Madeira: A Holding Haven

If you are looking for a way to optimize your tax efficiency, diversify your assets and protect your wealth, you might want to consider setting up a holding company in Madeira. Madeira is an autonomous region of Portugal that offers attractive benefits for holding companies within its Free Zone regime. In this article, we will explain what a holding company is, why Madeira is an ideal location for it and how you can establish one with the help of Datapres Solutions.

What is a holding company?

A holding company is a type of entity that owns shares or interests in other companies, without engaging directly in any operational or commercial activities. Its main purpose is to manage its investments and receive income from dividends, interest, royalties or capital gains.

A holding company can also provide financial, administrative or strategic support to its subsidiaries or affiliates. For example, it can lend money, guarantee loans, centralize treasury functions or coordinate business strategies.

A holding company can be either pure or mixed. A pure holding company only holds shares in other companies and does not perform any other activity. A mixed holding company can also carry out other activities related to its investments or unrelated businesses.

Why choose Madeira for your holding company?

Madeira is an autonomous region of Portugal that enjoys political stability, economic development and social security. It is also part of the European Union (EU) and the Eurozone, which means it follows the same legal framework and standards as other EU countries.

However, Madeira has some special features that make it an attractive destination for holding companies:

The Madeira International Business Centre (MIBC): This is a state-approved regime that grants tax benefits to companies that operate within certain sectors and meet certain requirements. The MIBC was approved by the European Commission until 2027 and aims to promote the economic development of Madeira.
The Corporate Income Tax (CIT) rate: Companies within the MIBC benefit from a reduced CIT rate of 5% on their taxable income derived from qualifying activities. This rate applies until 2027 and is subject to certain limits based on the number of jobs created and maintained by the company.
The participation exemption regime: This regime allows companies within the MIBC to receive dividends from their subsidiaries tax-free if they meet certain conditions. These include owning at least 10% of the share capital or voting rights of the subsidiary for at least one year; having their subsidiary resident in Portugal or another EU/EEA country; having their subsidiary subject to CIT at a rate not lower than 60% of the standard Portuguese rate; and not having their subsidiary located in a blacklisted jurisdiction.
The withholding tax exemption regime: This regime allows companies within the MIBC to pay dividends, interest or royalties to non-resident entities without any withholding tax if they meet certain conditions. These include having their recipient resident in Portugal or another EU/EEA country; having their recipient subject to CIT at a rate not lower than 60% of the standard Portuguese rate; not having their recipient located in a blacklisted jurisdiction; not having any debt-to-equity ratio higher than 2:1; not paying interest on hybrid instruments; not paying royalties for intangible assets acquired from related parties under non-arm’s length conditions; and obtaining prior authorization from the Portuguese tax authorities.
The double taxation treaties network: Portugal has signed more than 80 double taxation treaties with other countries that aim to avoid double taxation on cross-border income flows and provide relief for foreign taxes paid. These treaties can reduce or eliminate withholding taxes on dividends, interest or royalties paid by foreign subsidiaries to Portuguese holding companies.
The substance requirements: Unlike some offshore jurisdictions that offer low-tax regimes but require little or no substance from their resident entities, Madeira requires companies within the MIBC to have adequate substance in terms of management, administration, staffing, premises, equipment and activity. This enhances the credibility and reputation of Madeiran companies and reduces the risk of being challenged by foreign tax authorities.

How to set up your holding company in Madeira with Datapres Solutions?

Datapres Solutions is an international consultancy firm that specializes in corporate structuring and tax optimization. We offer a full range of services for setting up holding companies in Madeira, including market research, legal advice, tax optimization, company formation and maintenance.

Our team of experienced professionals can help you identify the best structure for your holding company and guide you through the whole process. We will take care of all the legal and administrative requirements, so you don’t have to worry about a thing.

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