Portugal Offshore

Summary: Portugal as an Offshore Tax Haven.

Portugal as an Offshore Tax Haven.

Can Portugal be considered an offshore tax haven for offshore banking and investment purposes?

Taxes in Portugal are on the high side and generally Portugal is not considered to have an attractive fiscal environment, mainland Portugal is not a conventional offshore tax haven.

However, Portugal can offer the Madeira Free Trade Zone together with a number of other tax breaks which are useful to certain types of company when it comes to taxation burden reduction and is the nearest Portugal comes to being an offshore tax haven.

Madeira - offering Portugal an Offshore Tax Haven

Madeira is a small group of islands located about 1000 km from Portugal and the African coast.  Madeira is part of Portugal and part of the EU.  The main language is Portuguese with some English spoken, and the legal system is based on the civil code.

The Madeiran Government enjoys a fair degree of autonomy from Portugal, but most legislation including Madeira taxation legislation is Portuguese.

With the full agreement of the EU the Portuguese Government were able to create an International Business Centre on Madeira, and the Free Trade Zone in the International Business Centre has been quite successful - unlike some such ventures in other countries.

VAT is applicable in Madeira but at a lower than average rate - this can be a positive advantage for importers into the EU.

Portugal has been careful and clever in developing the offshore tax haven economy in Madeira and has made sure that it has EU approval at every stage of the process.  This means that Madeira’s favorable tax status and the advantages it offers are unlikely to be threatened in the long run by the EU’s ‘harmful tax practices’ initiative.

Portugal has a number of double taxation treaties already in place, with several more under negotiation, and the use of these coupled with the advantages offered by the International Business Centre can mean a very low taxation burden is achievable for many types of trading and commercial activity and can mean that Portugal as an offshore tax haven exists.

Also worthy of mention is the fact that neither Portugal nor Madeira are known to be targets of criminal activity as they are protected by the EU legislation against money-laundering.

Portugal’s mainland offers a number of special corporate income tax regimes through which certain businesses benefit from reduced corporate income tax rates or even in some circumstances complete exemption from certain taxes altogether.  Also possible is the ability to artificially inflate tax deductible allowances in order to reduce taxable profits.

If you are thinking about moving to Portugal or doing business in or via Portugal, chances are there are ways you can reduce your taxation burden.  We have a wealth of ‘offshore’ information available so if you would like to find out more or speak to an offshore specialist, follow this link, complete the short form and we’ll do our best to supply you with the information you require.

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