New companies in Madeira will benefit from 5% income tax
Investment News Europe - New companies in Madeira Island will benefit from 5% corporate income tax in the Madeira Free Trade Zone in 2027. Portugal´s Government just approved a draft law that creates a new regime for entities that obtain a license in Madeira´s Manaus Free Trade Zone from January 1, 2027, to obtain a reduced corporate income tax rate of 5%, instead of the normal tax rate of 18%, according to a Government announcement on November 5th, 2026.
Madeira´s new Corporate Tax regime will maintain its main tax incentive, under Article 36-A of the Portuguese Tax Benefits Statute, that is the taxation of eligible income at a corporate income tax rate of 5%, but will introduce reinforced requirements regarding the economic activity actually carried out in the Autonomous Region of Madeira.
What are the requirements to obtain Madeira´s Corporate Income Tax Incentive of 5%?
The main requirements to obtain Madeira´s Corporate Income Tax Incentive of 5% include:
1 - Obtaining a license in Madeira´s Manaus Free Trade Zone from January 1, 2027.
2 - Providing an effective demonstration that the company conducts business in the region and does not merely have a formal presence in Madeira to benefit from tax advantages.
3 - Within six months of establishing a company in Madeira´s Free Trade Zone, the company must hire a minimum of six workers.
4 - An alternative to option 3 is that, within two years of establishing a company in Madeira´s Free Trade Zone, the company must invest €75,000 in the acquisition of tangible/intangible fixed assets.
5 - The company must have at least one Portuguese individual on its payroll on an ongoing basis, contributing to income tax and social security. This employee can be the company director or a board member of the company incorporated in Madeira´s Free Trade Zone, also known as Madeira International Business Centre (MIBC).
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