On April 20th, 2021, Law Nº. 21/2021 was published. This law alters the Statute of Tax Benefits, specifically Article 36-A, which regulates the regime applicable to licensed entities in the Madeira Free Trade Zone. 


The main impact of this law is the extension of the deadline to apply for new licenses to operate at the International Business Center of Madeira (IBCM) until the end of the year 2021, allowing companies holding this license to benefit from the tax advantages of the IBCM until the end of 2027.

In other words, the request for new licenses to operate within the institutional scope of the Madeira Free Trade Zone is allowed again until the end of this year, with the expectation that at the date there will already be an approval of the new tax regime for the Madeira Free Trade Zone or, alternatively, a new extension of the term for new admissions.

Additionally, this law also clarified several concepts and questions that were not clear in the previous legislation, namely:

  • The jobs to be created and maintained in the company, must be filled by full-time workers (or by two or more part-time workers who together represent at least one full-time worker, in terms of annual work unit (UTA).
  •  The jobs to be created and maintained in the company, must be filled by workers with tax residence in the Autonomous Region of Madeira, if not residing, they must exercise their activity there or be a crew member of ships / vessels registered in the International Ship Register of Madeira.
  •  Only income generated / realized in the Autonomous Region of Madeira is subject to the reduced rate of Corporate Income Tax (CIT), that is applicable to the activity carried out by the company in Madeira, through a business structure appropriate to the activity in the Autonomous Region of Madeira.

The present amendments to the law clarify the local substance requirements and conditions so companies can benefit from this tax regime, with all the confidence, transparency and security that characterize this International Business Center, which has existed for over 30 years.

Our team remains at your disposal for any additional clarifications, or to provide the local support necessary to fulfill the requirements indicated above.