Madeira defends tax benefits for another five years, until 2033

The Regional Secretary for the Economy, José Manuel Rodrigues, defended, on Monday, in a meeting with the Minister for the Economy and Territorial Cohesion, Manuel Castro Almeida, that the effects of the current Free Trade Zone regime continue for another five years.

In practice, this would allow a company that registers with the Madeira International Business Center (CINM), or Free Trade Zone, until 2026, to benefit from the effects of the current regime until 2033.

The current Free Trade Zone regime allows the admission of new companies until the end of 2026, with the regime's effects expiring at the end of 2028.

Government considers it urgent to extend the Free Trade Zone regime

The Regional Secretariat for the Economy believes it is “urgent and necessary” to extend the effects of the regime beyond the end of 2028.

In the view of the Madeiran executive, extending the effects of the regime from 2028 to 2033 would bring “investor confidence, predictability and legal certainty” to the current regime.

“The time gap between the licensing of a new entity (2026) and the production of effects of the stipulated regime (2028) is clearly short for an investment to reach the necessary break-even point and start generating income, which could jeopardize future investments within the scope of the Madeira Free Trade Zone”, warns the Regional Secretariat for the Economy.

The Madeiran government notes that this extension of the Free Trade Zone benefits is in line with the timeframe the European Commission "accepts for the benefits to take effect after the end of a given aid scheme (on average seven years)." And it is precisely within this timeframe that the Madeiran government's request arises. If the proposal is accepted, a company registering in 2026 would enjoy the benefits of the current Free Trade Zone regime until 2033, a total of seven years.

The Regional Government recalls that this has already been done with the Special Zone of the Canary Islands (ZEC), a jurisdiction for which the European Union “agreed both to the extension of the regime and to the extension of the production of its effects; a case very similar to the Madeira Free Trade Zone, for which the Spanish Government extended the effects of the ZEC regime until December 31, 2032 and ensured the licensing of new entities until December 31, 2026”.

The Regional Secretariat for the Economy also states that "without prejudice" to the implementation of a new regime to be notified by the State to the European Commission, it is "crucial to safeguard and maintain" the current regime, taking into account "the national interest of the measure, within the scope of regional development and territorial cohesion of the country, due to the Autonomous Region of Madeira being classified with the Status of Outermost Region".