Canary Islands Tax Regime for international entrepreneurs: advantages and how to establish

• EU territory: full access to the single European market, double taxation treaties, free movement of capital
• Special tax regime: 4% corporation tax (ZEC), 7% IGIC, own deductions and incentives
• Climate and quality of life: one of the best climates in the world, modern infrastructure, international connectivity
• Legal stability: Spanish legal system (European legal certainty)
• GMT+0 timezone: ideal for working with Europe, America and Africa simultaneously

1. ZEC — 4% Corporation Tax

The ZEC allows 4% IS versus 25% general. Minimum investment from €50,000 on smaller islands, at least 3–5 jobs, effective activity in the Canary Islands required.

2. IGIC at 7% instead of 21% VAT

The Canary IGIC applies at 7% versus the 21% mainland VAT — a direct competitive price advantage.

3. RIC — Up to 90% taxable base reduction

The Investment Reserve allows reducing the IS taxable base by up to 90% of undistributed profits destined for Canary Islands investments.

Step 1 — Define the legal structure

The most common option for international investors is the Sociedad de Responsabilidad Limitada (S.L.): minimum share capital of €1 (2023 reform), limited liability.

Step 2 — Obtain NIE and NIF

Foreign shareholders and directors must obtain a Foreigner Identification Number (NIE), essential for any procedure in Spain.

Step 3 — Incorporate the company

The full process takes 2–4 weeks if documentation is in order: company name registration, bank account, notary deed, Commercial Register inscription, tax registration.

Step 4 — Apply for ZEC status (if applicable)

If requirements are met, the company can apply for inscription in the ZEC Entity Register. The process takes approximately 3 months.