Company formation in Madeira

Have you ever considered doing business in Europe while paying only 5% corporate tax? If not — it's time to take a closer look at Madeira.

This autonomous region of Portugal is no longer associated solely with beaches and tourism. Today, Madeira is a modern International Business Centre that attracts entrepreneurs from around the world thanks to preferential taxation, legal stability, and an impeccable reputation in the eyes of European banks and partners.

In this article, we will explain why an LDA company registered in Madeira can be the best solution for your business and provide a clear step-by-step guide for setting it up.

Company Registration in Madeira – Jurisdictional Advantages

• Low corporate tax rate. Companies registered in the Madeira International Business Centre (IBCM) pay a preferential corporate tax rate of 5%, which is one of the lowest in the European Union.
• Access to the European market. Madeira-registered companies receive a Portuguese VAT number, ensuring seamless access to the EU market and simplifying international trade.
• Double taxation avoidance. Portugal has over 60 double taxation treaties with various countries worldwide. This means your profit will not be taxed twice — in the country of incorporation and in your country of residence.
• No "offshore" status. Madeira is not considered an offshore zone and is not listed on any international blacklist, which enhances the credibility of companies registered in this jurisdiction.
• Reputation of a reliable European jurisdiction. A company in Madeira is part of the EU legal system, ensuring transparency and trust from partners. This is especially important when working with large international clients and banks.
• Remote registration available. The company registration process in Madeira can be done remotely, which is convenient for foreign entrepreneurs.
• Flexible share capital requirements. For establishing an LDA-type company (equivalent to an LLC), there is no minimum share capital requirement.
• Wide range of permitted activities. Madeira is suitable for various business sectors, including IT, consulting, international trade, IP management, and shipping.

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Types of Legal Entities in Madeira

In Madeira, as in the rest of Portugal, several legal entity types are available for doing business. The choice depends on the scale of activity, number of founders, tax goals, and business development plans. The most common are:

LDA (Limitada) — Limited Liability Company

This is the most popular option for small and medium-sized businesses, especially among foreign entrepreneurs. It is the preferred form for companies registered in the Madeira International Business Centre (IBCM). LDA is the Portuguese equivalent of an LLC.

Key characteristics of an LDA company in Madeira:

• Liability of members is limited to the amount of capital contributed. Founders are not personally liable for the company’s debts.
• No minimum share capital requirement. However, in practice, we recommend contributing at least €100 to enhance the company's credibility with banks and partners.
• Number of founders – from 1 to 50 individuals or legal entities.
• Company management – one or more directors. Both Portuguese citizens and foreigners can be appointed.
• Remote company registration is possible. Including account opening and tax number acquisition without personal presence.

This form is ideal for IT companies, consulting firms, holding structures, trading entities, and businesses involved in intellectual property.

Other forms:

• SA (Sociedade Anónima) – similar to a joint-stock company, suitable for large businesses with public share offerings. Requires high minimum capital and has a complex management structure.
• Sole Proprietorship (Empresário em Nome Individual) – sole trader. Personally liable with all assets, not suitable for international business.
• Sociedade em Nome Colectivo (SNC) – general partnership where all partners have unlimited liability.
• Sociedade em Comandita (SC) – limited partnership with divided responsibilities between partners.

For international business purposes, LDA in the Madeira International Business Centre is undoubtedly the best option. In the following sections, we will focus on this form: how to register a company, what documents are required, and what benefits you can expect as an entrepreneur in Madeira.

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Madeira International Business Centre (IBC): What It Is and Why It’s Beneficial

If you are looking for a European jurisdiction with legally low tax burden — pay attention to the Madeira International Business Centre (IBC). This is not an offshore. It is a special regime recognized by the European Union, allowing businesses to operate within Portugal’s transparent legal framework while benefiting from significant tax incentives.

Madeira IBC is a free economic zone created by the Portuguese government in the autonomous region of Madeira to attract foreign investment. Companies registered under this regime receive tax benefits legally, provided they meet certain economic substance requirements.

