How international companies optimise their tax structure through the Canary Islands ZEC
In the Canary Islands Special Zone, all entities and branches that carry out an industrial, commercial, service or other permitted activity are able to establish themselves in the Canary Islands Special Zone and in so doing benefit from a range of tax advantages.
Take advantage of one of the most attractive tax regimes in EuropeDiscover the main advantages of belonging to the Canary Islands Special Zone
4% tax
ZEC companies are subject to Corporate Income Tax at a reduced tax rate of 4% (compared to the European Union (EU) average of 23%).
Exempt from withholding
Dividends distributed by subsidiaries of ZEC entities to their parent companies in another EU country are exempt from withholding tax.
Main sectorsThe activities that can be carried out in the ZEC are very diverse, both in the industrial field and in the services and wholesale trade.
The Canary Islands have established themselves in recent years as one of the leading destinations for international audiovisual productions.
This is further enhanced by tax incentives, specialized technical infrastructure, and institutional support, all key factors in attracting filming by major international production companies.
- Tax deductions of up to 50/54%
- Maximum deduction limits are higher than those in the Peninsula
- Compatibility between incentives
All companies that invest in Research, Development, and Technological Innovation (R&D&iT) are entitled to access the corresponding tax incentives. These incentives take the form of deductions applied to corporate income tax and are generated through the execution of research, development, and/or technological innovation projects.
- Tax deductions up to 75% higher
- Higher corporate tax deduction
- Possibility of monetizing unused deductions
- Direct reduction of the tax burden on corporate profits
Companies producing tangible goods in the Canary Islands can apply a 50% reduction to the gross Corporate Tax or Personal Income Tax liability on income derived from that activity.
It is one of the most significant incentives of the Canary Islands’ Economic and Fiscal Regime and, in many cases, is underutilized.
- 50% deduction on profits
- Taxation at 2%
Travel agencies operating within the Canary Islands Special Zone (ZEC) enjoy significant tax advantages. Thanks to the Canary Islands regime—where IGIC applies instead of VAT—there is a favorable difference of approximately 14 percentage points, enabling them to offer more competitive prices and improve business profitability within the tourism sector.
- Tax advantage of up to 14 percentage points compared to VAT.
- Greater competitiveness in tourism prices
- Better profitability for travel agencies
- The Canary Islands, a strategic hub for international tourism
Requirements of the Canary Islands Special ZoneTo benefit from the tax advantages of the Canary Islands Special Zone (ZEC), companies must meet a series of requirements established by current regulations.
Administrator
Administrator residing in the Canary Islands.
Investment
€100,000 or €50,000 investment, depending on whether it is a larger or smaller island.
Employment
Creation of 5 or 3 employees, depending on whether it is a larger or smaller island.
Geographical scope
The activities must be carried out within the geographical area of the Canary Islands.
New entity
Creation of a newly constituted entity in the Canary Islands.
Activity
That its corporate purpose falls within the activities permitted within the framework of the ZEC.
Establish your business in the Canary Islands to obtain the best tax benefits in Europe
Establish your business in the Canary Islands to obtain the best tax benefits in Europe
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FAQ
The Canary Islands Special Zone (ZEC) is a low-tax regime established in the Canary Islands to encourage foreign and domestic investment for economic development in the region.
Companies that establish themselves in the ZEC enjoy significant tax advantages, such as a reduced corporate tax rate of 4%.
Both local and foreign companies can benefit from the ZEC, as long as they meet the established requirements, such as job creation and investments in productive assets.
The process involves submitting an application to the competent body, complying with the requirements and commitments established by the regulations.
The tax benefit has an indefinite duration and is renewed every 10 years by the Spanish authorities and the European Union. The continuity of the ZEC Zone is guaranteed by the European Union.
The ZEC covers a wide range of sectors, from services to industry, promoting economic diversification in the Canary Islands.
One of the fundamental requirements to benefit from the ZEC is the generation of local employment, thus contributing to the social and economic development of the community.
Yes, it is possible to combine the ZEC with other available incentives and aid, making the region even more attractive for investment.
Companies in the ZEC must comply with the usual accounting and reporting obligations, ensuring transparency and regulatory compliance.
If you would like more information or need personalized advice about the Canary Islands Special Zone, please do not hesitate to contact Fimax Asesores. We will guide you from start to finish, providing a turnkey service for setting up your company within the ZEC (Canary Islands Special Zone) organization.