What is the ZEC?
The Canary Islands Special Zone (ZEC) is a low tax zone created for the promotion of the economic and social development of the Canary Islands.
The ZEC was authorized by the European Commission in 2000 and is regulated pursuant to Law No. 19/94 of the 6th of July, 1994.
In addition to being the best tax regime in Europe, the Canary Islands offer all of the infrastructure, services and advantages of a European lifestyle, and have a privileged geostrategic position to operate efficiently in Africa.
As an added benefit, the Canary Islands provide legal certainty and have skilled human capital.
What are its tax advantages?
The main benefit is a reduced Corporate Tax rate of 4%, compared to an average of 22% in the European Union (EU), in addition to other incentives.
Dividends distributed by ZEC subsidiaries to their parent companies registered in other countries are exempt from withholding, except for countries without information exchange with Spain.
Exemption from the Canary Islands Indirect General Tax (the equivalent of VAT in the Canary Islands) for imports and transactions between ZEC entities.
Exemption from the Transfer and Stamp Tax.
Compatibility with the tax-free areas, Reserve for Investment and the Regime of Deductions for Investments in the Canary Islands.
What are the requirements to become a ZEC entity?
- Be a branch or newly-created entity with its registered address and effective place of management in the Canary Islands
- At least one member of the administration must reside in the Canary Islands
- Make a minimum investment of 100,000 euros within the first two years (in the case of non-capital islands, the minimum investment is 50,000 euros)
- Create at least five jobs during the first six months (in the case of non-capital islands, the requirement is at least three jobs)
- Conduct activities that are permitted in the ZEC
- Prior authorization by the ZEC Consortium
Why invest in the Canary Islands?
There are many reasons to invest in the Canary Islands but perhaps the most important is the best taxation in the European Union (EU), with 4% corporate tax rate compared to an average of 22% in the EU.
As an EU outermost region, the Canary Islands have an Economic and Fiscal Regime of their own, fully approved by the EU, which applies double taxation conventions and fiscal transparency.
In addition, the Canary Islands have other highly powerful and attractive tax incentives for certain sectors and functions. For example, in the audiovisual sector, the deduction in the quota in the corporate icome tax is 40% for foreing productions and 45% for Spanish productions o coproductions.
Another element to keep in mind is the maximum legal guarantee. Fully integrated in the EU legal system, the Canary Islands offer the total guarantee in the matter of security and protection to individuals and companies.
As a European region, the Canary Islands accumulate a solid know-how in key sectors. It also has human resources with great potential to meet the needs of companies that settle in the Canary Islands to operate in neighboring countries.
Also has all the infrastructures of a 21st century region, first-class European Health and Education, best climate in the world, 22ºC/71F average annual temperature, cosmopolitan, modern and cheerful atmosphere, and wide and diverse cultural and leisure offer.
From the point of view of air connectivity, The Canary Islands have great potential to be an Air Hub for companies that operate between America and Europe with Africa. According to Proexca data, there are 496 weekly direct flights to UK, 411 weekly direct flights to Germany, 1806 weekly direct flights to Spain and 47 weekly direct flights to Africa.