The Economic and Fiscal Regime (REF) of the Canary Islands is a legal framework that regulates the economic activity of the Canary Archipelago in a differentiated manner compared to the rest of Spain and the European Union.
The Canary Islands occupy a privileged position for attracting capital and businesses thanks to the REF, offering complete stability and legal certainty, along with unique and extraordinary advantages in Europe. These features place the Canary Islands ahead of the rest of the world in fostering employment, boosting innovation processes, and driving the internationalization of the economy.
The legal framework is extensive, with unique and distinctive instruments, tools, vehicles, and incentives compared to other territories. Key highlights include:
The ZEC (Canary Islands Special Zone):
- Corporate Tax at 4%, compared to the 21.4% European average and 25% in the rest of Spain.
The RIC (Canary Islands Investment Reserve):
- A reduction of up to 90% of undistributed profits in the Corporate Tax base, or up to 80% in Personal Income Tax (IRPF).
- This tax reduction also serves as an extraordinary financing source, as the incentive allows reinvestment in the company itself or other assets within the Canary Islands.
Two Free Trade Zones
- Fully compatible with the other benefits of the REF.
The IGIC (Canary Islands General Indirect Tax):
- Applied at 7%, compared to the 21% VAT on the mainland.
- 0% for certain products and services, the acquisition of investment goods, or based on transaction volumes. Also applicable to industries like audiovisual production.
The ITPAJD (Tax on Asset Transfers and Documented Legal Acts):
- Exemption for company formation and expansion, as well as the acquisition of investment goods.
Special Bonuses and Deductions:
- For Tangible Goods produced in the Canary Islands:
- 50% bonus on Corporate Tax or IRPF (as applicable) for profits derived from sales.
- For R&D&I:
- R&D: 45% deduction versus 25% on the mainland, plus additional bonuses of +37% / +30.6% / +28% (depending on application).
- IT (Technological Innovation): 32% deduction versus 12% on the mainland.
- For Audiovisual Production:
- National: 40% deduction versus 20% mainland or 38% versus 18% mainland (depending on limits).
- International: 35% deduction versus 15% mainland.
- Reinvestment of RIC in audiovisual projects.
- 4% Corporate Tax for audiovisual companies under ZEC.
- For International Market Promotion, Advertising, and Expansion:
- 10–15% deduction, depending on company size.
- For Investments in West Africa:
- 10–15% deduction for the internationalization of Canary Islands businesses, based on company size.
Today, the REF is an extraordinary instrument enabling businesses to establish themselves in the Canary Islands under privileged conditions.
“The Canary Islands enhance their fiscal incentives for startups.
They offer a 4% Corporate Tax rate, compared to the general 25%, in exchange for stable employment.
The benefit requires no minimum investment and focuses on companies in science, technology, and audiovisual sectors.” – PROEXCA
With the latest updates included in the REF, the Canary Islands can be considered a hub of special interest for industries related to R&D&I (Research, Development, and Innovation), as well as technological sectors:
- Biotechnology.
- Information and Communication Technologies (ICT).
- Tourism Innovation.
- New Technologies.
- Audiovisual (Film, Advertising, TV, and Video Games).
- Internet Platforms.
- E-Commerce.
- Commercial Trading.
TODO ES SINGULAR offers strategic consulting services specialized in the uniqueness of the Canary Islands.
Contact us at: hola@todoessingular.com
