portugal, you will require special permission. Also, note that tax rules will be different for the above companies. We can explain in a consultation about the requirements your company may face.

How to take advantage of zero taxes on dividends and capital gains

In Madeira, offshore companies can get a tax break for dividends and capital gains. But, there are some conditions such offshore companies shall meet:

• They shall hold shares in a Madeira IBC, with a minimum threshold of 10%. The above shares need to be consistently held for 12 months.
• The subsidiary company is required to pay taxes at a rate of 60% of the total rate set in Portugal.
• The subsidiary company must not be a resident of any blacklisted jurisdiction.

FYI: You have the option to open an account for your international business company in Madeira with any bank around the world. To help you choose the best bank and set up your bank account, reach out to Q Wealth specialists or use our PRE-APPROVAL service.

Manufacturing and warehouse companies in the Madeira Free Trade Zone

Manufacturing and warehouse companies set up within Madeira’s Free Trade Zone (FTZ) enjoy a lower tax rate on profits until the end of 2028, so long as they register before the end of 2026. They also have an opportunity to get a 50% tax reduction if they meet any 2 of the following criteria:

• Adding value to Portugal’s economy by introducing new products, making tech advancements, and implementing other processes.
• Expanding the activity types to make Madeira’s local economy more varied.
• Actively hiring skilled professionals (HRM) to make the region more productive and economically successful.
• Making important improvements to the environment.
• Creating a minimum of 15 jobs over 5 years.

Besides, the above companies have the right to employ a suspension mechanism, where import duties are exclusively imposed when goods are transported beyond the FTZ borders.

Tax benefits for shareholders

Investors who hold shares in Limited Liability Companies (LDA),  both non-resident individuals and legal entities, don’t pay dividend withholding taxes on the dividends they get from businesses in Madeira. To qualify for these benefits, shareholders must not reside in any countries blacklisted by Portugal and need to own a minimum of 10% of shares for at least 1 year.

Additional tax incentives for International Business Companies (IBCs) in Madeira

In addition to the advantages of the Madeira tax system we discussed earlier, businesses enjoy other tax benefits:

• They may benefit from an 80% reduction in stamp duty if the parties involved are not Portuguese residents.
• They can qualify for an 80% decrease in property taxes, property transfer taxes, and various other taxes.

What countries come with low and zero taxes for foreign companies? Delve into the subject and reach out to Q Wealth for a customized consultation!

How to qualify for tax incentives in Madeira (Portugal)

To qualify for tax benefits, a company incorporated in Madeira shall earn money from other countries or similar business setups with an IBCM license. Also, it needs to meet one of these requirements:

• Create 1 to 5 jobs for Portuguese residents within the first 6 months after incorporating the business, along with the minimum investment of EUR 75,000 for the acquisition of tangible or intangible assets during the first 2 years.
• Establish 6 or more jobs within the first 6 months. There are no specific financial investment obligations for these types of companies.

Entrepreneurs who benefit from the reduced 5% corporate tax rate in Madeira are subject to an annual profit threshold. This threshold varies depending on the number of jobs created:

• Annual income of EUR 2.73 million – 1 to 2 jobs.
• Annual income of EUR 3.55 million – 3 to 5 jobs.
• Maximum annual income of EUR 21.87 million – 6 to 30 jobs.
• Annual income up to EUR 35.54 million – 31 to 50 jobs.
• Annual income up to EUR 54.68 million – 51 to 100 jobs.
• Maximum annual income of EUR 205.5 million – companies with over 100 jobs.

FYI: For a newly incorporated company in the Madeira International Business Center (IBCM), it’s necessary to start its operations within 6 months. Nonetheless, there’s an exemption for industries like manufacturing, maritime, and aviation, where the minimum period to commence activities is at least 1 year.

Steps for incorporating a low-tax company in Portugal (Madeira)

If you’re thinking about starting a business in Madeira, Portugal, and want to enjoy lower taxes until 2028, Q Wealth experts are ready to help you remotely set up your company without a hitch. Whether it’s a joint-stock company, limited liability company, subsidiary, or something else, our support guarantees an easy experience. You’ll only need to be present for the last step, which involves signing the papers to set up a bank account.

