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Madeira IBC Tax Regime Changes: Are You Ready?


With the end of the original Madeira International Business Centre (IBC) tax regime set to 31 December 2011, the Portuguese 2012 Budget Bill materialises the repeal of the regime. Taxand Portugal examines the impact this will have on companies operating in Portugal.

Taxand Portugal provides a full view of the impact of the Madeira Regime changes (PDF)

The tax regime incorporates the last minute agreements between Government and opposition on withholding tax rates. This will result for many IBC entities licensed prior to 2001 in the automatic "kick-in" of the reduced rate regime (4% in 2012 and 5% Corporate Tax rates available until 2020) that applies to a limited share of taxable profits, which varies according to the number of jobs maintained or created during a fiscal year.

Taxand's Take

In this "transfer" from a full Corporate Tax exemption to a reduced rate system, there still remains some areas of concern for IBC entities and their shareholders that need to be addressed, namely the way to extract profits to shareholders and the ability to continue to operate an IBC entity in a tax efficient manner.

Your Taxand contact for further queries is:
Miguel C Reis
T. +351 226 158 860

Taxand's Take Author