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A decrease in Portugal’s rate of Value Added Tax (VAT) was announced by the Portuguese Prime Minister on the 26th of March 2008. Consequently, a reduction of 1% will come into effect on the 1st of July 2008 resulting in a VAT rate of 20% (previously 21%).
Madeira benefits from this reduction as the VAT rate in Madeira is 30% lower than the standard Portuguese VAT rate. Subject to legislative approval, Madeira’s VAT rate will reduce to 14% (as of the 1st of July 2008) thus giving Madeira the lowest VAT rate in Europe (currently joint lowest with Cyprus and Luxembourg at 15%).
The rate is expected to decrease by a further 1% with the approaching elections in the coming year. Should this occur, Madeira’s position as a highly favourable location from which to deliver electronic services and to pay VAT on the import of non-EU yachts will be further enhanced.
For more information
Please contact Michael Maxwell at Madeira tax consulting firm Dixcart
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