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The description of corporate structures and prices quoted below is serving as a general guide and may be subject to the most recent changes of the legislation in various jurisdictions. We invite you to contact us for the latest update and free quotation.

COUNTRY: Madeira

Madeira Offshore Company 

The term ‘offshore company’ is not used in Madeira. 

Legal form: The types of Company used for international trade and investment are Sociedade por Quotas - Limitada (Lda's) or Sociedade Anonima (SA). In 1993, Portuguese legislation allowed the incorporation of Lda's or SA's with one sole quota/share holder for companies operating within the Madeira Free Trade Zone - so called "Sociedade Unipessoal" - Single Member companies. Portuguese legislation provides for the incorporation of Holding-only companies called SGPS (Sociedade Gestora de Participacoes Sociais).

Name of the company: Names must be in the Portuguese language and end 'Limitada' , 'Lda', ‘Sociadade Anomima’ or ‘S.A.’ Legislation was passed in September 1995 allowing the approval of foreign names for companies operating within the Madeira Free Trade Zone. All Madeira companies names must include words to describe clearly the objects of the company, e.g. consulting, engineering, marketing and trading.

Memorandum and Articles of Association: Once name approval has been obtained and a License obtained for the proposed entity to operate within the Madeira Free Trade Zone, a Public Deed is executed before a Notary Public. The Public Deed is then registered at Commercial Registry of Madeira. Trading and business activity are subject to the following restrictions: A Madeira company is not permitted to engage in any business not specified in its constitution. A Madeira Company does not have the right to engage in the business of Banking, Insurance, Assurance, Reinsurance, Fund Management or Asset Management (other than its own assets) without prior consent and special license.

License and annual fees: An application for a license to operate within the International Business Center  of Madeira must be made to the Sociedade de Desenvolvimento da Madeira ("SDM - Madeira Development Company) once the company name has been approved. The application fee is 750 Euro (reduced to 500 Euro if paid by the required date through a local Management Company). For Limitadas and Sociedades Anonimas the annual fee charged by SDM is 1,500 Euros per annum (reduced to 1,000 Euros if paid by the required date through a local Management Company) for a company with no physical presence in Madeira. For companies operating from their own office on the Island the annual license fee is 1,500 Euros.  For SGPS companies the annual license fee in the first year is the same as for an Lda. For subsequent years the annual fee charged is 1,500 Euros plus 0.5% of the profits of the previous year exceeding 1,000,000 Euros (limited to a maximum of 30,000 Euros). Most of the companies licensed to operate in the IBC of Madeira operate on the basis of not having any physical presence in Madeira and, as such are charged an annual license fee by SDM of 1,500 Euros (reduced to 1,000 Euros if paid by the required date through a local Management Company). SDM have the power to withdraw the license for a company whose annual license fee is long overdue, with the result that liability to Portuguese taxation on all profits and capital gains would then arise at the current corporation tax rate of 27% for Madeira based companies. The withdrawal of the license is made retrospective to the date when the invoice became due.

Shareholders: A minimum of two shareholders are required for ‘Limitada’ company and minimum five for ‘S.A.’ company.  Bearer shares not permitted for ‘Limitada’ company , but permitted for ‘S.A.’ company, provided  they are held by an approved in Madeira custodian. By way of exception the ‘S.A.’ company can have one shareholder if that shareholder is a nominee and if the company includes the name "Sociedade Unipersonal" in its name and where the company is not the sole shareholder in a subsidiary.

The minimum share capital: ‘Limitada’ companies must have capital of at least 5,000 Euros to be deposited in a bank account before incorporation.  This amount can then be withdrawn after incorporation.  ‘Sociedade Anonima - (S.A.)’ companies must have minimum capital of  50,000 Euros of which 33% must be paid up upon incorporation and the remainder within five years.

Directors of the company: A minimum of one director is required for ‘Limitada’ company who can be  individual of any origin. Corporate directors are not permitted. For ‘S.A.’ company, if the share capital is less than 200,000 Euro only one director is permitted; if the share capital is more than 200,000 Euro, any number of directors can be appointed.  Details of officers must be retained at the registered office address and this information is available for public inspection.

Registered office: Every company is required to have a registered office and address in Madeira.

Basic Tax Principles: The rate of corporate income tax in Madeira effective from 2005 is 22.5%, plus a municipal surcharge of 10%, giving an effective rate of 24.75%. There is a small company income tax rate of 20%, which applies to certain types of company.  Most offshore activity in Madeira takes place in and around the International Business Center, which comprises the Free Trade Zone, and its associated services, together with financial institutions and the Shipping Registry. Offshore entities use conventional corporate forms, or the Offshore Trust, which exists only in the Free Trade Zone. The Holding Company exists independently of the Zone, but still uses conventional corporate forms. Madeira companies located within the Offshore Financial Center can be structured so as to be exempt from all forms of Madeira taxation until 31st December 2011. Notwithstanding this attractive tax treatment, a Madeira company is considered to be the same as a normal Portuguese tax paying company and therefore falls within the terms of the taxation treaties signed by Portugal with Austria, Belgium, Brazil, Denmark, Finland, France, Germany, Italy, Japan, Mozambique, Norway, Spain, Switzerland and the United Kingdom. The terms of these treaties provide that payments from these countries can be made with a much lower rate of tax being withheld at source.

European parent directive: Madeira also allows for the incorporation of the SGPS (Sociedades Gestoras de Participações Sociais). The SGPS has been specifically designed to take advantage of European Union Directive 90/435. The terms of that Directive require that dividends paid by a subsidiary located in one EU state to a parent company located in another EU state must not be subject to any form of withholding tax as long as certain conditions are met - the most important of which is that the parent company cannot be exempt from taxation in its country of incorporation. The SGPS is therefore subject to a rate of tax of 36% on dividends received from subsidiaries situated in other EU states but 95% of the dividend income is exempt from taxation. Thus, the effective rate of taxation on dividends is 1.8% only. SGPSs must not undertake activities other than holding shares in other companies. This type of company is therefore of considerable use to any company located outside the EU which wishes to invest within the EU.

Audit and financial returns: Accounting information and books must be maintained at the company’s registered office. The accounts of a Madeira company must be prepared in the Portuguese language in accordance with Portuguese accounting rules. Normally the fiscal year ends on 31st December, and accounts must be approved by the shareholders before the 31st March of the following year. A tax form must be filed with the authorities before the end of May. All Portuguese companies and, therefore, all companies registered under the Free Trade Zone Legislation of Madeira, are automatically provided with a VAT number on incorporation. The current VAT applicable in Madeira is 15%. All companies must submit quarterly V.A.T. returns.

Meetings: Annual board meetings can be conducted outside Madeira.

Time needed for formation: Usually it is 4 weeks.  Ready-made companies are available.

In order to proceed with the formation of the Madeira company please visit our how do I start  page and then proceed to  filling in our application form