Guide to business in Spain Guía de negocios en España


3. Special regimes of certain Autonomous Communities

    That tax credit is 15% of the amounts invested in setting up subsidiaries or permanent establishments, with an increase in average workforce in the Canary islands. In the case of subsidiaries, they must be owned by companies with registered office in the Canary Islands.

  1. Tax credit of 15% of expenses for advertising and publicity, product launches, opening and researching markets abroad and attending trade fairs and the like.
  • The law establishes an increase from 32% to 45% in the tax credit for technological innovation through activities carried on in the Canary Islands.
  • Canary Islands Special Zone:
  • Canary Islands legislation also regulates the special tax regime of the Canary Islands Special Zone (ZEC), authorized in January 2000 by the European Commission, due to considering its application compatible with the provisions regulating the Single Market. The renewal of this tax incentive was included in the negotiation process on the Directives 2007-2013, establishing that the ZEC would remain in force until December 31, 2019 for authorizations granted up to December 31, 2013, although with minor modifications. Recently, the application of this special regime has been extended until 2026, and the period for requesting authorization runs until December 31, 2020.

    The regime is applicable to newly formed entities and branches domiciled in the Canary Islands that are registered on the Official Register of Entiies in the ZEC. Registered entities and branches must meet certain requirements, such as (i) having their registered office in the Canary Islands, (ii) having at least one director residing in the Canary Islands, (iii) having as their corporate purposes the performance of the economic activities expressly established in the law (financial activities being excluded in all cases), or (iv) creating a minimum number of jobs within the first six months following authorization, and keeping an annual average headcount of at least that number throughout the period in which the regime applies.

    In the current renewal of the Canary Islands Economic and Tax Regime, the list of activities that may benefit from the ZEC regime has been broadened and its territorial scope has been extended to the Canary Islands as a whole, meaning that the restriction of the regime to the activities carried out in certain geographical areas has been eliminated.

    The regime also requires (v) making a minimum amount of investments in the first years, through the acquisition of tangible or intangible assets located or received in the geographical area of the ZEC and which are used and necessary to perform the activities carried out in that area; and (vi) filing with the authorities a descriptive report on the activities to be carried out which supports their feasibility, international competitiveness and their contribution to the economic and social development of the islands, the content of which will be binding for the entity.

    Pursuant to the tax regime, the income obtained by the ZEC entities derived from the transactions carried out will be subject to corporate income tax at a single special tax rate of 4%. This reduced tax rate only applies up to a certain amount of tax base, depending on the activity carried out and the jobs created. Moreover:

Guide to business in Spain

Tax system


ICEX - Gobierno de España - Ministerio de Economía y competitividad
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