Why New Madeira

WHY NEW MADEIRAWHY NEW MADEIRA

NEW MADEIRA

_our company_our strategy_our services

MADEIRA

_general framework_institutional framework_other characteristics

INTERNATIONAL BUSINESS CENTRE OF MADEIRA

_framework_principles_activities_tax regime_certainty_key-factors_benchmarking

MAIN OPPORTUNITIES

CONTACTS

4

NEW MADEIRA_our company

New Madeira Investment Serviços, S.A. is an indepen dent company that operates since 1990 in the ambit of Madeira’s IBC, resulting from a spin-off of the largest law firm in Madeira.

New Madeira has:

• Experience and know-how in the four main areas of the IBC

• A global portfolio of clients, including leading multinational companies

• A long-standing cooperation with multinational professionals, law and consulting firms

• Experience in the implementation and management of all kinds of structures, including e-

business and industrial projects

• Effective management and know-how in Madeira

• All services are provided locally

5

NEW MADEIRA_our strategy

MissionTo add value to its customers, partners, staff-members and shareholders through the provision of professional services that facilitate the implementation of successful companies in Portugal.

Our VisionManagement company of reference in Portuguese market and market leader in Madeira

Strategic ValuesCustomer’s satisfaction, integrity, excellency of services and innovation

6

New Madeira provides all services necessary to effi ciently implement any structure in Madeira:

• Incorporation and registration of companies

• Registered office and respective services

• Companies’ management and administration

• Fiduciary services

• Bookkeeping and all related legal formalities

• Tax planning, legal and financial advice

• Consultancy and assistance for implementation of investment projects

• Services aiming at facilitating the creation of substance (offices, equip., human resources, etc.)

NEW MADEIRA_ our services

New Madeira provides all services necessary to guar antee the good integration of investors and respective collaborators in Madeir a:

• Visas and other entrance formalities

• Tax planning

• Translators and interpreters

• Assistance in whole process of setting up personnel plus respective families in

Madeira, including:

• Domestic services

• Insurance, health and social security procedures

• Real Estate / Housing

• Schools

• Social networking

NEW MADEIRA_ our services

8

MADEIRA _ general framework

• Portuguese Region located in the Atlantic Ocean, 1h20m off Lisbon

• Same time zone as London

• A modern economy based in International Services (Tourism: 28% and International Business Centre of Madeira: 21%)

• GDP per capita and productivity rate above national average

• Wager in simplifying procedures and e-government

9

MADEIRA _ general framework

• Modern infra-structures

• Political and social stability

• Local University with international partnership programs (ex: Carnegie Mellon)

• Highly specialized and efficient professional services providers

• Qualified workforce, proficient language skills

• Aptitude in attracting external human resources

10

MADEIRA _ institutional framework

• Autonomous Region of Portugal

• Portugal is a member-state of the European Union (EU) for more than 20 years

• Portugal is a member of the OECD

• Own Parliament, democratically elected, with legislative powers

• Regional Government nominated by the Parliament

• Autonomous Tax Administration with extensive powers, including that of issuing “rulings”

11

MADEIRA _ other characteristics

• Quality of life

• Safety, reduced criminality

• Mild climate

• Natural beauty

• Reduced operational costs

• Good Hotel and Housing facilities

12

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ framework

The International Business Centre of Madeira (IBC) is an instrument of economic development of Madeira

Created with the goals of:

• Modernizing, diversifying and internationalizing the productive structure of goods and services of the Region;

• Compensating structural weaknesses resulting from the reduced size of the internal market and from the ultra peripheral status of Madeira

Through the granting of tax benefits as a way to attract Foreign Direct Investment

13

The IBC was created with the following basic principles :

Full integration in the Portuguese legal order- Activities of the IBC are subject to the same regulations and supervision applicable at

national level

Full integration in the European Union- Preferential tax regime (state aid) previously approved by the E.U. - Total compliance with all EU treaties and law- All principles of European Union Treaty are applicable to Madeira companies and their

investors, namely the principle of freedom of establishment and of provision of services

- Free access to the European Internal market without discrimination- EU VAT System is fully applicable- Part of the European monetary system (reduction of operational costs, free movement

of capitals and elimination of exchange risk)

Competitiveness at global scale

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ principles

14

Credibility: Credible jurisdiction, approved by the EU and supported by the 27 member states – not a tax haven

Safety: The European Directives apply to Madeira, ensuring a modern legal framework

Transparency: Not included in any of the official black lists issued by the international organizations identifying the territories and regions qualified as tax havens; abides by all criteria defined by the OECD in terms of transparency and exchange of information.