Who Can Benefit?

The Madeira IBC regime is suitable for:

• IT companies serving clients outside Portugal;
• Holdings;
• Financial and consulting structures;
• Shipping companies;
• Businesses managing intellectual property rights.

What Are the Requirements?

To register a company and access tax benefits under Madeira IBC, you must meet one of the following conditions within 6 months of registration:

1. Hire between 1 and 5 full-time employees who are tax residents of Madeira + make an investment of at least €75,000 (tangible or intangible assets, not necessarily in Portugal);
   OR
2. Hire 6 full-time employees, at least one of whom is a resident of Madeira. Others can be non-residents, provided their salary is paid from the company’s account.

The director may also count as one of the employees if they are a Madeira resident and receive a salary.

Taxation of LDA Companies in the Madeira International Business Centre (IBCM)

• Corporate tax – only 5% (applies to profit from transactions with non-residents of Portugal or with other IBC companies).
• 0% capital gains tax.
• 0% tax on dividends if distributed to non-resident shareholders.
• Access to more than 60 international double tax treaties signed by Portugal.

Limits on the 5% Rate

The 5% tax benefit applies only to profits within set limits, depending on the number of employees:

How Long Is the Program Valid?

Applications for inclusion in the Madeira IBC regime can be submitted until December 31, 2026, and tax benefits apply until December 31, 2028. Further extensions will depend on negotiations with the European Commission, but as of now, Madeira IBC remains one of the most advantageous and stable options within the EU.

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How to Register a Company in Madeira: Step-by-Step Guide

Registering a company in Madeira is not only the first step to doing business in Portugal, but also a way to benefit from the tax advantages of the Madeira International Business Centre (Madeira IBC).

Step 1 – Choosing the Company Name and Preparing Documents

The first stage involves selecting a unique name for your company and preparing the necessary set of incorporation documents. The name is checked for uniqueness through the Registo Nacional de Pessoas Coletivas system.

Step 2 – Submitting the Company Registration Application in Portugal

The application must be submitted to:

• National Register of Legal Entities (Registo Nacional de Pessoas Coletivas)
• Portuguese Tax Authority (Autoridade Tributária e Aduaneira)

The registration can be completed in person or remotely by power of attorney.

Step 3 – Paying the State Fee

Step 4 – Receiving the Certificate of Incorporation

After submitting the documents and paying the fees, you will receive a Certificate of Incorporation (Certificado de Registo Comercial), confirming the creation of a legal entity in Portugal and its entry into the Madeira companies register.

Step 5 – Opening a Corporate Bank Account in Portugal

After registering an LDA company in Madeira, the next essential step is to open a corporate bank account in a bank or payment institution. Both options have their pros and cons, depending on the nature of your business, source of income, and geographic reach of your clients.

• Portuguese banks usually require the physical presence of the director. If there are no local clients or physical presence of the company in Portugal, the banks may refuse to open an account or initiate additional checks.
• An alternative to a traditional bank account is an account in a European payment institution (EMI), which provides an IBAN within SEPA, access to a multi-currency account, and fast transactions without the need for physical presence (Paysera, Payoneer, Wise, Revolut).

For a company registered in Madeira with international operations, the best initial solution is to open an account with a payment institution for a quick start and later — if needed — open a Portuguese bank account.

Step 6 – Tax Registration in Portugal (NIF)

The company must register with the Autoridade Tributária e Aduaneira to obtain a tax number (NIF), which is required to carry out business activities, pay taxes, submit reports, and participate in the Madeira IBC regime.

Step 7 – Application to S.D.M. and Obtaining the IBC Madeira License

To benefit from the tax advantages of the IBC Madeira, the company must apply to S.D.M. (Sociedade de Desenvolvimento da Madeira) — the official administrator of the Madeira International Business Centre.

After reviewing the application and confirming eligibility, the company will receive a license to participate in the IBC and apply the preferential tax rates (including the 5% corporate income tax rate).

