The Madeira Holding Company

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The SGPS (Sociedade Gestora de Participações Sociais) is a company which sole objective is to hold participations in other companies. Due to its core business, the SGPS is not entitled to own less than 10% of the share capital of its subsidiaries. Because it is regarded as a Portuguese company, it may benefit from the tax treaties concluded by Portugal as well as the EU tax directives plus the tax incentives granted by the EU to the Madeira International Business Centre.

Legal Form

The SGPS can be constituted either as a “sociedade anónima” (public limited company- SA) or a “sociedade de responsabilidade limitada” (private limited company- LDA).


The minimum share capital for incorporation of a SGPS company is €50.000 for a “SA” and €2 for a “LDA”.


A SGPS is a company fully subject to tax. Two tax regimes apply to this company, depending on the country of origin of the income received.

a) Income received from EU Member States: the company will be subject to the normal legislation applicable to SGPS in Portugal, thus a full participation exemption on dividends received, provided they comply with the requirements set by the EU Parent Subsidiary Directive and by Art. 51º of the Portuguese Corporate Tax Code, namely a minimum holding period of one year, a minimum shareholding of 10% and that the dividends received have their origin in profits that have been effectively subject to taxation. Other income will be subject to the standard tax rates in Madeira, namely 20%.

b) Income received from third countries: the company will be subject to the tax rates of 4% in 2011 and 5% from 2013 and thereafter until 2020 on all income (dividends and others).

After the first year, the SGPS is subject to a licensing fee of 0,5% on the taxable income of the previous year. Such tax is levied on earnings exceeding €1.000.000 but with a maximum tax amount of €30.000.


The taxable income of a SGPS is based on the company’s annual financial statements subject to adjustments. Expenses incurred exclusively for the purposes of the business are deductible while expenses incurred with exempt income are not deductible.

Capital Gains Exemption

Capital gains made on the sale of worldwide shareholdings will be exempt according to Portuguese legislation, subject to a minimum holding period (normally of one year, but in the case of participations in companies located in a blacklisted jurisdiction, the minimum holding period is of three years) and a minimum shareholding of 10%.

Some Advantages of the SGPS

Besides the common advantages of a holding company, the SGPS may also enjoy from the following:

Exemption from Withholding Tax on Payment of Dividends

Dividends paid out of profits derived from non-Portuguese companies are exempt from withholding tax, as long as the shareholder is a non-resident of Portugal.

Exemption from Withholding Tax on Payment of Interest

Interest paid by the SGPS to EU or non-EU residents is exempt from tax, as long as the recipient is a non-resident of Portugal.

Capital Gains Exemption on Sale of Shares of the SGPS

Capital gains from the sale of shares of the SGPS are exempt from tax for non-residents. Such exemption is not available to residents of countries blacklisted by the Portuguese tax authorities.

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Double Tax Treaties

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Legal Form: Sociedade anónima (SA);
Sociedade de responsabilidade limitada (Lda)
Minimum Subscribed Capital: €50.000 (SA)
€2 (Lda)
Minimum Paid-Up Capital:
Number of Shareholders: 1 (SA)
1 or 2 (S.U. Lda or Lda)
Type of Shares:
Substance Requirements: Nil
Capital Duty: 0%
Net Worth Tax: 0%
Corporate Income Tax: 0% (EU countries – subject to certain conditions);
4% / 5% (third countries)
Double Tax Treaties: 62
Dividends Exemption: 100%
Holding Requirements: 10% for 1 year (EU subsidiary)
Capital Gains Exemption: Yes
Holding Requirements: 1 Year
Tax Credit: Yes
Relief of Losses: Carry forward 6 years
CFC Rules: Yes
Debt-to-Equity Ratio: 2:1
Withholding Taxes
Dividends: EU Parent Co- 0%12
Treaty Countries- 0%12
Others- 0%13
Interest: EU Parent Co- 0%13
Treaty Countries- 0%13
Others- 0%13
Royalties: EU Parent Co-
Treaty Countries-
Liquidation: Nil

12 A 15% withholding tax is levied if dividends derive from a Portuguese subsidiary.

13 If the recipient is an EU company holding at least 10% of the company for a minimum period of 1 year

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A bespoke 'offshore' solution can be complex and requires careful planning and execution. We therefore encourage our clients to contact us directly, without obligation.

While all of our consultants in our offices provide a Free Initial Consultation, the office and consultant listed below has particular expertise in this area and will gladly assist with advice on how to approach your unique challenge.

Alternatively, to select one of our multilingual offices, click here for a list of our office contact details.

Madeira Management Cia Lda
PO Box 7
Rua dos Murcas 98
9000-058, Funchal

+351 291 201 700
+351 291 227 144

Languages spoken in this office:Languages Spoken: English, Portuguese, Spanish and French


Dra. Elita Correia Amaral, Legal Counsel
+351 291 201 700
+351 291 227 144
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