The Madeira Archipelago is situated in the North Atlantic about 400 Km from the African coast and 1,000 KM's from Lisbon on the same latitude as Casablanca, close to the straits of Gibraltar.
Madeira is an autonomous region within Portugal, having its own Government and Legislative Assembly. The power of this Assembly, however, cannot override decisions taken by the Central Government in Lisbon or its political unity with Portugal, Madeira is therefore part of Portugal as defined on the Constitution of the Portuguese Republic.
The capital of the Island is Funchal, which is the city in which our office is located. Funchal holds one half of the Island's population and has many fine old buildings. Its international airport regularly connects the Island to Lisbon and all other major European cities.
The attractive points that this new business centre offers are as follows:
- The territory is totally integrated into the European Union
- Political and economical stability
- Privileged geographical situation
- Excellent international communications network
- Wonderful climate and leisure infrastructure
The currency used in Madeira is the currency of Portugal, the Portuguese Escudo.
MIBC IS TOTALLY INTEGRATED IN EU
The Island therefore provides an ideal place from which to trade within the European Economic Community, making full use of the business financial legislation.
The Island of Madeira is the most recent industrial zone and business centre in Europe. It is totally integrated into and recognised by the EU
EU recognised that Madeira is part of the Community and recognising the reality of the region", "its geographical location far from the European Continent" and "its serious lack of infrastructure and its economic backwardness" compared to the whole of the Community." enabled the Portuguese Government together with the Madeira Regional Government to create the Madeira International Business Centre duly integrated in the EU.
The European Council, recognises that the Free Trade Zone of Madeira is a fundamental instrument to the development of the archipelago and in that context, provides for specific measures to stimulate activities in those areas.
A Resolution of the European Parliament, published in 1993, concerning the Community programs in favour of the autonomous regions in the islands "supports the, already existing commercial and industrial character of the Free Trade Zone of Canical, as well as its financial character, and considers that there are sufficient reasons for its continuation within the Common Market, as well as the exceptions existing in the tax domain (VAT)."
The referred position was based on the fact that Madeira needs a special treatment, considering its isolationism and its extremely peripheral location.
Moreover, Madeira is a recipient of structural funds and of the Community program REGIS III of 1994-1999 (specific to ultra peripheral regions).
The Free Trade Zone of Madeira was also the object of examination by the European Commission, with the aim of analysing the compatibility of the incentives granted to the companies installed in the referred zone, with the Treaty of Rome. The Commission declared on May 26th, 1987, December 18th, 1991 and November 3rd, 1995 that those state aids were compatible with the Treaty. A new examination is scheduled for the year 2000 to determine the eventual prorogation of the granted state aids.
The grounds for the enactment of the declarations of compatibility of the state aids in the Free Trade Zone of Madeira with article 92 of the Treaty of Rome were the following:
The period of application of the state aids regime was limited in time, in what concerns to the creation of new companies as well as in the term during which the companies may benefit from the exemption to the main applicable taxes;
The island of Madeira has a level of development abnormally low, not only compared to Community levels, being the GDP 24% of the Community average;
The region is strongly impaired by its ultra peripheral geographical location.
In conclusion, the European Commission, considers that the Free Trade Zone of Madeira has a particular importance because it constitutes one of the most dynamic elements of the Portuguese economy, resulting in an efficient social and economic instrument able to "reduce the ultra peripheral nature of the Autonomous Region of Madeira, with important consequences to the development diversity of the productive network and the creation of jobs". Its tax incentives of regional development are recognised by the European Commission and are compatible with the Treaty of Rome.
From this, emerges a special duty of solidarity and co-operation of the remaining Member States with Madeira, because it is a Community region with a very low level of economic development and part of specific programs implemented by the European Union.
Considering the above, being legitimate and necessary the tax benefits granted by the Portuguese State and the European Union to the entities installed in the Free Trade Zone of Madeira, we are of the opinion that the same may not be used as basis for certain Member States to adopt anti-abuse unilateral measures which eliminate the benefits granted by equalising the entities therein installed to vehicles of "tax abuse" similar to the ones in the classic tax havens.
Due to the peculiarities of its juridical framework, the Free Trade Zone of Madeira is not an Offshore Centre but an ultra peripheral zone subject to an European regional development program
An additional advantage is the fact that Madeira is part of the Portuguese territory for all legal purposes, including the application of treaties avoiding double taxation.
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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