Company formation Madeira

Company Formation Madeira

Professional offshore incorporations and offshore banking services

Tax Madeira

Madeira’s economy depends very much on tourism and on subsidies from the Portuguese State and the EU. The International Business Centre Madeira (IBCM) in the Free Trade Zone was created to offer an additional sector for the island’s economy. With full approval from the European Commission, Madeira is an internationally respected jurisdiction. The laws governing the IBCM are well-founded and in accordance with Portuguese law and EU Directives.

You can choose between a:

  • Type I: “2000” Lda., which is tax free until 31.12.2011 (incorporated until end of 2000). From 2012 to 2020, this type of company will have the same conditions as
  • Type II: “new” Lda., with a corporate tax of 4-5% until 31.12.2020, incorporation now. This type has the following conditions:

    The company must have substance in the form of an office and
    • either hire some employees (the higher number of employees, the higher the tax free ceiling for the company) or
    • invest Euro 75.000 during the first two years after incorporation

There are some ways to comfortably cover these requirements. 

The “Lda.” (the equivalent to a “Ltd.”, with 5.000 € capital) can easily be changed into an SA (stock company, with 50.000 € capital)

All companies come with a representative address, a bank account and a European tax number. Through a Madeira company, you can work with all European countries except Portugal.

The best option for clients who are trading is Type I. Traded goods do not have to be sent to Madeira, but the invoicing has to be done from the Region.

To use the preferential import duties the Free Trade Zone offers, the clients can also install or rent a space in the FTZ in order to distribute, produce or finish goods coming from other continents, for import into the EU.

Company formation Madeira: Madeira Geography

Madeira is a group of islands with a surface area of 314 square miles spread across an area of 5,000 square kilometers and forming part of an archipelago located in the Atlantic Ocean between Africa and the Azores. The islands are on the same latitude as the Moroccan city of Casablanca, are approximately 700 kilometers from the coast of northwest Africa, and consist of Madeira, Porto Santo and several small deserted islets. The capital city is Funchal, on Madeira.

The climate is sub-tropical and rainfall is plentiful. Madeira is covered in lush green vegetation with the temperature ranging from 17°C to 24°C in the summer and averaging 13°C in winter. The islands experience micro-climates which lead to distinct climatic variations between one area and another. Thus in May and June the west coast experiences plenty of sunshine whereas an enveloping cloud known as “el capacete” often blocks out the sun over Funchal bay.

The airport of Santa Caterina on Funchal has daily flights to Lisbon, taking 90 minutes, and connections to many other European cities. Madeira uses Greenwich Mean Time, plus one hour in summer.

Madeira Population, Language and Culture

Madeira was discovered by Portuguese explorers in the 15th century and was subsequently colonized by farmers from the Algarve region of southern Portugal. In the Portuguese constitution of 1821 Madeira was recognized as part of metropolitan Portugal.

The population is about 245,800 making Madeira one of the European Union’s most populated regions with an estimated average population density of 195 persons per square mile. The Islands are largely Roman Catholic and as with most traditional societies the church exercises a strong influence over organs of government and the cultural life which largely revolves around religious and harvesting festivals.

The official language is Portuguese, but English is quite widely spoken, particularly in business. Madeirans tended to emigrate in search of work until recently, when the trend has somewhat reversed. The global Madeiran diaspora is supposed to be near 1m. The Madeiran life-view was traditionally somewhat melancholy, although tourism and EU money infusions have tended to flatten out this idiosyncracy, like so many others.


At the time of writing, the following countries have double-tax treaties with Portugal (an * indicates that the treaty is under negotiation or awaiting ratification):

Cape VerdePoland
Czech RepublicSingapore
FinlandSouth Africa*
FranceSouth Korea
IcelandUnited Kingdom

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