The International Shipping Registry of Madeira (MAR) is a high quality international Registry particularly as, since the vessels registered there have to carry the Portuguese flag, all the International Treaties, Pacts and Conventions entered into by the Portuguese State are also applicable to MAR.
MAR's purpose is to carry out the registration of all acts and contracts concerning commercial vessels, private yachts, and fixed or floating platforms. However, MAR is not a simple registration entity; it also performs all acts related to registration, such as shipping surveys, sign call attribution, ship certification and many others. It has a Technical Commission composed by a representative of the Central Government, a representative of the Regional Government and a representative of the General Shipping Inspection. This Commission issues declarations and certificates, related to shipping registration and applications for registration must be presented to them.
Ships registered in MAR may be owned by off-shore licensed entities (companies and all forms of corporate representation), or by entities which are not part of the Madeira Free Trade Zone. It is also possible to make a temporary registration supported on bare-boat charters, provided they are property of the above referred entities. This may be done by presenting declarations from the vessel's owner, and from the proper authorities of the country where the ownership is registered, authorising such registration in MAR and also permission declarations of the mortgage(s) if any. Ships temporarily registered in MAR will fly the Portuguese flag.
No. 3 of Article 15 of Decree law no. 96/89 established that ships registered at MAR were not allowed to transport cargo or passengers between national ports (continental cabotage). However D.L. 31/97 amended this no. 3 of article 15 in terms of allowing ships registered in MAR to develop their transportation activity between national ports (continental cabotage), considering the ship owners are:
- Nationals of one member state of the EU that are established according to the law of that member state as a shipping entity.
- Shipping companies established in one member state of EU with head office in another EU member state, having its effective control in this latter member state.
- Nationals of one EU member state who are established outside of the EU, or companies established outside of the EU but controlled by EU nationals.
This amendment turned MAR into a highly competitive shipping register, with 110 ships yachts and platforms registered at the present time and with few others in process of registration, confirming the dynamic and the comparative advantages of this International Register.
Another fact that is contributing to make MAR a prestigious international register is the increase of registration of new ships in the recent years.
2) Advantages
In comparison with other international shipping registers, MAR offers innumerable advantages.
The rules of the Portuguese Corporate Code concerning the incorporation of companies and their branches are not applicable to companies having as corporate object the maritime transportation industry as far as minimum capital stock requirements are concerned(see endnote 1). Entities wanting to establish a company or a branch in the Free Trade Zone can benefit from free importation of capital, although prior consultation with the Bank of Portugal is necessary.
A further advantage is that companies are not required to have their head office in the Madeira Autonomous Region, being sufficient to have local legal representation, such as a branch office, a delegation or an agency situated in Portugal. In these cases the administration or management are exempt from residency requirements.
The sale and purchase of vessels registered in MAR must be done through a written document - bill of sale - and the signature of the seller must be recognised in the presence of a Public Notary. No institutional authorisation is required.
Another important advantage that should be mentioned is the absence of limits to the navigation areas beyond the port and to the kind of waters on which the maritime traffic operates.
Eight International Classification Societies are recognised in Portugal, and since MAR can delegate some of its functions in these Societies (see endnote 2), the activities of ship owners working through these same societies are facilitated.
Another attraction lies on the fact that the vessels' tonnage has only to comply with the minimum safety requirements.
The contracting of crew and their conditions of work are subject only and exclusively to the rules laid out in the International Conventions current in Portugal, namely the Regulations established at the Labour World Organisation. The Technical Commission decides upon the validity of these contracts, and therefore a copy of all of them should be enclosed together with the registration application.
Also important is the fact that the crew and ship-owning companies of the vessels registered in MAR, are not required to make contributions for the Portuguese social security, unless they wish so, therefore, private or public social security schemes, in force before the registration of the ship in MAR, have the possibility of remaining untouched.
The law requires that the captain and 50% of the crew of a ship registered in MAR are citizens of the European Union. However, when there are not enough citizens of the EU available for employment, Portuguese authorities may allow the taking on as crew of nationals of other countries beyond the 50% limit. It is also acceptable by the Portuguese authorities to derogate the referred citizen requirements in cases such as, the ones in which, the crew members do have long term contracts with the ship owner.
