This document aims to offer relevant and valid information regarding ship registration in Madeira. It covers the requirements and procedures that must be followed to register a ship in Madeira and details the resultant tax benefits.

 

PART I - INTRODUCTION

Background to Madeira

Madeira is the name of an archipelago of islands, belonging to Portugal. As part of Portugal, Madeira is a full member of the European Community.

The Free Trade Zone Legislation

The Madeira Free Trade Zone Legislation was established in 1987 to allow both Portuguese companies and companies registered elsewhere in the world to carry on activities from Madeira whilst enjoying the benefits of tax exemptions provided in the legislation. Madeira's position as an integral part of Portugal and, therefore, a full member of the European Union makes the Zone a very attractive proposition.
Companies incorporated in Madeira have access to all double taxation between Portugal and other counties.
There is complete freedom from exchange controls in Madeira.

Under the Free Trade Zone Legislation, Madeira has created an International Register for Ships. The ships are registered as operating under the Portuguese flag, a traditional and respected maritime jurisdiction.

PART II - SHIP REGISTRATION

Entities qualified to Register and Advantages of Registration in Madeira

The International Shipping Register - MAR, was established in 1989 as part of the International Business Centre “package” of taxation and offshore benefits available to potential investors.

All commercial vessels that operate in the maritime environment including fixed or moveable oil rig platforms are qualified to register at International Shipping Register - MAR.

The Register is not a flag of convenience, but is a Portuguese, and therefore, European Union Register.

There are unique benefits, which can be enjoyed by appropriate parties, namely:

a) Ships registered in the International Shipping Registry of Madeira are fully entitled to undertake Portuguese internal cabotage, with the exception of transportation between Portuguese mainland ports and ports in the autonomous regions of Portugal. As such, they meet the requirements of article one of the European Directive on Marine Cabotage.

b) Crew wages are exempt from all forms of Portuguese taxation.

c) The mortgagor and mortgagee may choose in writing the legal system of any country to govern the terms of mortgage, provided that the country of their choice recognises the regulations of the International Conventions ratified by Portugal in this matter. The main one being the Brussels Convention of April 10, 1926.

d) Exemption from taxes on profits generated from operations undertaken by vessels registered in MAR.

Classification Societies

Portugal presently recognises seven classification societies who are certified to carry out their functions within the framework of MAR and whose certificates are recognised:

- Lloyd's Register of Shipping (LRS)
- Bureau Veritas (BV)
- Det Norske Veritas (DMV)
- Registro Italiano Navale (RINA)
- American Bureau of Shipping (ABS)
- Germanisher Lloyd (GL)
- Rinave Portuguese (RINAVE)

Among the responsibilities that may be delegated is: supervision, definition of norms concerning stability, bulk cargo, on-board security, as well as the issuing of international certificates concerning conventions and resolutions.

The Purchase and Sale of Ships

Purchases and sale of ships are not subject to any authorisation. The sale becomes effective through a Bill of sale.

Crew - Required Characteristics

Income received by the crew of ships registered in MAR is exempt from any form of Portuguese taxation.

1 - Citizen requirements

The captain and 50% of the crew of the registered ship can be citizen of any European state or any one of the former colonies of Portugal, as well as from any country speaking the Spanish Language. In special circumstances these requirements may be waived, depending upon the ship's geographical area of operation.

2 - Crew Composition

Applicants may propose the specific composition of the crew of the ship, depending upon the particular characteristics of the ship and International conventions. The Technical Commission will establish minimum crew composition requirements in order to guarantee safety and the preservation of the quality of life on board and at sea.

3 - Social Security

Crew members and their respective employers of ships registered in MAR are not obliged to pay social security taxes within the Portuguese system, providing that they are already members of and contributing to similar system elsewhere.

Mortgage Law

The mortgagor and the mortgagee may, by written agreement, choose the legal system of a particular country that will govern the terms of the mortgage. Should such agreement not be reached, then the Portuguese law shall apply.

Registration

Documents and information regarding the ship needs to be submitted to the Technical Commission of MAR for analysis.