What is the Canary Islands Special Zone (ZEC)?
The Canary Islands Special Zone (ZEC) is a low-tax zone created under the Canary Islands Economic and Fiscal Regime (REF). Its objective is to promote the economic development of the area and attract new investments.
In general, all entities and branches seeking to carry out industrial, commercial or service activities can establish themselves and benefit from this tax regime, within a list of activities.
The Canary Islands Special Zone (ZEC) has the great advantage of being located at a geostrategic point that allows it to be an intercontinental connection bridge between Europe, Africa and America.
This location facilitates connectivity and accessibility in an increasingly globalized market . The ZEC presents itself as a strategic point for all those companies seeking to grow, invest, and expand their operations.
Furthermore, the Canary Islands have a great human potential , which allows companies to meet their needs through employees with extensive training, knowledge and experience in different areas.
Reduced corporate tax
One of the main tax advantages of the ZEC is the applicable Corporate Income Tax. ZEC entities are subject to a reduced Corporate Income Tax rate of 4% , compared to the EU average of 23% or the rest of Spain's 25%.
This is an unbeatable tax system in a geostrategic location with great potential for businesses, especially those with an international focus.
Exemption from Non-Resident Income Tax (IRNR)
Similarly, there is an exemption under the Non-Resident Income Tax (IRNR). This means that dividends distributed by subsidiaries or entities located within the Canary Islands Special Zone (ZEC) to their parent companies located in another European Union (EU) country are exempt from withholding tax.
Transfer tax and stamp duty
In addition to the reduced corporate tax rate of 4% and the exemption from Non-Resident Income Tax, belonging to the Canary Islands Special Zone (ZEC) entails exemption from Transfer Tax and Stamp Duty under certain circumstances. These exemptions apply to the acquisition of assets and rights intended for the development of the ZEC entity's activity within the geographical area of the Canary Islands Special Zone (ZEC). They also extend to corporate transactions carried out by ZEC entities , with the exception of their dissolution. Furthermore, stamp duty related to transactions carried out by these entities within the geographical area of the ZEC is also exempt from taxation.
Canary Islands General Indirect Tax (IGIC) on deliveries of goods and services
The Canary Islands General Indirect Tax (IGIC) is the equivalent of VAT applicable in the rest of Spain . Within the Canary Islands Special Zone (ZEC) regime, the supply of goods and services between ZEC entities are exempt from IGIC taxation.
Is the ZEC compatible with other incentives?
Yes. The tax advantages of the ZEC are compatible with other tax incentives of the Canary Islands Economic and Fiscal Regime such as the Investment Reserve, the Investment Deduction and the Free Zones.
This framework of benefits provides flexibility and ample opportunities to boost economic activity in the Canary Islands. This makes the archipelago a favorable environment for innovation and investment across various sectors.
It is important to highlight that community regulations regarding the accumulation of aid must be taken into account. For this reason, at Fimax Asesores we advise you to be able to take full advantage of the different incentives to invest in the Canary Islands.
What are the necessary conditions to become a ZEC company?
To benefit from the Canary Islands Special Zone (ZEC), you must meet several requirements. First, the company must be a newly established entity or branch, with its registered office and principal address located within the ZEC's geographical area . Furthermore, one of the company's directors must be legally resident in the Canary Islands, and its business activity must be included in the list of permitted activities eligible for the ZEC.
Another requirement concerns the minimum investment the company must make. This will be at least €100,000 during the first two years after incorporation for the islands of Tenerife and Gran Canaria , and €50,000 for the other islands. Furthermore, there are reductions in the minimum investment depending on the number of jobs created.
To obtain ZEC entity status, the creation of at least 5 permanent jobs is required on the two main islands, or 3 if the investment is made on the other islands.
At Fimas Asesores we are experts in the Canary Islands Special Zone (ZEC), so we know all the necessary requirements to benefit from this very attractive tax framework.
Tax deductions for R&D and in the audiovisual sector
Tax credits for Research, Development, and Innovation (R&D&I) activities are tax incentives that companies can use in their Corporate Income Tax . These credits allow companies to reduce their tax burden as a reward for investing in innovation and technological development activities.
In the Canary Islands, these deductions are especially beneficial, since companies can deduct up to 75% on Research and Development activities and up to 45% on Technological Innovation activities.
The intensity of the tax deduction in the Canary Islands is significantly higher than in the rest of the national territory.
In addition, one of the main beneficiaries of tax incentives in the Canary Islands are producers whose tax domicile is in the Canaries and who are responsible for carrying out foreign production. These companies can access tax deductions ranging from 45% to 50% . This 50% deduction is offered for the first million euros. Beyond that amount, the deduction will be 45%, with a maximum deduction limit of 36 million euros.
How to get the most out of the benefits of the ZEC?
The Canary Islands Special Zone (ZEC) presents itself as an excellent option for investors seeking growth opportunities by 2025. Strategic advice allows you to maximize the tax benefits offered by the ZEC. At Fimax Asesores, we have a team of ZEC experts who will analyze your case and advise you on whether you meet the requirements to benefit from the tax reductions available in the Canary Islands Special Zone (ZEC). We will also support you throughout the application process and during the incorporation of your company within the ZEC.
There are many permitted activities that can benefit from these tax benefits, which provides great investment opportunities for the year 2025.
The Canary Islands, with their geostrategic location, government support, and favorable tax regime, offer an ideal environment for business success. Don't hesitate to contact us for more information.