No nationality requirements apply to the hiring of crew for yachts registered with MAR.
MAR also allows two types of approved crew, depending on the voyage and on the cargo which is to be transported. This can mean important monetary advantages and is an authorisation not provided in normal registers.
MAR also offers the advantage of having very low costs when compared with other international registers - for example the acts of commercial registration are exempt from taxes and fees.
It is also important to mention the fact that the parties involved may choose the law applicable to any mortgage - or equivalent guarantee - taken on a ship registered with MAR. This law (duly translated and legalised) must be signed by the parties involved and filled with the Registry Office, along with a joint declaration. Only if no law is chosen or, if no law is filled upon registration, Portuguese law will be applicable.
A.3) Registration procedures
I)-Legal documents required for permanent registry
- Power of attorney legalised with the International Hague Apostlille, granted by the applicant in the presence of a Notary, giving powers of representation to local representative. This document is only demanded, if the applicant head office or residency, is located outside Madeira Autonomous Region.
- Complete identification of the applicant, if the applicant is an individual.
- Legalised copies of the articles of association duly translated, concerning the applicant with the identification of the director of the company. Only applicable if the applicant is not an entity operating under the legal frame work of Madeira International Business.
- Legalised copy or original of the certificate of license to operate in Madeira. Only applicable if the sip owner is a company operating under the legal frame work of Madeira International Business Centre.
- Original or legalised copy duly translated of the Bill of sale (this document must be signed by the seller with the signature recognised by a Notary Public)
- Proof of payment of the enrolment and annual maintenance fees.
- Certificate issued by the previous registry, regarding the ship.
- Original or a legalised copy of the deletion Certificate issued less than six months ago, which can be replaced by a document confirming that the applicant has requested to the proper entity the cancellation of the previous register).
- Legalised copy or original of the authorisation of the mortgagor, if any.
II) Technical documents required for permanent registry.
- Passenger ship safety certificate.
- Cargo ship safety radio certificate.
- Exemption certificate.
- Ship station license.
- List of radio equipment and other auxiliary navigation equipment.
- Names of the entity responsible for the payment of the radio accounts, which must be an entity recognised by the Portuguese authorities.
- Cargo Ship Safety Construction Certificate.
- International Load Line Certificate, if the ship to be registered is a cargo ship.
- International Oil Pollution Prevention Certificate.
- International Pollution Prevention Certificate for the carriage of liquid substances in Bulk.
- Certificate of class.
- International Certificate of fitness for the carriage of liquefied gases in bulk.
- Certificate of insurance or other financial security in respect of civil liability for oil pollution damage.
- Declaration of P&I inscription (blue card).
- International Tonnage Certificate, in respect of the following rules.
* Portuguese rules (equivalent to the U.K rules)
* Panama Channel rules
* Suez Channel rules.
* London International Convention for Arching of 1969.
- Manning certificate.
- Statement of compliance with ILO 92 and 133.
- Ship's General Arrangement Plan.
- Fire control and life saving appliances plan.
- Approved stability booklet.
III) Documents and information regarding the crew members, to be presented for the permanent registry.
- Names, nationality and duties on board.
- Seaman books.
- Health certificates.
- Certificate of competence.
- Contracts of employment.
- General certificate of radiotelephone operator.
- Operator certificate GMDSS.
IV) Other documents and relevant information for the permanent registry
- Ship Tonnage Elements.
* Gross tonnage
* Net tonnage
* Total length in meters measure
* Signal length
- Ship Characteristics And Its Propulsion Devices
- Shipyard and year of construction
- Copy of the ship certificate, including those issued by the Classification company. MAR may delegate the incumbency of its functions in a recognised Classification company or recognise the certificates issued by the same. Presently, there are eight Classification Companies recognised by MAR, which include the following:
* Lloyd's Register of Shipping (LSR)
* Bureau Veritas (BV)
* Det Norske Veritas (DNV)
* Registro Italiano Navale (RINA)
* American Bureau of Shipping (ABS)
* Germanischer Lloyd (GL)
* Rinave Portuguesa (RINAVE)
* Nippon Kaiji Kyokai (NKK)
Other Classification Companies may be recognised in the future. Negotiations are presently taking place to accept two new classification societies, one from the Russian Federation and another from Greece.