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How Long Does It Take to Register a Company in Madeira?

As of 2025, the overall timeframe to register a company in Madeira is approximately 30 business days, provided all documents are prepared in advance. Breakdown of the timing:

• Registration of an LDA (LLC) in Portugal – 3–4 weeks.
• Registration under the IBC Madeira regime – 2–3 weeks.

Documents Required to Register a Company in Madeira

• Information about the founder(s) and director:
  • Notarized and apostilled copy of the passport
  • Proof of residential address in English (bank statement / utility bill)
  • If the founder is a legal entity – extract from the register + corporate documents
• Notarized and apostilled power of attorney
• Detailed description of the company’s activity (to assign the business classification)
• Three company name options in order of preference
• Company formation documents (we prepare everything; the client only needs to sign)
• Proof of payment of the registration fee

Opening a Corporate Bank Account in Madeira

Opening a bank account for a company in Madeira is a crucial step after LDA registration in Portugal. For companies registered in the Madeira International Business Centre (IBC), having a corporate account with a European bank or payment institution is mandatory to conduct business, pay taxes, and operate legally within the jurisdiction.

Banks typically require the following:

1. Proof of business activity in Portugal or Madeira (contracts, clients, office space)
2. A legal address in Portugal (virtual office services are available)
3. Tax identification number (NIF) for the director and the company

Top Banks for Opening an Account in Madeira:

1. Millennium BCP – one of the largest banks in Portugal, actively working with business clients, including non-residents.
2. Caixa Geral de Depósitos – a state-owned bank with a wide network in Madeira, works with companies registered under IBC Madeira.
3. Novo Banco – focused on corporate clients, suitable for small businesses and IT companies.
4. Banco Santander Totta – Portuguese branch of a major international banking group.

Alternative to Banks – Payment Institutions (EMI - Electronic Money Institutions)

Banks and EMIs offer similar functionality: both allow you to open a corporate account, receive and send payments, have a euro IBAN, and pay taxes. However, there’s a key difference — banks operate slower, require more documents and often personal presence, while payment institutions work faster, fully online, and are not tied to the country of registration. That’s why for new companies, it’s often more practical to start with an EMI: it’s convenient, fast, and allows business operations to begin immediately while the bank processes the application.

We recommend considering payment providers like Paysera, Payoneer, Wise, and Revolut Business. These are ideal for e-commerce businesses, IT firms, consulting, online course sales, and other online services.

Documents Required to Open a Bank or Payment Account:

Corporate documents:

• Articles of Association
• Certificate of Registration (Certificado de Registo Comercial)
• Company’s Tax Number (NIF)
• Documents confirming ownership structure and share distribution
• Detailed business activity description

Documents for beneficial owner(s), shareholder(s), and director(s):

• Copies of passports
• Proof of residential address (utility bill, bank statement)
• CV
• Proof of source of funds

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Why Choose TAXTERS to Register a Company in Madeira

Registering a company abroad, particularly in Madeira, is a complex process that requires a deep understanding of local tax laws, IBC Madeira requirements, and the nuances of opening bank or EMI accounts.

TAXTERS is a legal team with over 12 years of experience, helping businesses expand internationally in a smart, transparent, and risk-conscious manner. We assist clients at every stage — from initial consultation to company registration, account setup, and ongoing legal support.

Our advantages:

• We constantly monitor changes in EU legislation, especially in Portugal.
• We have direct contacts with registration agents, banks, and payment institutions, which helps avoid intermediaries and reduce registration and account setup time.
• We offer a comprehensive approach: not just registering a company but advising on the choice of legal form, ownership structure, tax planning, and financial reporting.

We help you not only open a company in Madeira but also build a solid legal foundation for its stable growth, taking into account local and international legal requirements.

TAXTERS — where international company registration becomes simple, clear, and safe.

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Author: Valeriia Nevinchana, Senior Lawyer; Pavlo Dubynskyi, Partner at TAXTERS. Information updated in March 2025.