Taxation on Madeira Island: what are the advantages for digital nomads?
In recent years, Madeira Island, located in Portugal, has become an attractive destination for digital nomads. This archipelago not only offers natural beauty, but also an advantageous tax regime, capable of attracting companies and individuals looking for tax optimisation.
1. Madeira Island's Fiscal Context
Madeira Island is part of the Madeira Free Trade Zone (ZFM), a special tax regime created to promote economic development in the region. The Portuguese government, with the support of the European Union, established this regime with the aim of attracting foreign investment and creating jobs on the island. As a result, Madeira offers a number of tax benefits for companies and individuals who set up there, making it a favourable jurisdiction for digital nomads looking to optimise their tax obligations.
2. Tax Benefits on Madeira Island
The Madeira Free Trade Zone is recognised for its fiscal competitiveness. The main tax benefits include:
Reduced Corporate Income Tax (IRC): Companies setting up in Madeira can benefit from a reduced rate of IRC, which can be as low as 5%, applicable until 2027, provided they fulfil certain requirements, such as job creation.
Tax exemptions and reductions: There are tax exemptions on dividends, interest, royalties and other passive income, which is particularly interesting for digital nomads who have international investments.
Exemption from Value Added Tax (VAT): In some cases, products and services transacted by companies in the ZFM may be exempt from VAT, depending on the nature of the activity.
These tax incentives are based on legal provisions, such as Decree-Law 500/80, which regulates the Madeira Free Trade Zone regime. In addition, Portugal has a vast network of double taxation treaties that avoid double taxation of income, which can be advantageous for digital nomads who generate income in different countries.
3. Legal provisions
Madeira's tax regime is well-defined and supported by legal provisions that guarantee legal certainty for investors. The Investment Tax Code and Decree-Law 500/80 are the main regulations that structure tax benefits on the island. Decree-Law 198/90 is also worth mentioning, as it establishes the conditions for favourable tax treatment for activities carried out in the Madeira Free Trade Zone.
In addition, the Constitution of the Portuguese Republic and the Double Taxation Treaties signed by Portugal with various countries guarantee that digital nomads will not be penalised by double taxation of their income if they choose to settle in Madeira.
4. Stability and Well-being for Digital Nomads
Digital nomads, often in search of new experiences and environments, find Madeira a balance between a favourable tax regime and a peaceful, welcoming lifestyle. The island not only offers tax advantages, but also an environment that can provide greater stability and well-being, elements that are increasingly valued by those who live an itinerant life.
Madeira Island, with its combination of tax security and quality of life, can be seen as a place where digital nomads can find a certain degree of anchorage, even if only temporary. The island's tranquillity and tax advantages create a favourable environment for those seeking a balance between work and quality of life, without giving up the financial benefits.
5. Conclusion
Madeira Island presents itself as a fiscally advantageous and emotionally welcoming destination for digital nomads. With a special tax regime, the island offers a series of incentives that can help reduce the tax burden, as well as providing a safe and stable environment.
For digital nomads seeking not only an economic benefit, but also a sense of stability and well-being, Madeira could be the ideal choice. In this context, Madeira Island is not only a tax haven, but also a place where it is possible to find a balance between financial and emotional needs.
If you are interested in hiring professional legal services related to tax consultancy for Portugal, we are a law firm specialising in the subject and we can help you, just get in touch via email: contato@trpuppioadvocacia.com.br, or via WhatsApp.
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