General tax incentives
Canary Islands Special Zone (ZEC) Businesses set up within the ZEC are subject to a reduced level (4%) of company tax. This option is particularly attractive to investors from other countries as no withholding tax applies to repatriation of dividends nor on the payment of interests to their headquarters.
Tax deduction for the production of material assets. This incentive offers a 50% reduction in company tax, applicable to businesses producing agricultural, livestock, fishing and industrial goods.
Indirect Canary Islands Tax (IGIC). This is similar to VAT but specific to the Canary Islands, with notably lower charges. Its standard rate is 7%.
Special taxes. Taxes on alcoholic drinks, tobacco, fuel and certain modes of transport are significantly lower than in the rest of the European Union.
Customs-free zone. In this zone goods can be stored, transported and handled during an unlimited period of time without having to pay any type of import duty or tax.
Profit tax by countries 2016
Source: KPMG (own preparation)
Tax incentives for investment
The Canary Islands Investment Reserve (RIC). With this incentive the tax burden can be reduced by up to 90% of the company’s profits, always provided that certain investments linked to the growth of the company are made.
Deduction for investment in fixed assets. This means a reduction of company tax equivalent to 25% of the amount destined for the acquisition of fixed assets.
Greater deductions in company tax in comparison with the general Spanish system, for investments and expenses in activities such as:
- RD&I (45%-32%)
- National audiovisual productions (40%-45%)
- International audiovisual productions (40%)
Investment Aid
Business investments made in Gran Canaria are eligible for subsidies and other national and regional financial instruments aimed at financing productive investment, RD&I, environmental improvements, training and recruitment.
