< Previous30 PART V COMPANY INCORPORATION 1 – Licence application for shipping companies Although it is not compulsory to incorporate a company in Madeira’s IBC in order to proceed with the registration of a ship in MAR, many shipowners choose to do so, as it enables companies to benefit from the applicable tax regime. All types of companies and other forms of corporate representation, such as branches, agencies or offices, foreseen in Portuguese company law, may set up in the IBC of Madeira to carry out the activity of maritime transportation and other shipping related activities. Licence application A licence application must be submitted to S.D.M., in duplicate, addressed to the Cabinet of the Regional Secretary of Finance and Public Administration of the Regional Government of Madeira. The licence may be requested by an existing company, in Portugal or abroad, or by a company to be incorporated. In the case of branches, it is also required to submit the statutes of the head-office and the record of proceedings of the meeting in which the formation of the branch was decided. The statistical nomenclature of the economic activity (NACE code) to be undertaken in Madeira’s IBC must be indicated. In case a new shipping company is formed, no minimum share capital requirements will apply. The incorporation procedures are similar to those applicable to any other Portuguese company. Shipping companies operating within the legal framework of Madeira’s IBC are not obliged to keep their main offices in Madeira, although some form of legal representation must be kept in the island. In order to speed up the process, a Private Commercial Registry has been created for such purpose. In the case of a successful application, the licence is deemed to be granted in favour of the company once the applicant furnishes proof of the formation and registration of such company. All documents in support of the licence application must be duly translated into Portuguese and legalised. The licensing procedures are set by articles 18º and 19º of the Regulation approved by the Regional Regulatory Decree nº 21/87/M, of the 5th of September and by Decree-Law nº 13/2008, of the 18th of January.31 2 – Applicable fees Shipping companies incorporated in Madeira’s IBC will be subject to a license and annual operating fees of, respectively, 1.000 euros and 1.800 euros. The above described fees are set by the Regional Government of Madeira through Order nº 222/99, of the 28th of December. 3 – Company law The most common legal structures according to Portuguese law are the following: • Private limited company (Lda.), which may be incorporated with a single shareholder (Sociedade Unipessoal) and with a minimum share capital of €1 (one Euro) per shareholder. This type of company does not need to appoint directors; the minimum requirement is to appoint a manager who, by law, has the powers to undertake the management of the company. • Stock corporation (S.A.), which must be incorporated with a minimum of 5 shareholders and a minimum capital of Euro 50,000. Non-voting preference shares may be issued up to a maximum of 50% of the share capital. Redeemable preference shares may also be issued provided they are fully paid up. The management of these companies must be guaranteed by a board of directors made up by an odd number of members. If the share capital does not exceed Euro 200,000, these need only one director. These companies may also be incorporated with a single shareholder in the case of a Sociedade Unipessoal. • Branch. There are no minimum capital requirements for a branch, unless it relates to a bank, in which case either a minimum capital of an acceptable amount applies or the head office must provide a full guarantee for the branch’s operations. Shareholders of IBC companies may be an individual or a company, national or foreign. According to Portuguese Law, shareholders may also be the managers of the company or may choose to appoint an individual to act as manager of the company. Shipping companies licensed to operate in the IBC of Madeira are dispensed from keeping their head-office in Madeira and are only required to maintain legal representation.32 4 – Company requirements Legal reserve 5% of the annual profits will be attributed to the constitution of a legal reserve, corresponding to at least 20% of the share capital. The legal reserve of Lda. companies is subject to a minimum amount of 2.500 euros. Auditing requirements In accordance with Portuguese law, all companies licensed within the legal framework of Madeira’s IBC must keep proper books of accounts and make them available, if required, for inspection by the relevant authorities. The official books of accounts should be kept in the Portuguese language and currency (the EURO). Auxiliary records can, however, be kept in any currency. Stock corporations are subject to auditing in the following conditions: - By a single auditing entity (either a qualified auditor or auditing company) or by an Investigation Committee or; - By both an Investigation Committee and a qualified auditor or auditing company in the case of stock corporations with shares or bonds admitted to the stock exchange and if two of the following three pre-requisites are fulfilled