Here’s what you’ll have to do to incorporate a company in Madeira:

1. Pick a suitable company name and reserve it in line with the business type and established guidelines.
2. Deposit the minimum required authorized capital amount, which can’t be less than EUR 1, following the set legal requirements. The amount of EUR 1,000 is typically suggested. This needs to be done within a year after you incorporate the company in Madeira.
3. Prepare the company’s articles of association and have the document notarized.
4. Prepare and submit the documents about the business, owners, and founders, and send an application to register the company with RNPC.
5. Pay the necessary company incorporation and insurance coverage fees.
6. Get a certificate that shows your business is officially incorporated in Madeira after it’s approved by the registrar.
7. Register your new company with tax authorities and social insurance agencies in Madeira.
8. Open a bank account for your new company.

General requirements to know about in advance when you want to incorporate a company in Madeira:

• You need at least 1 shareholder, regardless of their residence.
• You must have an official local address to keep your company papers.
• You need at least 1 director, regardless of their tax residency.
• You have to submit financial reports each year.
• You can hold yearly shareholder meetings remotely.
• You don’t have to do audits.

Foreign entrepreneurs can also opt for a sole proprietorship in Madeira, get a Non-Habitual Resident status with tax advantages for 10 years, and enjoy the privilege of a residence permit. Q Wealth experts are here to help and guide you through every step of the process so that you would avoid any mistakes along the way.

Documents you will need to incorporate a company in Madeira

To incorporate a business in Madeira, Portugal, make sure to prepare, translate, notarize, and legalize the following documents in advance:

• copy of the passport for the partner, shareholder, and/or director
• verification of your residential address (a bank statement dated no more than 3 months will do)
• Tax Identification Number (TIN) from your country of residence.

If you want Q Wealth experts to help you remotely incorporate your company in Madeira, you’ll also need a power of attorney. The above PoA shall be notarized and either apostilled or legalized at the consulate.

With Q Wealth seasoned experts supporting you, you can expect to finish company incorporation in Madeira in just 15 working days!

How to open a bank account in Madeira

An extra service not covered in the EUR 5400 fee for incorporating a company in Madeira is the setup of a corporate bank account in Portugal. To start setting up the said corporate account, don’t hesitate to consult Q Wealth experts beforehand. They will help you pick the right bank for your business. You’ll also need to submit some important documents:

• Duplicate of the beneficiary’s passport
• Tax identification number from the country of residence.

It will cost you EUR 4000 to set up a bank account in Portugal supported by Q Wealth experts.

Summary: things to know about offshore companies in Madeira

It is possible to incorporate an offshore or international company in Madeira quickly and within the scope of the law. To seize this chance, take advantage of the special offer from Q Wealth, which comes with various benefits:

• A Madeira-incorporated company will enjoy a reduced corporate tax rate of 5% until the end of 2028, so long as you register before December 31st, 2026.
• Your company will be registered online. All you need to initiate the procedure is the founder’s passport.
• The usual time it takes to incorporate an offshore company in Madeira with assistance from Q Wealth experts is about 15 days.
• You can manage your business remotely, so you don’t have to live in Portugal.
• If you’re thinking of moving to Portugal to reduce taxes, you can become a Non-Resident of the country. This status means you won’t pay taxes on your global income for 10 years. You may choose to either order the service separately or along with registering your business (don’t hesitate to ask us about it during a personal consultation).
• Setting up a bank account is usually easy, but you might need to visit Portugal to sign the final papers. You can use online banking services through payment systems, but whether they are suitable for you depends on your specific business type.

If you still have any questions left, we are here to answer them as soon as possible. Feel free to contact us at: info@qwealthreport.com or leave your contact details for our online consultant to get in touch with you. Remember, you’ve a choice in a free, fifteen-minute consultation or a paid one with an expert to dive deep into the process according to your specific needs (priced 300 euros, normally 500).