IBC / Madeira Free Trade Zone — the 2026–2033 window

The Madeira International Business Centre (IBC, also called Zona Franca / CINM) offers companies a 5% corporate tax rate on export-derived profits — one of the lowest in the EU. In November 2025, Parliament extended the regime to 2033 and confirmed new licences will be issued through December 31, 2026.

Headline benefits

• 5% IRC on export-derived taxable income, up to the bracket ceiling.
• Duration: until Dec-31-2033.
• Withholding-tax exemption on dividends paid to non-Portuguese, non-blacklist shareholders (proportional to qualifying profits).
• Access to EU single market; no additional tax treaty friction.

The 2026 deadline — why it matters

Companies that receive an IBC licence by Dec-31-2026 benefit from the 5% rate until 2033. Post-2026 licences (barring further legislation) default to standard Portuguese IRC — currently 19% (scheduled 18% in 2027, 17% in 2028).

Translation: you have roughly 8 months (as of this writing) to file, be approved, and formally register. IBC applications routinely take 3–6 months. Start now if you are considering it.

Substance requirements

The 5% rate is not unconditional. EU state-aid rules require real economic activity — headed by minimum employment thresholds that tier with the taxable-income benefit.

Core substance obligations:

• Create and maintain real jobs in Madeira (within the first 6 months of licensing).
• Make a minimum investment in fixed assets within the first two years (applies to some activity categories).
• Restrict the 5% rate to export-derived activity (profits from PT domestic operations may be taxed at standard IRC).
• Maintain an operating presence in the region — not a mere mailbox.

Taxable-income brackets by job count

The 5% rate applies up to a taxable-income cap that scales with the number of jobs maintained:

Taxable income above the cap is taxed at standard IRC (19% in 2026). The bracket structure means the regime scales cleanly: a 3–5 jobs company can shelter up to €3.55M of taxable profit at 5%.

OECD Pillar Two (MNEs > €750M)

Multinational enterprise groups with consolidated revenue above €750M fall under the OECD/EU Pillar Two rules (15% global minimum effective tax). If your group qualifies, the IBC 5% rate will likely be topped-up to 15% via the Income Inclusion Rule or Undertaxed Payments Rule — eroding the benefit. For SME / standalone companies below the threshold, IBC retains full value.

How to apply

1. Define activity + confirm it is export-derived and eligible.
2. Hire a local accountant with IBC track record — this is not DIY territory.
3. Submit licence application via Sociedade de Desenvolvimento da Madeira (SDM).
4. Budget 3–6 months from submission to registration.
5. Hire the minimum job count within 6 months and maintain it continuously.

Editorial guide. The IBC regime involves EU state-aid compliance, OECD Pillar Two, and licence-specific substance audits. Legal + tax advice mandatory before applying.