Madeira tax & residency 2026: IRS rates, IFICI and the Free Zone

What is Madeira-specific, and what is just Portugal

Madeira is an autonomous region of Portugal, not a separate tax jurisdiction. Residence tests, capital-gains rules, crypto treatment, property taxes and the IFICI regime are national law, covered in our Portugal tax-residency guide. What Madeira changes is narrower: the regional income-tax (IRS) table, regional company-tax (IRC) rates, and the Zona Franca da Madeira (the Madeira International Business Centre, MIBC). Regional rates are set each year in the regional budget. As of September 2026, the figures below come from the 2026 regional budget decree (Decreto Legislativo Regional 8/2025/M) and national statute text on the Portal das Finanças.

The tax residency test

Under Article 16 of the Portuguese personal income tax code (CIRS), you are resident if you spend more than 183 days, consecutive or not, in any 12-month period that starts or ends in the tax year. You can also be resident with fewer days if, on any day of that period, you have a home in conditions suggesting you intend to keep and occupy it as your habitual residence. A day of presence includes partial days with an overnight stay. The test is not a calendar-year count, and it is not tied to 31 December: that date matters only for ship and aircraft crew. Because of the home limb, keeping a permanent home in Madeira can make you resident even below 183 days. For Germans, the mirror question, whether Germany still treats you as unlimited taxpayer, is separate and must be checked on the German side.

Madeira IRS rates in 2026

Residents of Madeira pay the regional table in place of the general mainland rates (Article 18 of DLR 8/2025/M). The 30% maximum regional reduction now covers all nine brackets, according to AT Madeira's January 2026 bulletin; in 2025 it stopped at the sixth bracket, with smaller cuts above. Each regional rate below is exactly 70% of the mainland 2026 rate.

On top of these, PwC reports a solidarity surcharge of 2.5% on taxable income above EUR 80,000 and 5% above EUR 250,000. Residents are taxed on worldwide income. Some older sources quote a 9.10% first rate or other figures; the statute says 8.75%.

IFICI: the 20% regime, and who actually qualifies

The old NHR regime closed to new entrants: it was revoked from 1 January 2024, and PwC says it still applies to those who met its conditions by 31 December 2023 or, under conditions, became resident by 31 December 2024. Its successor, IFICI (sometimes called NHR 2.0, Article 58-A of the tax-benefits statute), is national and narrower.

• Rate and term: 20% on net employment (category A) and self-employment (category B) income from qualifying activities, for 10 consecutive years.
• Eligibility: you become Portuguese tax resident, were not resident in any of the previous five years, and work in a qualifying activity. Former NHR beneficiaries are excluded.
• Professions: a list in Portaria 352/2024/1 (for example company directors, science and engineering specialists, doctors, university teachers, ICT specialists), typically requiring a level-8 qualification, or level 6 plus three years' proven experience. The OCC guide summarises the list.
• Deadline: register on the Portal das Finanças by 15 January of the year after you become resident.
• Foreign income: Article 81(4) CIRS relieves foreign income in categories A, B, E, F and G. Foreign pensions are category H and are not covered, and there is no special pension rate under IFICI. PwC's summary agrees. Income from blacklisted jurisdictions is taxed at 35%.

Madeira's 2026 budget decree (Article 21) adds a regional route for highly qualified professionals who become Madeira-resident from 1 January 2026. It depends on a regional regulatory decree; the decree was announced but its publication could not be confirmed, so treat this route as not yet operational until the authority confirms it.

Zona Franca da Madeira: the 5% company rate

Under Article 36-A of the tax-benefits statute (EBF), income of entities licensed to operate in the Madeira Free Zone from 1 January 2015 until 31 December 2026 is taxed at 5% IRC until 31 December 2033. Shareholders' distributed profits are exempt from IRS and IRC to 2033 under conditions, including residence and not being in a preferential-tax jurisdiction. Parliament approved the extension to 2033 on 20 November 2025, according to the operator (MIBC) and press reports.

Outside the Free Zone, Madeira's regional IRC is 13.3% (mainland 19% less 30%), and 10.5% on the first EUR 50,000 for SMEs and small mid-caps whose main activity is agricultural, commercial or industrial. PwC rounds the standard rate to 13%; the decree says 13.3%.

