Long-term stay in Portugal and profitable business in the country: does it sound like what you are looking for? The good news is that it is not that hard to do, and you will not even need a large-scale business to qualify. You can register a sole proprietor in Madeira, Portugal, and obtain the right to a residence permit and all the tax incentives that the country can offer.
All major projects start with collecting practical information, and we would like to invite you to our portal called International Wealth where you will find a lot of up-to-date articles on living and working in Portugal. By the way, the full text of this post about the residence permit in Portugal is also available on our portal. And if you feel that some questions remain unanswered, you can get in touch with our experts to clarify everything.
You can book an initial session free of charge to discuss the whole project. Our seasoned experts will analyze your information and tell you which solutions will be the most viable. However, most of our clients have insufficient experience to venture on their own, and we can provide support at all stages, including a package of turnkey services: we can register a company for you abroad, open a foreign bank account, and more. Click on the above link and use our live chat to start your journey!
Why Choose Madeira to Register a Sole Proprietorship?
If you opt for Madeira rather than mainland Portugal, you will have fewer administrative hoops to jump through, so registering a sole proprietorship will be easy. However, if you have more ambitions than just being a remote freelancer and want to become a resident of Europe, you can take advantage of the Golden Visa program if you meet the requirements.
Another interesting option in Portugal is the Non-Habitual Resident program which offers generous tax incentives. Under the NHR opportunity, foreigners obtain the right to live, work, and set up companies in the EU with zero taxes on income worldwide for up to 10 years.
Madeira’s Free Zone is the most accessible gate to all the above perks that many investors choose in the end.
Madeira Sole Proprietorship: Advantages
Madeira is a Portuguese region with autonomous administration, so it sets the tax rates independently. However, when it comes to everyday life and business, it complies with the same laws and regulations as the rest of Portugal and the European Union at large.
The incentives and tax relief that Madeira offers give a great opportunity for non-resident investors to successfully make business and obtain an EU residence permit. Use Madeira’s International Business Center (IBCM) to register your company, which will simplify the process and give you access to all the opportunities.
Here are some of the perks that Madeira offers to sole proprietors:
- No minimum share capital threshold set, so you can start with any amount
- You will have a chance to participate in the Golden Visa program, ending up with an EU passport if you comply with a number of requirements
- Madeira has an advantageous location as this is a place where Europe, Africa, and the Americas cross. As a result, it can serve as a convenient center of international trade.
- There is no currency control in Madeira.
- The island offers numerous tax incentives, including the status of a Non-Habitual Resident (NHR) under which you can pay zero taxes on global income for up to 10 years.
- You can freely travel across EU countries without a visa.
Sole Proprietors in Madeira: Current Applicable Tax Rates
Let’s look at the taxes payable by the freelancers who live in Madeira:
- Income Tax depends on your earnings and can start at 0% and go up to 47.5%.
- Value Added Tax. Freelancers (sole proprietors) working in Madeira do not pay any VAT if their annual income exceeds a certain amount. If it is applicable, however, you will have to pay 22% at an ordinary rate and 5% if you are registered in Madeira’s free zone.
- Social Security Contributions. These are calculated in the same way as in the rest of Portugal and are based on the amount you made in the three months preceding the reporting period. If you are interested in exact amounts, please contact our experts.
Registration as a Sole Proprietor in Madeira: Procedure
Sole proprietorship registration in Madeira is not very complicated, but you will still have to make certain steps and fulfill a number of requirements:
- Get a local tax identification number.
- Foreigners will need to have their documents translated into English or Portuguese, notarized, and then apostilled/legalized at the consulate.
- Seek professional assistance (we can provide an expert) to have your documents thoroughly checked to make sure they meet all applicable requirements and the chance of being turned down is minimized.
- You will need to open an account, and you have a wide range of opportunities to do so by using Madeira or Portuguese banks, payment systems, or even foreign banks. Keep in mind, however, that you may be required by tax authorities to declare the income obtained to accurately track the freelancer’s actual earnings.
- Madeira’s sole proprietors are under the obligation to draw up an invoice/receipt for each transaction (even if it was made with a foreign client).
- Submission of annual tax returns is a mandatory procedure.
If you want to use the benefits under the Non-Habitual Resident program, you will have to become a tax resident of Portugal/Madeira first and then acquire the NHR status. Here are the requirements:
- You should have a residence permit issued by Portugal or another European country
- You will have to make a long-term lease agreement in Madeira
- You are required to live in the country for at least 183 days a year
Please follow the above link to see the list of documents you will need to collect for registration as a sole proprietor in Madeira (which will take 1 day with our help), as well as a list of documents required to set up a bank account in Madeira. The costs are also specified in the article. If you are a person who makes decisions quickly and wastes no time, please get in touch with our expert and set the ball rolling today!