Madeira: Global Solutions for Wise Investments Ship Registration in Madeira Document downloaded from www.ibc-madeira.com Sociedade de Desenvolvimento da Madeira S.A. Investment Guide3 Index PART I – INTRODUCTION......................................................................................................................................................................................4 1 – FOREWORD ..............................................................................................................................................................................................................4 2 - THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA ...................................................................................................................4 3 – THE ROLE OF S.D.M. ............................................................................................................................................................................................5 4 - THE TECHNICAL COMMISSION OF MAR ..................................................................................................................................................5 5 - DGRM – DIRECÇÃO GERAL DE RECURSOS NATURAIS, SEGURANÇA E SERVIÇOS MARÍTIMOS ...............................6 6 - REGION PROFILE ....................................................................................................................................................................................................6 PART II – THE INTERNATIONAL SHIPPING REGISTER OF MADEIRA – MAR...................................................................7 1 –ABOUT MAR ..............................................................................................................................................................................................................7 2 – TAX REGIME................................................................................................................................................................................................................7 PART III – REGISTRATION OF COMMERCIAL VESSELS AND OIL-RIG PLATFORMS..................................................10 1 – FORMALITIES .........................................................................................................................................................................................................10 2 – PERMANENT REGISTRATION .........................................................................................................................................................................10 3 - TEMPORARY REGISTRATION ...........................................................................................................................................................................13 4 - OTHER REQUIREMENTS ....................................................................................................................................................................................15 5 - REGISTRATION FEES ............................................................................................................................................................................................19 6 – ENTITIES SUPPORTING SHIP REGISTRATION IN MAR ......................................................................................................................21 PART IV - REGISTRATION OF COMMERCIAL AND PLEASURE YACHTS............................................................................23 1 - FORMALITIES ..........................................................................................................................................................................................................23 2 - FEES .............................................................................................................................................................................................................................26 3 - ENTITIES SUPPORTING YACHT REGISTRATION IN MAR ..................................................................................................................29 PART V – COMPANY INCORPORATION....................................................................................................................................................30 1 – LICENCE APPLICATION FOR SHIPPING COMPANIES ......................................................................................................................30 2 – APPLICABLE FEES ................................................................................................................................................................................................31 3 – COMPANY LAW ....................................................................................................................................................................................................31 4 – COMPANY REQUIREMENTS ..........................................................................................................................................................................32 5 – LABOUR ...................................................................................................................................................................................................................33 6 – INCORPORATION AND REGISTRATION OF COMPANIES..................................................................................................34 PART VI – SUPPORT SERVICES, INFRASTRUCTURES AND HUMAN RESOURCES.....................................................37 1 –SUPPORT SERVICES .............................................................................................................................................................................................37 