Portugal has recently introduced a “patent box” tax incentives. In accordance with the same only half (50%) of the income resulting from contracts exploiting patents and other Intellectual Property rights (such as models and industrial designs subject to registry) are considered for taxation at corporate income tax level. This 50% exemption applies to gross income, and therefore all costs relating to the development of the said IP remain deductible. This regime will also apply when income perceived is paid from related parties (subject to some restrictions) though always provided the transferor of the IP is not located in a blacklisted jurisdiction. Trade-marks and other IP are excluded from this particular “patent box” regime. Nonetheless, all other tax benefits inherent to the Madeira IBC are fully applicable, such as:

• Reduced corporate tax rates (5%) until 2020 – please check applicable conditions;
• No withholding taxes on dividend (and reserves) payments to corporate shareholders (applicable criteria) and no taxation (corporate income tax) on dividends and reserves received from subsidiaries (applicable criteria) as these profits are removed from the taxable income;
• No taxation of capital gains upon sale of subsidiaries (applicable criteria) and, as well, on capital gains originated upon disposal - by non-resident shareholders - of participation held in Madeira IBC Company;
• No withholding taxes upon payment of royalties and services to non-resident entities, as well as upon interest payment (under certain conditions), notwithstanding possible application of the EU Directive on Interest and Royalties);
• Possible tax credit mechanism (in order to avoid international double taxation);
• No capital duty, no Stamp Tax, as well as no Registration or Notarial fees.

Our qualified personnel can help you manage your Intellectual Property in the most tax-efficient way. Ask us how at info@madintax.com or call us for additional information.

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