during any two consecutive years: 1. Average of 150 employees or more per annum; 2. Total assets of Euro 100 million or more per annum; 3. Total income of Euro 150 million or more per annum. The Investigation Committee must be made up by a minimum of three members. In the case of private limited companies, if two of the following three pre-requisites are fulfilled during any two consecutive years, then such companies are required to present annual accounts audited by either a qualified auditor or an auditing company: 1 Average of 50 employees or more per annum; 2 Total assets of Euro 1,5 million or more per annum; 3 Total income of Euro 3 million or more per annum. Corporate Tax Returns Periodical tax returns must be submitted to the Portuguese authorities, through the Portuguese Fiscal Authorities website http://www.dgci.min-financas.pt/:33 - Periodical income declaration: to be submitted until the last working day of the month of May (if the fiscal year corresponds to the civil year) or five months after the term of the fiscal year (if different from the civil year). - Annual Simplified Company Information (IES): to be submitted until the last working day of the month of June (if the fiscal year corresponds to the civil year) or six months after the term of the fiscal year (if different from the civil year). - Periodical VAT declaration: to be submitted until the 10th day of the second month following the one to which the operations refer to (for a turnover of or above Euro 498.797,90 in the precedent civil year) or until the 15th day of the second month following the quarter to which the operations refer to (for a turnover under Euro 498.797,90 in the precedent civil year). 5 - Labour Personal Income Tax and Social Security Taxes Companies are required to withhold personal income tax and social security contributions on the payment of salaries and other forms of remuneration to workers. Personal income tax rates vary according to the level of salary paid. As a reference, the applicable withholding rates in Madeira for 2013 start at 1% (for a monthly income up to 590 euros, single individuals) to 44,5% (for a monthly salary over 25.000 euros, single individuals). Monthly salaries up to 585 euros are not subject to withholding personal income tax. Social security contributions are of a fixed rate of 11% for the employee and of 23,75% for the employer. The social security rates applicable to Directors are of 21,25% paid by the company and 10% paid by the Director. The amounts withheld will be paid to the tax authorities until the 20th day of the following month in which the deductions were made. Labour Regulations The working week includes a maximum of 40 hours with Sunday being the day of rest. Employees are entitled to 22 working days of vacation per year, plus 10 days statutory holidays, and to sick leave and maternity leave. If the employee starts to work in the first half of the calendar year, he will be entitled to a minimum vacation period of 12 working days during that year. Overtime is payable at the rate of 125% for the first hour and 137,5% thereafter. Overtime worked during rest days is payable at the rate of 150%. Salaries are paid on a monthly basis 14 months per year (holidays and Christmas bonuses included). The law allows short-term contracts, with a minimum period of 6 months, renewable at the 34 employer’s option, up to a limited period of 3 years, after which the employee is either granted a permanent contract or is dismissed. Minimum and average wages In the year 2013, the average gross monthly wages paid in the Autonomous Region of Madeira in the services sector were of approximately 1.112,70 euros for highly qualified workers and of 583,06 euros for non-qualified workers. The minimum monthly wage set for 2015 in Madeira is of 515,10 euros. 6 - Incorporation and registration of companies The following steps describe the incorporation process of a new company in the IBC through the use of the Private Deeds Registry Office. Step 1 -Name approval A name approval certificate and a provisional identification card must be requested to the National Company Registrar (RNPC – Registo Nacional de Pessoas Colectivas). This request may also be made through the internet. The certificate and identification card must be required by either a shareholder of the company to be formed or by a duly authorized entity through the submission of the appropriate forms. The certificate will be valid for 180 days for registration purposes and for one year after the company incorporation. Companies must inform the RNPC of their intention of incorporating and operating within the legal framework of the IBC of Madeira. Step 2 - Company incorporation Formation and registration of IBC companies must be requested to the Private Deeds Registry Office. The following documentation must be submitted to the notarial office upon the request: -Company name approval certificate; -Provisional company identification card; -Copy of the identification documents of the applicants: •Single person: identification and fiscal cards; •Collective person: certificate of the conservatory of the commercial registry, company identification card, initial public deed, identification and fiscal number of the