Portugal is reputed to host one of the optimal Residency by Investment (RIP) programmes in Europe. What most people don’t know is that the island of Madeira, just 900 km off the Portuguese mainland, may as well be the best venue in the country for investment residency.
An all-year tourist destination, Madeira features a favourable climate as well as rich history and culture. Moreover, the island has even better real estate prices than mainland Portugal and impressive corporate tax benefits authorised by the EU.
Investors willing to set up shop in Madeira can qualify for RIP with a share capital of €1 million or at least 10 people employed. This option implies considerable tax perks. Investors may cut their corporate tax by 76% if they pick Madeira as their business venue.
What investors need to do is apply for a MIBC (Madeira International Business Centre) license which unlocks the following benefits:
Reduced corporate tax rate of 5 percent (21% on the mainland) – applicable to incomes from business with non-resident entities or other firms within the MIBC framework
Full exemption from taxes on dividends from Madeira-based companies to non-resident single/corporate shareholders
No tax on global royalties, interests and services payments
The perks above become available under these conditions:
The firm creates at least one full-time job in Madeira in the first half-a-year of operations – even investors themselves can apply for the job if they choose to live in the region
The firm undertakes a minimum investment of €75,000 in fixed assets in the first two years of operation. As an alternative, the business can create six or more full-time local jobs in the first half-a-year of operations.
What about real estate investment? While the property prices in Lisbon and Algarve have gone up sharply, the Madeira real estate is generally 7% cheaper now than in 2010. There is also a way to blend lower taxes with bargain real estate deals. Applicants may invest in property through a company as its only shareholder and leverage such investment to fulfil the Portuguese RIP and MIBC requirements.
Another benefit for foreign investors: Madeira processes Portuguese RIP applications faster. There aren’t so many applications yet as opposed to mainland Portugal. However, it won’t be long before global investors realise the full potential of the region.
Icing on the cake, investors may mix both RIP and MIBC programmes with the Non-Habitual Resident tax scheme. This provides an incredible 10-year personal tax exemption on income generated outside of Portugal – provided that you hadn’t been resident in the country within the five years before arrival and you currently meet the physical presence requirements.
Astons is a leading global immigration advisory firm with offices in London, Moscow, Dubai, Cyprus and China and offers residency & citizenship investment solutions in the EU & the Caribbean.
For further information or to discuss your personal circumstances in a private consultation, please contact Astons at [email protected] or call +44 207 292 2977.