- Proposal for the ship capacity
Note that no fees are due for the acts of registry established in MAR. These acts are carried out at the Madeira Free Trade Zone Private Notary, which assures an efficient express registry due to the fact that this Private Registry only operates with the Madeira International Business Centre matters.
4) Fees (not applicable to yachts)
1. Enrolment tax
- a fixed fee of US$2,000;
- variable fee
Vessels up to 250 Net tonnage US$ 225
Vessels of 250 to 2,500 Net tonnage US$ 0,90 per Net tonnage
Vessels of 2,500 to 10,000 Net tonnage US$ 0,75 per Net tonnage
Vessels of 10,000 to 20,000 Net tonnage US$ 0,60 per Net tonnage
Vessels of 20,000 to 30,000 Net tonnage US$ 0,50 per Net tonnage
Vessels of 30,000 to 40,000 Net tonnage US$ 0,40 per Net tonnage
Vessels of 40,000 to 50,000 Net tonnage US$ 0,30 per Net tonnage
Vessels of 50,5000 to 60,000 Net tonnage US$ 0,20 per Net tonnage
Over 60,000 Net tonnage US$ 0,10 per Net tonnage
2. Annual maintenance tax
- a fixed fee of US$ 1 ,500;
- variable fee
Vessels up to 250 Net tonnage US$ 200
Vessels of 250 to 2,500 Net tonnage US$ 0,80 per Net tonnage
Vessels of 2,500 to 20,000 Net tonnage US$ 0,40 per Net tonnage
over 20,000 Net tonnage US$ 0,25 per Net tonnage
3. Issue of manning certificates
Commercial vessels US$ 300
4. Issue of Registration Licence US$ 500
5. Control inspections carried out by
MAR or surveys requested by the ship owner US$ 100/hour
6. Issue or re-issue of vessel certificates US$130/certificate
7. Issue of recognition of officers and other crew member certificates
officers US$ 100 other categories US$ 25
8. Registry deletion US$ 650
5) Tax incentives
MAR, as previously mentioned, is one of the institutions of the Madeira Free Trade Zone, and as such, once the vessels have been duly licensed, the tax regulations applicable to the owners of these vessels and to the vessels, are the ones provided in the legislation of that Free Trade Zone.
The companies should employ appropriate accounting methods in order for the profits of their activities in the Free Trade Zone to be outlined clearly.
The Regional Government may grant financial incentives in the form of participation, - of up to 50% - in the costs of training workers, as well as in costs involved in the adoption of new production processes that lead to energy saving.
The Statute of Tax Benefits, which is also applicable to MAR, determines that incomes derived from the work of crews of ships registered in the services of the International Shipping Register, are exempt from national insurance contributions, taxes and duties and IRS.
In conclusion, here is a brief summary of the main tax incentives:
1. Ship-owner companies (registered in MAR) which sail under the Portuguese flag and navigate on international waters are exempt from IRC, the tax which is levied on profits and capital gains.
2. The transfer by inheritance of shares from a company carrying out maritime transport is exempt from any tax.
3. The sale, or any other form of transfer of a ship, or shares of a company are exempt from taxes.
4. The Territorial application of double taxation treaties concluded by Portugal and third countries, brings (with it) important tax advantages.
YACHT REGISTER
1) Introduction
The Shipping Registry was opened up to yachts after the enactment of Decree-Law 393/93.
The MIBC Shipping Registry is an internationally well reputed quality registry. All yachts are required to carry the Portuguese flag, benefiting from all the international treaties, pacts and conventions entered into by Portugal.
2) Direct tax benefits resulting from one of the lowest VAT rates in the European Union.
From January the 1st 1993, the EEC directive 92/111/EEC was implemented in Portugal through circular no. 296/92 of the Finance Ministry, which requires Portuguese tax authorities to charge VAT to all yachts whose (6 months) temporary permit has expired.
