On 19th April 2010, Regional Legislative Decree 5/2010/M was published, approving the amount of the minimum salary to be applicable in Madeira from January 2010, in € 484,50.

With the approval of the State Budget for 2010, it was extended to all Member States of the European Economic Area, not only the exemption from withholding tax for dividends paid by companies resident in Portugal to entities resident in another Member State of the EU, following the conditions of the Parent Subsidiary Directive, but also the participation exemption regime applicable to dividends paid to Portuguese companies.

Our purpose is to inform you about these news, which extend the scope of the respective regimes, improving the competitiveness of the International Business Centre of Madeira as well as its capacity to attract foreign investment.

Minimum Salary in Madeira for 2010

On 19th April 2010, Regional Legislative Decree 5/2010/M was published, approving the amount of the minimum salary to be applicable in Madeira from January 2010.

The Autonomous Region of Madeira, in order to offset the constraints arising from the insularity costs and continuing its policy of increasing 2% compared to the minimum salary in force in mainland Portugal, determined that the amount to be applicable in Madeira from January 2010 will be of € 484,50.

This figure is important since it is used as a reference in various cases including the establishment of minimum social security contributions for company directors in Madeira.

Extension of the Parent Subsidiary Directive to the Member States of the European Economic Area (EEA)

With the approval of the State Budget for 2010, the exemption from withholding tax for dividends paid by companies resident in Portugal to entities resident in another Member State of the EU, following the conditions of the Parent Subsidiary Directive, is now also applicable to companies of Member States of the European Economic Area (EEA) and its permanent establishments situated therein, thus covering also Iceland, Liechtenstein and Norway.

It should be added that, in general, dividends paid to shareholders of Madeira companies, providing they are non resident in Portugal, are exempt from withholding tax.

Extension of the Participation Exemption to the Member States of the European Economic Area (EEA)

Similarly, the participation exemption regime, exempting from Corporate Income Tax (CIT) all dividends paid by companies resident in another EU Member State, was also extended to companies of Member States of the EEA and its permanent establishments, benefiting as well from the exemption of CIT.

New Madeira, an independent corporate service provider with a vast experience attracting inward foreign investment to Madeira, has provided all professional services related to the evaluation, implementation and management of business-related structures in the International Business Centre of Madeira, since 1990.

Please feel free to consult our website at www.newmadeira.com.
Should you require further clarification on the above or to discuss any other specific structure, do not hesitate to contact us.

This newsletter provides information and general advice about the law but laws and procedures change frequently and they have to be interpreted differently for different people. For specific advice geared to your situation consult an expert. For more information visit www.newmadeira.com