The objective of the Madeira International Shipping Register (MAR) is to offer a credible alternative to other international registers. The high quality and safety standards of a conventional register have been maintained within an attractive tax environment designed to encourage inward investment to the island of Madeira. Vessels registered with MAR carry the Portuguese flag and are subject to the International Treaties and Conventions entered into by Portugal.
Over half a million vessels are now registered with MAR and it is ranked the fourth international shipping register in the EU. Four of the largest ship-owners in the world, APM-Maersk, the Mediterranean Shipping Company (MSC), CMA CGM Group and Cosco Shipping, have ships registered with MAR, as recorded by the international analyst firm, Alphaliner.
Recent Developments of MAR
In 2017 a number of significant developments took place, increasing the attractiveness of registering a vessel in MAR:
- The Madeira Shipping Register was “White Listed” on both the Paris MOU and the Tokyo MOU.*
- Vessels under the Portuguese flag are included in the Qualship 21 Index of the United States of America. This certificate recognises the exceptional standards of the Register.
- The Korean Register (KR), a member of the International Association of Classification Societies (IACS), was granted authorisation by the Portugal Maritime Authority (DGRM) to deliver statutory services on behalf of the Portuguese flag. This authorisation enables the Korean Register to act as a Recognised Organisation (RO), conducting surveys and audits, and issuing certificates to Portuguese flagged ships, including those in Madeira, to ensure full compliance with SOLAS, MARPOL, ITC, ILL and MLC regulations.
*MOU: Paris Memorandum of Understanding on Port State Control (MoU) and Tokyo (MoU).
Advantages of Registering a Vessel with MAR
The key advantages of ship registration in MAR are detailed below:
- Shipping companies licenced to operate within MAR benefit from a corporate income tax rate of 5% until 2027. They also enjoy automatic VAT registration and have access to the Portuguese double taxation treaty network.
- The Register is of a high standard, has EU credibility and full access to EU cabotage.
- It is not regarded by the International Transport Workers’ Federation as a flag of convenience.
- There are no nationality requirements for ship owners of vessels registered in MAR and they are not required to have their head office in Madeira; it is sufficient to have local legal representation with adequate powers. Dixcart in Madeira can provide this service.
- The existence of a flexible mortgage system allows the mortgagor and the mortgagee, by written agreement, to choose the legal system of a particular country that will govern the terms of the mortgage.
- Registration fees are competitive and there are no annual tonnage taxes.
- Generally, the captain and 50% of the crew of the ship must be “European”. This includes nationalities such as Polish, Russian and Ukrainian, as well as citizens of Portuguese-speaking countries, which allows for flexible manning.
- Crew wages are exempt from income tax and social security charges in Portugal.
- Temporary registration is allowed by law (bareboat charter: “In” and “Out”).
- Eight International Classification Societies are recognised in Portugal. MAR can delegate some of its functions to these societies. This can be simpler and more convenient for ship owners.
Additional Tax Advantages for Shipping Companies in Madeira
In addition, to the reduced corporate tax rates, Madeira shipping companies also enjoy exemption from withholding taxes on the distribution of dividends, exemption from withholding taxes on interest, royalties and service fees paid to non-residents, and exemption from capital duty, notary and registration fees. If certain requirements are met, shipping companies may also be exempt from capital gains tax when subsidiaries are sold.
Shipping companies can benefit from the Double Taxation Treaties with Portugal and Investment Protection Treaties signed by Portugal.
The approach adopted by MAR allows for flexibility. Depending on the circumstances, the ship can be registered on MAR with the shipping company licensed in another jurisdiction, OR the shipping company can be registered in Madeira with the vessel registered elsewhere, OR both the vessel and the shipping company can be licensed in Madeira. Each of these options offer various advantages.
How Can Dixcart Help?
Dixcart has extensive experience working with the owners and operators of commercial vessels as well as pleasure and commercial yachts. We can assist with the permanent and/or bareboat registration of vessels, re-flagging, mortgages, and the establishment of corporate owning or operational structures for the holding or management of vessels.
If you require additional information regarding the International Shipping Register of Madeira and the tax efficiencies available to ships owned by Portuguese companies registered in MAR, please contact Carlos Santos at the Dixcart office in Madeira: firstname.lastname@example.org