Legal Framework for Car Rental in Madeira

 I.    Purpose

Regional Legislative Decree No. 7/2025/M, published in the Official Gazette on December 4, repeals Regional Legislative Decree No. 13/2013/M, of March 28, establishing an updated regime on the conditions for access to and exercise of the activity of renting passenger vehicles without a driver by natural or legal persons established in the national territory, including the activity of sharing vehicles, with or without a motor.

   II.    Main changes to the car rental regime 

The legal diploma now published arose from the need to preserve good conditions for travel and mobility within Madeira, ensuring sustainable development, introducing to this end some changes to the rules and procedures to be verified both in access to and in the exercise of the activity of car rental without a driver, with the primary objective of ensuring clear, accessible, and objective information between operators, supervisory bodies, and service users.

The following is a list of the new rules with the greatest impact on access and, in particular, on the activities of car rental companies. Some aspects are still open and will only be finalized with the publication of the Ordinance that will regulate the aforementioned law:

▪ Access to the activity:

1. Prior notification to the Institute for Mobility and Transport, IP-RAM, is now mandatory for operators wishing to operate in the Autonomous Region of Madeira (RAM); those already operating on the mainland must also notify that entity, attaching proof of administrative permission.
2. Tacit approval for the start of car rental activity in the RAM no longer exists, and the competent authority must now expressly issue the relevant permit.
3. An electronic platform will be created and made available for the purposes referred to in the previous points.
4. The following requirements for access to the car rental activity are now mandatory:
   1. The operator must have a physical establishment in the Autonomous Region of Madeira, dedicated to the activity, intended for commercial and industrial services, open to the public;
   2. The operator must have a fixed licensed parking space, located within a 15 km radius of the fixed establishment, with a minimum capacity of between 20% and 40% of the total number of vehicles in the fleet, to be defined by Ordinance;
   3. The operator must have a minimum of 10 vehicles assigned to the car rental business.

▪ Exercise of the activity:

1. It is now mandatory that at least 10% of the operational fleet consists of zero-emission vehicles;
2. Except in cases of financial leasing or renting of vehicles used in the car rental activity by the operator, the subleasing of vehicles is prohibited;
3. The operator is obliged to notify the IMT, IP-RAM of any updates to the fleet operating in the Autonomous Region of Madeira, namely the allocation and deallocation of vehicles to the car rental or sharing activity;
4. A daily usage fee of €2 per full day, up to a limit of 10 days, is created, to be paid by the user, with the lessor (rent-a-car company) responsible for collecting it and delivering it to IMT, IP-RAM, by the 15th day of the month following the month to which it relates, accompanied by a list of contracts entered into. In the case of zero-emission vehicles, the fee is €1 per day.

   III.    FINAL NOTES:

 The new regime now published provides for a transitional rule for adaptation and transition by operators who already hold administrative permission for car rental activities.

▪ Until June 30, 2026:

1. Operators with administrative permission in mainland Portugal who wish to operate in the Autonomous Region of Madeira must notify the IMT, IP-RAM in advance of their intention, attaching proof of this existing permission;
2. All vehicles must display the rent-a-car sign, which will be approved by order of the Regional Government;
3. Operators who already have administrative permission to operate a car rental business must adjust their activity to all other provisions of the law, other than those provided for in the following points, without the need to submit prior notification.

▪ Until December 31, 2026:

1. All operators must obtain a licensed space for fixed parking, with a minimum capacity for 10% to 20% of the total number of vehicles in the fleet, within a radius of 15 km from the fixed establishment (to be defined by Regional Government ordinance);
2. All operators must have a minimum of 10 vehicles in order to operate a car rental business;

▪ Until December 31, 2027:

1. All operators must obtain licensed space for fixed parking, with a minimum capacity of 20% to 40% of the total number of vehicles in the fleet, within a 15km radius of the fixed establishment (to be defined by Regional Government ordinance);
2. All operators must comply with a minimum of 10% of the operational fleet in zero-emission vehicles.

▪ Violation of certain rules of the amended legal regime constitutes an administrative offense and leads to the imposition of fines, pursuant to Articles 22 et seq.

▪ The above-mentioned legal document came into force on December 5, 2025, but its procedures will only take effect upon publication of the ordinance provided for therein, which should occur within 90 days of the aforementioned date of December 5, 2025.

Note: The information contained in this note is summarized, is not exhaustive, and does not cover all the rules contained in the legal regime set forth in DLR 7/2025/M, of December 4, and therefore its full consultation is required.