EU Commission opens state aid investigation into Portugal’s Madeira Free Zone tax scheme

The EU Commission on July 6 announced that it is investigating for potential state aid violations the implementation of a tax exemption scheme put in place by Portugal for companies established in the Madeira Free Zone.

The Commission said it is studying whether Portugal properly followed  2007 and 2013 Commission decisions approving the incentive.

The Commission has concerns that the Portuguese authorities may have failed to respect some of the basic conditions under Commission decisions.

In particular, the Commission has doubts that Portugal complied with the requirement that the company profits benefitting from the income tax reductions originate exclusively from activities carried out in Madeira and that the beneficiary companies created and maintained jobs in Madeira.

Portugal ended the incentive in 2014.

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