The recent approval by the Parliament to extend the 5% CIT rate under Madeira’s International Business Centre (“IBCM”) until 31 December 2033 restores the level of predictability long requested by operators and investors. Companies already licensed will continue to benefit from the regime until 2033, provided that all legal requirements remain met, while new entities may access the same treatment if they obtain their license by 31 December 2026. The deadline for new registrations has not been amended, despite political proposals to extend it, and the measure still awaits promulgation and official publication.

The reduced 5% CIT rate applies to profits derived from qualifying activities carried out from Madeira, being also applicable a withholding tax exemption on the distribution of dividends to non-resident shareholders (with exception of countries and territories classified as tax havens). Maximum benefit thresholds remain linked to the number of jobs created or to the volume of qualifying investment, and the specific framework for shipping and the international ship registry is preserved.

The extension maintains the core architecture of the regime: a 5% rate on eligible profits, potential reductions in regional and municipal surcharges, a favorable dividend framework, and a local ecosystem of financial and professional services adapted to the regime’s operational requirements. However, access to and maintenance of the benefits continues to depend on genuine economic substance. The creation and maintenance of local employment, the effective direction and management in Madeira, and strict compliance with accounting, tax and regulatory obligations remain essential to ensure conformity with EU State aid rules.

The extension to 2033 represents a clear signal of continuity and stability for investors using Madeira as a competitive EU jurisdiction. However, sustainable benefit from the IBCM requires a technically rigorous approach, full adherence to substance requirements, strict observance of EU and international rules and the design of transparent, economically justified and properly documented structures.

For more information on this matter, please do not hesitate to contact the Tax Law Department of Ana Bruno & Associados, Sociedade de Advogados, SP, Lda.