Portugal: EC finds tax benefits in Madeira free zone not correctly applied

Portugal: Tax benefits in Madeira free zone

The European Commission today announced that Portugal’s application of the Madeira free zone aid regime has not been in line with state aid decisions.

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As explained in an EC release, the objective of the approved free zone aid measures was to contribute to the economic development of Madeira through tax incentives, and the grants of tax reductions or benefits were conditioned on only benefitting companies that create jobs in Madeira and activities effectively and materially performed in Madeira.

An EC investigation, however, found that the tax reductions were applied to companies that have made no real contribution to the development of the region, in breach of the conditions of the decisions and EU state aid rules. Portugal must now recover the incompatible aid, plus interest, from companies that did not meet the conditions.

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