company’s legal representative;35 -Report from the Official Account Auditor for capital shares entrances in goods; -Licence and Authorization from the Regional Secretary of Finance and Public Administration. IBC companies are exempt from fees and notarial costs. Step 3 - Declaration of beginning of activity Companies must declare the beginning of activity at the local tax dependency. The following documentation must be submitted together with the declaration: -Specific form, available at the tax office, in triplicate and duly certified, with information regarding the official accountant responsible for the company’s books of accounts; -Provisional company identification card; -Copy of the public deed; -Copy of identification and fiscal cards of the shareholders and official accountants. Companies must submit the declaration before the beginning of the activity or within 90 days to the RNPC registration (date of issue of the provisional card). Step 4 - Commercial and RNPC registration, publication on the Official Journal - JORAM To be submitted to the private conservatory of the commercial registry, until 90 days from the public deed, through the following documentation: -Company’s incorporation public deed; -Company name approval certificate; -Beginning of activity declaration. The official publication will be at JORAM, the Official Journal of the Autonomous Region of Madeira. Companies may also request the publication at a local newspaper.36 Step 5 - Social Security Registration Companies must proceed with the registration at the Regional Social Security Centre within 30 days of the beginning of activity. The following documents must be presented: -Tax payer’s identification card; -Company’s incorporation public deed; -Company’s identification card; - Record of proceedings of the election of the members of the board and forms of income; -Copy of the fiscal card of the members of the board; -Fiscal document of beginning of activity. Existing companies wishing to operate within the legal framework of the International Business Centre of Madeira may do so either through the formation of a branch, agency or other form of legal representation foreseen in Portuguese law or by requesting the transfer of the company’s headquarters to Madeira. In either case, a license must be obtained through the application process described earlier. The registration in the private conservatory of the commercial registry is also required.1 - Support Services There is a wide range of professional support services, provided by local companies. These include management companies, which provide incorporation and other permanent supporting services, accounting companies, law firms, real estate agents and recruitment agencies, amongst others. More information and contact details in www.ibc-madeira.com. 2 - Infrastructures Airport The recent improvements made to the local airport included the extension of the runway to 2.781 meters and the increase of the traffic capacity to 3.500.000 passengers per year. The cargo capacity has also been increased to 16.000 tons per year with the improvement of the cargo terminal. Several international airlines fly to and from Madeira, with direct flights to international destinations such as London and Paris. Commercial Port The port of Caniçal has recently been expanded to become the major commercial port in Madeira, meaning that all loading and unloading of cargo takes place in that new facility. The port has 3.9 km of quay with a draught of 15m for bulk cargoes, as well as 4.2 km of quay with an 8m draught for containerships. It also has a ro-ro ramp on backs on to 42,750 sqm of multi- purpose terminal space. Madeira has regular sea cargo connections on a twice-a-week basis with Lisbon, on a weekly basis with New York, and every fortnight with European ports such as Bremen, Hamburg, Antwerp, Felixtowe, Rotterdam and London. Road Network The island’s main motorway has been recently expanded and improved, allowing a fast and easy access to all major locations in Madeira. PART VI – SUPPORT SERVICES, INFRASTRUCTURES AND HUMAN RESOURCES38 3 – Human resources Local recruitment Madeira offers a young and skilled workforce for recruitment. Placing an advertisement in local and national newspapers is a very common procedure, as well as resorting to the local Employment Centre or a recruitment agency. Recently. S.D.M. has set up a database with a large scope of CV’s and IBC licensed companies may also use S.D.M.’s website to advertise their recruitment needs at http://www.ibcmadeira.com. The University of Madeira, as well as other local technical schools, are a good source of skilled professionals. Currently, nearly 300 students graduate from the university every year. It is also possible to recruit highly qualified professionals from a large pool of Madeirans studying in Portuguese universities or working abroad.1 - International Business Centre of Madeira The legislation ruling the incorporation of companies, the tax regime in force and the activities carried out within the legal framework of the International Business Centre of Madeira may be downloaded directly from http://www.ibc-madeira.com/en/ibc-legislation.html. 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