Capital gains, dividends, crypto, rental and property

• Capital gains: generally a flat 28%, with an option to aggregate. A partial exclusion (10%, 20% or 30% after 2, 5 or 8 years) applies only to securities admitted to trading and fund units. Only 50% of gains on unlisted micro and small company shares is taxed, per PwC.
• Dividends and interest: 28% flat or optional aggregation at marginal rates. AT Madeira says the regional 30% reduction on withholding ("liberatory") rates is maintained in 2026 for Portuguese-source income such as bank interest and dividends. It did not publish a resulting percentage that we could confirm, and we found no evidence it applies to foreign income.
• Crypto: selling crypto-assets is a capital gain (CIRS art. 10(1)(k)) taxed at 28% (art. 72(1)(c)). Gains and losses on assets held 365 days or more are excluded, except with counterparties in jurisdictions with no EU/EEA link, tax treaty or information exchange. Crypto-for-crypto swaps are not taxed. A May 2026 decree renumbered Article 10 without changing the rule, as of the consolidated text on the Portal das Finanças; the 365-day rule can change in any budget.
• Rental income: generally 28%; residential rentals are taxed at 25% "in general", with conditions.
• Buying property: since Decree-Law 97/2026 (20 May 2026), non-resident buyers of residential property pay a flat 7.5% IMT with no exemption, refundable on request if you become Portuguese tax-resident within two years or let the home under the rent cap for at least 36 months. It applies only to property destined exclusively for housing. Regional IMT figures were not verified.
• Holding property: IMI is 0.3%–0.45% on urban property, 0.8% rustic and 7.5% for owners in listed tax havens. AIMI applies to urban property with a EUR 600,000 deduction per individual, 0.7% for individuals (0.4% companies), a marginal 1% above EUR 1 million and 1.5% above EUR 2 million; married couples can opt for joint taxation, which doubles the deduction and thresholds. PwC adds 0.8% stamp duty on transfers, which we could not confirm from the statute.

For German residents: treaty points and exit tax

The 1980 Germany-Portugal double-tax treaty (approved by Lei 12/82) is the reference text. The points below come from the original 1982 text; later protocols were not checked, so verify the current version.

• Pensions (art. 18): pensions from prior employment are taxable only in the state of residence. Statutory versus private pension classification was not confirmed.
• Public-service pay (art. 19): taxed by the paying state (Kassenstaat), with an exception for local nationals working in the other state.
• Withholding caps: dividends 15%, interest 10% on bank loans or 15% otherwise, royalties 10%.
• Gains on shares (art. 13(4)): taxed only in the seller's residence state.
• Relief: Portugal credits German tax on income the treaty lets Germany tax.

Germany's exit tax (§6 AStG) is separate. On giving up unlimited German tax liability, certain shareholdings (Anteile im Sinne von § 17 EStG) are treated as sold at market value. The statute lets the tax be paid in seven equal annual instalments, interest-free, on application, and it falls away in some cases if you return within seven years. Whether it applies to you depends on your holdings and history, so take individual German tax advice before moving.

Official steps: registering as an EU citizen

1. Stay past three months, then register at the câmara municipal of your area within 30 days (Lei 37/2006, art. 14). Some sources say 90 days; the law's wording puts it at about day 120.
2. Bring valid ID or passport and a declaration that you meet one of the art. 7 conditions (working or self-employed, sufficient resources plus health insurance, or a student).
3. Pay the fee under Portaria 13/2024: EUR 15 digital or EUR 18 in person (over 25); EUR 12.50 or EUR 15 for under-25s. A standalone address change costs EUR 3.
4. Get a NIF at Finanças; EU/EEA residents abroad need no fiscal representative. Update your tax address within 60 days if your status changes between resident and non-resident (15 days otherwise); it takes effect only after you confirm the code mailed to you.
5. The certificate is valid five years or your stated stay if shorter. Permanent residence follows five consecutive years of legal residence (art. 10, issued under art. 16). Naturalisation under Organic Law 1/2026 (in force 19 May 2026) needs seven years for EU nationals, ten for others, plus language and culture proof; how EU certificate-holders' years are counted was not confirmed.

Two Madeira-specific notes: foreign driving-licence exchange has been online-only since 21 January 2026, and the Digital Nomad Village in Ponta do Sol is a free coworking community, not a visa or tax scheme.

Challenges and downsides

• High marginal rates remain: Madeira residents still pay up to 33.60% above EUR 86,634, plus the solidarity surcharge, on worldwide income.
• Rates move yearly: the regional table is set in each regional budget, and the 30% cut reached the top brackets only in 2026.
• IFICI is narrow: listed professions, degree or experience minimums, and five years of prior non-residence. Foreign pensions are not exempt, and NHR is closed.
• Zona Franca risk: licensing closes 31 December 2026, jobs or investment are required, profit caps apply, and the regime has been extended repeatedly by short-notice amendments.
• Property costs: the new 7.5% IMT for non-resident buyers, IMI, and AIMI on high-value property. Recent INE data put Madeira rents up 16.0% year on year in Q1 2026; see our Madeira cost-of-living guide.
• Announced, not confirmed: Madeira's own IFICI route awaits an implementing decree we could not confirm, and later German-Portuguese treaty protocols were not checked.
• German exit tax: deemed-sale taxation can arise on leaving Germany with qualifying shareholdings.

This guide is general information, not tax advice. Verify figures with AT Madeira, the Portal das Finanças and a qualified adviser, and see our Portugal guide for national residency routes.