IBC Tax Benefits
Tax Benefits, Requirements and Business Activities
Tax Benefits
- Reduced Corporate Tax Rate (IRC) of 5% until 2027;
- Full exemption from withholding tax on dividend remittances for non-resident shareholders;
- Full exemption from withholding tax for interests and other forms of remuneration of shareholders loans, allowances or advances of capital made to the company, or which are due because they did not withdraw the profits or income placed at their disposal;
- The “Participation Exemption Regime” is applicable for dividends, reserves, capital gains and losses;
- 80% exemption on Stamp Duty, Municipal Property Tax, Municipal Tax on Real Estate Transfer; Regional and Municipal surcharge;
- 76,2% reduction on the Special Advance Tax Payment and Autonomous taxations;
- Tax Credit for international double taxation is possible, both legally and economically;
- Full exemption from corporate tax on royalty payments and interests paid to third parties;
- Exemption from withholding tax for interest paid to non-residents, provided that the purpose of the loan is the realization of investment and to the normal operation within the scope of IBC;
- Application of all EU directives;
- Benefit from a large network of Double Taxation Treaties (with over 60 countries).
Flexible Substance Requirements
- The creation of one post of employment during the first six months of activity and the achievement of a minimum investment of 75.000,00 € within the first two years of operation;
- Or the creation of six or more posts of employment during the first six months of activity (in such cases it is not necessary any investment); – In case of hiring several workers it is only mandatory to hire one local person;
- In case of hiring several workers it is only mandatory to hire one local person;
- The investment may be made through the acquisition of Immovable Assets (Land, Buildings), Movable Assets (such as Cars, Vessels, Motorcycles, Aircrafts, Computers, Furniture, etc.), Patents, Brands, and Image Rights;
- The tax benefits (5% Tax Profit) are limited, depending on the number of employees (or remunerated directors), to the following plafond:
|
TAXABLE INCOME |
NUMBER OF JOBS |
|
€ 2,73 Millions |
From 1 to 2 |
|
€ 3,55 Millions |
From 3 to 5 |
|
€ 21,87 Millions |
From 6 to 30 |
|
€ 35,54 Millions |
From 31 to 50 |
|
€ 54,68 Millions |
From 31 to 50 |
|
€ 205,5 Millions |
> 100 |
- Tax benefits are also subject to one of the following annual ceilings:
– 15, 1% of the annual turnover; or
– 20,1% of the annual gross value added; or
– 30,1% of annual costs incurred with the workforce.
– If the taxable amount exceeds the limit, the remainder shall be taxed at a rate of 22% (Madeira general regime).
Business activities that can be developed in the IBC
- Wholesale trade of any kind of goods (Goods; Textile products; Furniture) all over the world;
- Real Estate Activities, Rentals;
- Maritime and Air Transport of goods and persons;
- Manufacturing industries;
- Communication – Includes online advertising services.
- Services:
– Motion picture activities, video activities, television programmes production, sound recording and music publishing;
– Activities of intelligence services;
– Computer programming, consultancy and related activities;
– Legal and accounting activities;
– Head offices and management consultancy activities;
– Architectural, engineering and other technical activities;
– Technical testing and analysis activities;
– Scientific research and development activities;
– Advertising, market research and public opinion polling;
– Other professional, scientific and technical activities.