The Canary Islands Special Zone (ZEC) removes the minimum investment requirement for companies focusing on knowledge and innovation

The “Official State Gazette” (BOE) has published the 1/2022 circular, in which the Governing Council of the Canary Islands Special Zone established the guiding criteria for the minimum investment exemption in ZEC.

The Canary Islands Special Zone (ZEC) is a low tax zone created within the framework of the Canary Islands Economic and Tax Regime (REF) to promote the economic and social development of the Islands and diversify their production structure.

Many companies have launched or evolved in Gran Canarias due to the advantages associated with ZEC, such as the reduced rate of 4% for entities subject to the Corporate Income Tax. 

This regime was approved by the European Commission in 2000 and has been improving and relaxing the requirements ever since. However, the minimum investment of 100.000 euros in fixed assets within the activity was still active until last week.

With this change already introduced, several companies attending to several unique characteristics could be exempted from the minimal investment requirement.

Small and medium-sized companies with the seal of ‘Innovative PYME” by the Minister of Science and Innovation or the ones whose activities focus on obtaining it, as well as R+D companies and those in the audiovisual, video games, IT, and telecommunications fields, could ask for an exemption of minimal investment requirement. To receive this exemption, companies must have six or more employees.

A new rating system for reducing investment requirements is also established if companies employ more than the set minimum. Companies in Tenerife and Gran Canaria that use more than 20 people could reduce investment to 20.000 euros, 40.000 for those who employ at least 15 people, and 60.000 for those who employ 10 people. Companies that generate more than 25 jobs are not required to make a minimal investment.

This new measure seeks to promote the Canary Islands as an ideal destination for investments in sustainability, creative and innovative industries and to encourage the effective development of the entrepreneurial ecosystem of the islands.

This measure eases the creation and relocation to Gran Canaria of emerging companies in innovation, knowledge, and R+D fields. In recent years, Gran Canaria has had the largest share of investment in the Canary Islands due to the tax incentives and economic advantages for companies on the island. SPEGC aims to inform and guide innovative projects seeking to relocate to the island and to encourage local employment. If you have questions, our experts will help you through the  ‘Business Support Service’ of SPEGC.

projects seeking to relocate to the island and to encourage local employment. If you have questions, our experts will help you through the  ‘Business Support Service’ of SPEGC.