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ principles

15

Activities may be undertaken in the following secto rs:

International ServicesTrading, consultancy, technical and professional services, holding, telecommunications, e-commerce and any other services of international nature

Industrial Free trade ZoneIndustrial and warehousing activities, as long as they do not put at risk national health and public order

International Shipping Register – MARShipping activities, registration of vessels, commercial yachts and pleasure crafts

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ activities

16

Madeira companies, licensed as from the 1st of January 2007, benefit from the following tax regime :

At the level of the shareholders of the Madeira Com pany (MadCo)– Exemption from withholding tax (WHT) on dividends and interests– Exemption from capital gains tax on sale of shareholdings in the MadCo [1]– Exemption on the proceeds of liquidation

At the level of the Madco– 3% - 5% corporate income tax (CIT)– Exemption from WHT– Exemption from local and municipal taxes– Exemption from stamp or capital duty – Lowest VAT in Europe (14%)– Exemption from notary’s and registration fees

_____________________________________________________________[1] Not applicable to countries that form part of the black list (other exemptions apply even to such shareholders)

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ tax regime

17

Access conditions to the preferential tax regime:

• To be licensed by the Regional Government of Madeira

• Benefits to shareholders only accessible to non residents in Portugal

• Withholding tax exemption only accessible to payments to non residents in Portugal

• Corporate tax income reduction only applicable to income obtained outside Portugal

• Some substance requirements are applicable

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ tax regime _ access conditions

18

Substance requirements:

1. At least one director or employee (resident or not in Portugal) in the payroll of the company (part time or full time job).

2. Whenever less than 6 jobs created, minimum investment of Eur 75,000 in the purchase of tangible or intangible fixed assets (not necessarily located in Madeira).

NOTES:

- Pure holding companies (SPGS) are not subject to such substance requirements.

- Requirement nr 1 must be fulfilled within the deadline of 6 months

- Requirement nr 2 must be complied within the course of the 2 first years

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ tax regime _ substance requirements

19

The tax benefit is limited to the following threshol ds of the taxable profit:

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ tax regime _ceilings

Jobs Taxable Profit

1 to 2 Eur 2 millions

3 to 5 Eur 2,6 millions

6 to 30 Eur 16 millions

31 to 50 Eur 26 millions

51 to 100 Eur 40 millions

> 100 Eur 150 millions

___________________________________________________________At present negotiations are underway with the EU Commission that aim at increasing the level of such thresholds

20

Companies licensed before end of the year 2000 (old regime ) are subject to the same abovementioned tax regime , with the following differences:

– Full corporate tax income exemption up to the end of 2011– Substance requirements are not applicable

In 2012, such companies will automatically migrate into the new regime, being subject to 4% CIT in 2012 and 5% from 2013 until 2020

____________________________________________________________[1] It is still possible to purchase companies benefitting from such tax regime

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ tax regime _old regime

21

This graphic shows an evolution of the CIT rates of the old and the new tax regime:

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ tax regime _tax rates

22

In general, the double tax treaty network signed by Portugal applies to the IBC of Madeira:

Algeria Austria Belgium Brazil Bulgaria Canada Cape Verde

Chile China Cuba Czech Republic

Denmark Estonia France

Finland Germany Greece Guinea Holland Hungary Iceland

India Indonesia Ireland Israel Italy Latvia Lithuania

Luxembourg Macao Malta Morocco Mexico Mozambique Norway

Pakistan Poland Romania Russia Singapore Slovakia Slovenia

Spain South Africa South Korea Sweden Switzerland Tunisia Turkey

UK Ukraine USA Venezuela

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ tax regime _ double tax agreements

23

Considering:

• Preferential tax regime approved by the EU and approved until the end of 2020

• Possibility of extension of this deadline (after negotiation with the EU)

Certainty

Whatever the circumstances, no exit costs

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ certainty

24

Choosing a jurisdiction Key factors:

Madeira Strengths

CREDIBILITY AND SAFETY

•EU jurisdiction•Regime previously approved by the EU•Part of the Portuguese legal order•EU Directives apply to Madeira

TRANSPARENCY •Not blacklisted•Abides by all OECD criteria

TAX REGIME

•0-5% CIT•Exemption from WHT•Lowest VAT in Europe•Double tax treaty network

CERTAINTY •Regime approved by the EU until end of 2020

OTHER CONSIDERATIONS

•International Business Environment •Professional and efficient services providers•Qualified human resources•Modern Infrastructures

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ key factors

25

Comparing Madeira with other EU jurisdictions:

• More competitive, simple and straightforward tax regime

• State aid package previously approved by the EU

• Certainty until the year 2020

• Possibility of obtaining rulings with competitive margins

• Lower operational costs

• Madeira has never been considered a tax haven by any relevant international organization (when compared to Malta or Cyprus)

• Mature legal system tested in Courts (when compared to Malta or Cyprus)

THE INTERNATIONAL BUSINESS CENTRE OF MADEIRA _ benchmarking

Effective structures using Madeira:

• Trading

• Holding

• Exit Strategy

• Intra-group financing

• Intellectual property (IP)

• E-business and telecommunications

• Holding immovable property and other assets

• Shipping

• Import of yachts and chartering operations

• Other efficient structures

MAIN OPPORTUNITIES

Please do not hesitate to contact us:

New Madeira - Investment Serviços, SA

Rua Dr. Brito Câmara, nº 20 - 1º

9000-039 Funchal

Madeira - Portugal

Tel.: +351 291 210 200 – Fax:+351 291 210 209

[email protected]

CONTACTS