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The redomiciliation to Madeira of Luxembourg 1929 holding companies, which regime ends on the 31st December 2010, may be an excellent alternative, ensuring a complete continuity of the company and its affairs within the EU.
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MADEIRA AS AN ALTERNATIVE TO LUX 1929 HOLDING COMPANIES
On July 2006, the European Commission instructed the repeal of Luxembourg’s preferential tax regime for holding companies established under the law of 31st July 1929 (1929 holding regime), on the basis that it violates the EC Treaty’s state aid rules.
As a consequence, the 1929 holding regime has been abolished as of 1st January 2007. Consequently, no new 1929 holdings can be incorporated after 20th July 2006 and the existing ones will continue to benefit from the regime only until the 31st December 2010.
Time is running out and a Madeira company can be an excellent alternative to the existing structures, for the following reasons:
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Under the Luxembourgish and Portuguese law, it is possible to redomicile a company (transfer its legal seat) from Luxembourg to Madeira, ensuring there is a complete continuity of the company and its affairs within the EU. In fact, Madeira’s preferential tax regime is totally integrated in the Portuguese legal order and is a well-regulated EU state aid regime, grounded on the concept of ultra peripheral region defined in the European Treaty, since inception supported by the EU Commission and recently therein reviewed and reapproved. Such redomiciliation does not involve any capital duty. |
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Similar to the 1929 holdings regime, a Madeira holding company may hold shares in foreign subsidiaries and receive dividends from these companies. In this case, the dividends received within the EU are exempt, according to the provisions of the Portuguese participation exemption, and dividends received outside the EU are currently subject to 3% corporate income tax. |
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Two of the major advantages of a Luxembourg 1929 holding company are also available with a Madeira holding company: there are no capital gains on the sale of its subsidiaries (minimum holding period of one year) and no withholding tax levied on dividends paid (and also on interests and royalties), irrespective of where the shareholders are resident. |
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Furthermore, a Madeira holding company benefits from the world’s network of double tax treaties signed between Portugal and other countries, unlike the 1929 holding companies which are excluded from treaties between Luxembourg and other countries. |
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Also, the Madeira holding companies benefit from EU directives as opposed to the 1929 holding companies. |
New Madeira can help you proceed with the above referred redomiciliation of a Luxembourg 1929 holding company to Madeira, enabling you to thus benefit from Madeira’s preferential tax regime.
New Madeira, an independent corporate services provider with a vast experience attracting inward foreign investment to Madeira, provides since 1990 all professional services related to the evaluation, implementation and management of business-related structures in the International Business Centre of Madeira.
Please feel free to consult our website at http://www.newmadeira.com.
Should it be of interest to obtain further clarifications on the above or to discuss any other specific structure, do not hesitate to contact us.
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