2 – INFRASTRUCTURES ............................................................................................................................................................................................37 3 – HUMAN RESOURCES.........................................................................................................................................................................................38 PART VII – LEGISLATION...............................................................................................................................................................394 1 – Foreword This short guide aims to provide shipowners, maritime lawyers and consultants or any other entity interested in the International Shipping Register of Madeira - MAR with the most relevant information regarding all the procedures and steps for the registration of commercial vessels and yachts, as well as the incorporation of shipping companies within the ambit of the International Business Centre of Madeira (MIBC). All the relevant operational issues are addressed, such as the registration procedures and required documentation, tax regime, applicable fees, Portuguese company law, labour law, company incorporation procedures and other general information. For other types of activities (e.g. industrial and international services) please refer to the respective guides also available for consultation and download at www.ibc-madeira.com. Further operational information such as obtaining visas, opening bank accounts or buying property may be consulted in the guide Moving to Madeira. 2 - The International Business Centre of Madeira The International Business Centre of Madeira has been created to attract foreign direct investment in order to diversify and modernize the island’s economy. It has been conceived as a programme of regional development and it is a regime of State aid fully approved and supported by Portugal and the European Union. Such fact, coupled with the MIBC’s full integration in the Portuguese and E.U.’s legal systems, have made of Madeira not only an efficient investment location, but also a well-regulated business centre recently regarded by the OECD as a model to follow. The International Shipping Register of Madeira - MAR was created under the framework of the MIBC, aimed at giving the island of Madeira a predominant role in shipping and, as Portugal’s second and international shipping register, to contribute to reduce the country’s “flagging out” process, attracting new shipowners and vessels. PART I INTRODUCTION5 3 – The role of S.D.M. S.D.M. – Sociedade de Desenvolvimento da Madeira, S.A. is a mixed capital company appointed by the Regional Government of Madeira to promote and administer the International Business Centre of Madeira, including the International Shipping Register of Madeira – MAR. The licensing process for the incorporation of companies within the legal framework of the IBC of Madeira is carried out through S.D.M., which will issue the respective license after authorization granted by the Regional Government of Madeira. S.D.M. is also responsible for collecting the fees due to the Regional Government of Madeira by companies licensed in the IBC of Madeira and vessels registered in MAR. In addition, institutional and operational support is provided by S.D.M. by acting as a one-stop- shop and intermediary between the companies and shipowners and all the relevant local entities. A network of representative offices around the world has been established, providing support since the early stages of the registration of vessels and yachts in MAR or company incorporation in the IBC of Madeira. 4 – The Technical Commission of MAR MAR has a Technical Commission composed of a President, directly appointed by the Portuguese Ministry of Transportation, a representative of the Madeira Autonomous Region and a representative of DGRM – The Portuguese Agency for Ports and Maritime Affairs. The maritime background and technical expertise of all members of the Technical Commission assures the full understanding of the maritime transportation business and the implementation of fast procedures. The duties of the Technical Commission of MAR include the registration process of commercial vessels, oilrig platforms and yachts, as well as the establishment of the crew composition. The Technical Commission is also responsible for the issue of on-board documentation and recognizes certificates issued by the DGRM and classification societies.5 – DGRM – Direcção Geral de Recursos Naturais, Segurança e Serviços Marítimos DGRM – The Portuguese Agency for Ports and Maritime Affairs is the Portuguese authority responsible for the supervision, regulation and inspection of the maritime sector, as well as for the management and administration of the ports under its jurisdiction. The Technical Commission of MAR works in articulation with DGRM in what regards the recognition of crew competency certificates, as well as on the carrying out of surveys to vessels registered in MAR. 6- Region Profile Country: Portugal. Form of Government: Autonomous Region (since 1976). Head of State: Marcelo Nuno Duarte Rebelo de Sousa, President of the Portuguese Republic President of the Regional Government: Miguel Filipe Machado de Albuquerque. Location: In the north Atlantic Ocean, about 535 miles (861 km) from Lisbon and 360 miles (580 km) from the coast of Africa. Total area: 741 Km2 (Madeira island); 801 km2 (archipelago). Islands: Madeira island (inhabited); Porto Santo island (inhabited); Desertas island; Savage islands. Main island: Madeira island, with an area of 741 km2, a lenght of 30 geographical miles (57 km), a breadth of 13 miles (22 km) at its widest point and a coastline of 80 to 90 miles (140 km). Capital (and largest city): Funchal (more than 100,000 