What are the main highlights of Madeira's Budget for 2024?
The key tax highlights are set out below:
- Update of the Personal Income Tax (“PIT”) brackets, reinforcing the strategy of expanding the maximum 30% reduction (when compared to the rates of mainland Portugal) permitted by the Regional Finances Law.
As such, in 2024, this 30% reduction is extended to the 5th bracket - annual income up to EUR 27,146 – which impacts the remaining four brackets through the progressivity of the Portuguese PIT Code;
- Corporate Income Tax (“CIT”) rate of 8.75% over the first EUR 50,000 of the taxable amount of certified start-up companies established in Madeira. The standard 14.7% CIT rate will apply to the remaining;
- Reduction of the minimum VAT rate to 4% (currently 5% in Madeira and 6% in Mainland Portugal). This ultra-reduced rate applies, among others, to the supply of some essential food products, books, pharmaceutical products, hotel accommodation, agricultural products; and
- Exclusion of application of the extraordinary contribution applicable to properties used for short-term rental (this extraordinary contribution will also be revoked in the mainland and hence can be seen as redundant).
The new rules above, published on 24 June 2024, are expected to take effect retroactively from 1 January 2024, except for the VAT reduction, which will come into effect on 1 October 2024.
