Internacional Business Centre of Madeira

This information note seeks to clarify some points for our Clients regarding the Special Tax Regime for the International Business Center of Madeira (hereinafter, the “IBC Regime”), through some notes that aim to dispel possible misconceptions.

First of all, it is essential to debunk the idea that the scheme has been repealed or that it is no longer open to new registrations. On the contrary, the IBC Regime is still in force and new companies can register until at least December 31, 2024, with tax benefits guaranteed until December 31, 2028, which may be extended. This clarity is crucial for those considering establishing operations in the Autonomous Region of Madeira, allowing for informed decision-making.

Secondly, it is important to emphasize that the Autonomous Region of Madeira is not an offshore jurisdiction, but is committed to international compliance and best tax practices. Although the IBC Regime offers attractive tax benefits, the substance requirement for companies in that region is emphasized as a safeguard against harmful tax practices. This means that companies must have a real presence on the island, creating value and maintaining ties with the local community. This approach aligns with international standards and guarantees the legitimacy and sustainability of the tax regime, avoiding possible negative implications.

In addition, it is essential to clarify the role of the IBC regime in the context of Value Added Tax (VAT) and its trade relations with Portugal. Contrary to a common myth, companies in the Autonomous Region of Madeira under the IBC Regime are subject to Portugal’s VAT system and follow European Union rules. This means that they have the same reporting obligations and are integrated into the Portuguese tax system.

This clarification is essential in order to understand the tax dynamics involved and the implications for companies operating in that region. In this way, by debunking these myths, we can have a clearer and more accurate understanding of the role of the IBC Regime in the economy of the Autonomous Region of Madeira and the opportunities it offers for international investors and companies.

Contact us if you would like to know how the IBC Scheme works in more detail.