All yachts are required to pay VAT upon finding themselves in EU waters for more than 6 months. VAT is levied on those boats that remain in EU waters for more than 6 months in 12. However, Madeira has one of the lowest VAT rates in Europe: 13%. If the yacht belongs to an "exempt" company, established in the Madeira International Business Centre, which is automatically registered for VAT purposes, VAT can be recovered in certain cases.
Additional benefits can be achieved in the acquisition of second-hand yachts, since VAT applies to a reduced value. Also, yachts arriving in EU waters for the first time, have to pay VAT at the port of entry, and if this is Madeira, then a rate of 13% applies.
3) Indirect tax advantages. Use of Madeira companies.
The companies licensed to operate in the Madeira International Business Centre, benefit from the following comparative advantages:
a) They are considered Portuguese companies and are subject to all domestic rules and laws, benefit from the treaties against double taxation signed by Portugal, and are tax exempt until the year 2011. They benefit from full free movement of capital, and are exempt from any taxation on their international activities. As previously mentioned, these companies are subjected to VAT rules, and the applicable rate of 13% is one of the lowest rate in the European Union. They benefit from their status as companies in the European Union authorised to operate the free movement of goods. By being included in the treaties they benefit from tax advantages that allow for easier yacht financing. Of importance is the non-levying of inheritance tax on the transfer of shares from one "Sociedade anónima" - a limited liability company by shares, with a yacht among its assets (this tax is only levied on the eventual distribution of dividends). Also, the EC subsidies/incentives apply fully to Madeira companies, that may include diversified business activities in areas such as financial, holdings, share holdings, trading and other investments.
4) Financing
The fact that the Madeira companies are included in the treaties allows them, in some cases, to benefit from a "tax sparing" scheme, also applicable to the financing of yacht purchase, with a considerable reduction in the cost of financing.
The banks also provide easy access to credit because they are comforted by the fact that mortgages and any other charges are required to be registered on the ownership certificate of yachts, and the sale or change of name of the yachts requires the authorisation mortgagor. Additionally, the provisions of Decree-Law 393/93 authorise a choice of law to rule nautical mortgages.
5) Yacht Registration - Procedures
Only yachts over 7m long to be used in sporting or leisure activities are allowed to be registered. The initial application should be presented before the Technical Committee of MAR and should mention the following:
- Builder and date of construction
- Updated photograph of the vessel
- Ownership certificate proving the ownership of the vessel.
- Inspection report
- Name or corporate name of the applicant
- Address of applicant
Yachts over 24 m long must provide additional documentation required by the Technical Commission of MAR and follow the normal procedure of shipping registry. The inspections can be carried out either by the General Shipping Inspectorate or by any of the specialised firms accepted by MAR. The master of the yacht must prove that he is capable of commanding the type of vessel concerned and must have on board the ownership certificate and a log book. The MAR Technical Committee shall verify all the previously mentioned requirements and submit the application process to the Commercial Register of the Madeira Free Trade Zone who will issue the ownership certificate. This certificate bears the name of the owner, the name of the ship, port the registration, tonnage and any mortgages, charges or encumbrances that should be written on the certificate, as above referred.
6) Charges
The charge for entry in the register is in the amount of 500 USD. There are specially reduced rate if the yacht owner is an entity licensed to operate in the Madeira International Business Centre; they benefit from an exemption of the initial charge and from a 20% reduction on the annual fee.
Madeira Fiducia, jointly with its legal consultants, has its own know-how on the registration of vessels in several jurisdictions and of registering foreign ones. It is ready to understand and analyse comparative situations and therefore to better advise its clients.
Its representative office in Lisbon is in direct contact with the central authorities namely, the General Shipping Inspectorate which oversees some of the registration procedure aspects and is also in contact with all the other companies classifying ship that are accepted by MAR, and that are represented directly in Lisbon.
ENDNOTES:
1) Presently, the minimum capital stock for a Corporation is PTE 5,000,000.00 (Portuguese Escudos) and PTE 400,000.00 for a Limited Liability Company.
2) For instance, inspections, register of stability and safety plan.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information please contact:
Christina Perriera Madeira Fiducia Management LDA Rua 31 de Janeiro No 81-A 5E -9050 Funchal Madeira Portugal
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