Madeira sees Foreign Direct Investment plummet by 50% in 8 years

The autonomous region of Madeira has suffered strong disinvestment since the start of a Brussels’ investigation into state aid to the Madeira reduced tax zone (ZFM).

The Bank of Portugal says that since 2017 several companies have left Madeira, transferring their activity to other regions of the country or abroad.

Foreign Direct Investment in Madeira shrank by more than half in eight years. The strong disinvestment in the region is explained by the relocation of dozens of companies to other Portuguese regions or oversees due to tax changes and court decisions that have forced the return of some of the state aid received in the Zona Franca Madeira (ZFM).

The “stock” of foreign direct investment in the Madeira region stood at €8.7Bn at the end of 2025, according to data from the Bank of Portugal.

The value is the lowest since the beginning of the series, in 2017, when the stock was around €17.7Bn.

Between 2017 and 2025, annual variations in the “stock” of investment in Madeira were always negative, which means that the autonomous region has seen systematic disinvestment from year to year.

“This drop is mainly explained by the change of headquarters of entities located in Madeira abroad or to other regions of Portugal”, says an official source from Bank of Portugal.

The data shows that, while foreign investment has been falling in Madeira, an increase has been observed in the remaining regions of the country, with emphasis on the Centre, Alentejo and Algarve, where the accumulated value of transfers from foreign investors has more than doubled in the last eight years.

In October last year, the Legislative Assembly of Madeira sent a proposal to parliament to extend the fiscal regime of the Madeira Free Zone (ZFM), currently at 5%, until the end of 2033. The goal was to guarantee “stability and predictability” to the regime and reinforce the region’s attractiveness for international investment.

Last year, with the State Budget for 2025, the deadline for admitting new entities to operate within the scope of the ZFM was extended for a period of two years (until December 31, 2026). However, the regime’s effects will only continue until December 31, 2028.

Source: Negócios; Credits: Colin Watts on Unsplash