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In the middle of the Atlantic sits a Portuguese gem. World-famous as a tourist destination, Madeira is beautiful, intriguing and lively.
Read further to discover more about Madeira, where it is, its history, and its growing popularity as a place to live and do business.
Where is Madeira?
Do you need help finding paradise? Madeira is located in the Atlantic Ocean, roughly 1000 km from mainland Portugal. It’s geographically closer to Morocco (≈520 km) than to Europe! Nevertheless, Madeira is an integral part of the Republic of Portugal and the European Union.
Madeira is an archipelago that comprises four distinct groups of islands:
- Madeira Island is the largest island in terms of size and population. It’s also where the capital city of Funchal is located.
- Porto Santo is a small island to the northeast of Madeira. It has roughly 5.000 inhabitants and is most famous for its yellow sand beaches.
- Desertas Islands are three small islands to the southeast of Madeira. These uninhabited islands are a nature reserve for endemic marine and bird species.
- Savage Islands are a group of uninhabited islands further southeast of Madeira. These islands are a nature reserve because of their importance as a nesting spot for several endangered species of birds.
 José Lemos Silva / Arquipelagos
 Miguel Lopes / Arquipelagos
The Pearl of the Atlantic – a brief history of Madeira Island
The islands now known as Madeira and Porto Santo were officially discovered by the Portuguese in 1419 and started being settled around 1420. However, there are earlier mentions of Madeira in some 14th-century maps. This suggests that Europeans and North Africans had, at least, some previous knowledge of the Madeira archipelago.
The first settlers of Madeira were the families of the explorers who discovered it: João Gonçalves Zarco and Tristão Vaz. Some peasants, farmers and former inmates of the then-Kingdom of Portugal came with them.
Madeira (wood in Portuguese) is so called because it was wholly covered in a dense forest – the Laurel Forest. The initial settlers burned vast stretches of this ancient forest to make room for farmlands. At the same time, they began constructing an intricate network of canals to transport water from the north of the island to the south, where the farms and houses were located. These were the now famous levadas.
Sugar cane (rare in Europe then) was introduced as a crop sometime around 1450. By 1480, Madeira was one of Europe’s leading producers of sugar.
However, the Portuguese discovery and colonisation of Brazil meant the decline of Madeiran sugar production. The local, small-scale sugar cane production couldn’t compete with the massive Brazilian sugar plantations.
Thus, the focus turned to wine. Vineyards replaced the sugar canes, and this shift soon attracted English merchants eager to engage in the profitable business of wine trading to America, the West Indies and the United Kingdom. These merchants laid the foundations for the Madeira Wine industry.
The 18th and 19th centuries brought with them the arrival of tourists. Wealthy aristocrats came to Madeira to enjoy its climate and perceived therapeutic effects. The first hotels began to open around the 1850s.
Nowadays, Madeira is a world-famous tourist destination, with the cosmopolitan Funchal as its capital city. Madeira has a modern, thriving business environment that attracts workers and businesses worldwide. It is one of the Portuguese regions with the highest GDP per capita.
As the Portuguese Constitution defines, the Autonomous Region of Madeira has political and administrative autonomy. It is governed by a Regional Government, with the legislative power being assigned to the Legislative Assembly of Madeira.
Madeira enjoys a notoriously stable political system that focuses on improving the business environment and quality of life for locals and investors.
Despite its political and administrative status, Madeira is an integral part of Portugal, and Portuguese laws are fully applicable in Madeira. Under its Autonomous Region status, Madeira can adapt the laws to its specificities, always within the limits provided by the Portuguese Constitution.
Due to its geographical location, Madeira is considered an Outermost Region of the European Union. This means that Madeira forms part of the European Union but is entitled to positive discrimination and some special regimes, such as the tax regime of the International Business Center of Madeira.
Because it’s part of the European Union, Madeira also forms part of the European Union customs area and the Schengen Area.
This means that if you are a Madeiran resident, you can travel without restrictions to 27 European countries, including Spain, France, Germany and others.