inhabitants). Currency: Euro (€). Official language: Portuguese (but English is widely spoken). Climate: Oceanic subtropical (22-26º C during the summer and 17-22º C in the winter). Time zone: GMT/UTC + 1 hour (same as in Lisbon). Internet TLD: .pt Calling Code: +351(291) Population (2007)1: Total: 246 689; Density: 307,4 inhabitants/km2; Age structure: 0-14 years: 44 046; 15-24 years: 35 035; 25-64 years: 135 349; 65 and more years: 32 259 1Source: INE - Instituto Nacional de Estatística.7 1 – About MAR All entities undertaking the maritime transportation of persons and goods may register vessels in MAR, flying the Portuguese flag and having therefore full access to continental and domestic cabotage. Such entities may be companies, branches, agencies, or legal representations licensed or not to operate within the framework of Madeira’s IBC. Commercial vessels, oil-rig platforms and commercial and pleasure yachts may be registered in MAR, benefiting from the services of the Private Commercial Register and Notary of Madeira’s IBC. Companies licensed in the IBC of Madeira and whose activity is that of maritime transportation will fully benefit from the existing tax incentives regime. 2 – Tax regime Vessels and Yachts Foreign crew aboard commercial vessels and yachts registered in MAR are not obliged to contribute to the Portuguese social security regime provided they have an alternative protection system. Portuguese nationals or residents in Portuguese territory shall be mandatorily covered by the general Portuguese social security regime for employees. A total contribution rate of 2,7% will be applicable, of which 2,0% shall be borne by the employing entity and 0,7% by the employee. The crew may also register under the Portuguese voluntary social insurance regime for protection in the events of disability, old age and death. In addition, the wages of the crew of commercial vessels and yachts registered in MAR are also exempt from personal income tax. Shipping companies It is not mandatory to incorporate a company in Madeira’s IBC in order to proceed with the registration of a ship in MAR, although some form of legal representation must be nominated with all necessary powers to assure full representation before the State and Regional authorities. In the case a company is formed, the tax regime of the IBC of Madeira is fully applicable. PART II – THE INTERNATIONAL SHIPPING REGISTER OF MADEIRA MAR8 The present regime of tax benefits allows the incorporation of new entities until the end of 2024, granting a significantly reduced corporate tax rate until the end of 2028, as well as other tax advantages, as shown in the following table: 1 -The general rate of 21% will be applicable to income derived from activities carried out with resident entities 2 -If relating to a participation of at least 10% held for 1 year, amongst other conditions, otherwise the rate of 5% shall be applicable 3 -If relating to income derived from the temporary disposal or use of Industrial Property Rights originated from R&D activities and subject to registration in Portugal, such as Patents and Industrial designs or models. 4 -When paid to worldwide single and corporate shareholders including Portuguese resident entities but excluding entities resident in blacklisted jurisdictions *This table is not intended as an extensive presentation of the taxation and conditions applicable to companies within the IBC of Madeira but rather a summary of the main aspects of the applicable tax regime and does not, therefore, replace the consultation of the applicable legislation. Companies licensed as from 2015* Corporate Taxation Corporate Income Tax Rate5% (1) Dividends/ Capital Gains0% (2) Royalties2,5% (3) or 5% Capital (Stamp) Duty80% Exemption Withholding Tax Dividends0% (4) Interest0% Capital Gains0% Royalties0% Services0%Number of jobsMinimum InvestmentCeiling 1,2€ 75.000 € 2.730.000 3 to 5€ 75.000 € 3.550.000 6 to 30-€ 21.870.000 31 to 50-€ 35.540.000 51 to 100-€ 54.680.000 More than 100-€ 205.500.000 9 Shipping companies licensed in the IBC of Madeira also benefit from an exemption of 80% applicable to stamp duty, municipal property tax and property transfer tax, regional and municipal surtax as well as any other local taxes. To qualify for the tax reductions, the companies must comply with pre-established requirements, namely the creation of at least one job in the first 6 months of operation and the investment of €75.000 in the first two years of operation. This last requirement does not apply, however, to those companies that create 6 or more jobs. On the other hand, the reduced tax rates are applicable up to a ceiling placed upon the annual tax base, which varies according to the number of jobs created, as follows: Companies with a tax base above their respective ceiling will be taxed at the normal corporate tax rate in Madeira, 21% from 2015 onwards, on the exceeding amount. Additionally, companies will be subject to one of the following maximum annual limits applicable to the tax benefits of the present regime: a)20,1% of the annual Gross Value Added, or b)30,1% of the annual incurred labour costs, or c)15,1% of the annual turnover. All companies licensed to operate in the International Business Centre may also benefit from the large network of international treaties to avoid double taxation ratified by Portugal. VAT rate In case the yacht is engaged in charter activities there will be no charge of VAT on importation or acquisition, on the charter operation of sea-going commercial yachts and on repair and maintenance operations, as well as fuel and oil supply in open sea, according to Article 14º of the Portuguese VAT code. The tax regime of the IBC of Madeira is set by articles 33º and 36-Aº of the Portuguese Tax Incentives Statute and by DL 165/86, of the 26th of June. MadeiraNext >