Economic and tax regime
The Canary Islands apply a tax regime of their own, authorised by the European Commission. It is not a shortcut: every measure has its access conditions, its exclusions and its monitoring obligations. This page describes the mechanisms; the figures shown carry their source and their date.
Corporate income tax
The Spanish general rate is not always the right point of comparison: a micro-enterprise and a small-sized entity are taxed at lower rates. The rate of the Canary Islands Special Zone, by contrast, applies only to part of the taxable base. The chart places the rates; your own position is determined case by case.
Corporate income tax: ZEC and Spanish regimes, 2026
The 4% rate applies only to the share of taxable income from operations physically carried out in the ZEC, up to €1,800,000 increased by €500,000 per job created above the minimum (up to 50 jobs), and the tax reduction may not exceed 30% of net turnover.
BOE — Ley 19/1994, régimen económico y fiscal de Canarias (texte consolidé) (2026) · BOE — Ley 27/2014, impuesto sobre sociedades (texte consolidé) (2026)
| Regime | 2026 rate |
|---|---|
| Canary Islands — ZEC | 4% |
| New company | 15% |
| Micro-enterprise | 21% |
| Small company | 23% |
| Standard rate | 25% |
Canary Islands Special Zone (ZEC)
The ZEC is a State aid scheme authorised by the European Commission and reserved for entities entered in the official register. The reduced rate applies only to the share of the taxable base arising from operations physically carried out within the zone, up to a limit linked to the jobs created, and the annual tax saving is capped by reference to net turnover. The conditions below are cumulative.
The registered office and the place of effective management must lie within the geographical perimeter of the zone. At least one director, or the legal representative of a branch, must reside in the archipelago.
An investment in fixed assets allocated to the activity must be made within the period set by law after registration. The amount required is higher in the capital islands than in the less populated ones.
A minimum number of jobs must be created shortly after registration and then maintained as an average headcount. Where the activity was already being carried on, the creation must be net: taking over an existing workforce is not enough.
The annex to the law is a positive list: only an activity appearing on it is admitted. Registration is subject to authorisation, with a filing fee and then an annual fee for remaining on the register.
| Item | Rule in force | Reference |
|---|---|---|
| Applicable rate | 4% | Ley 19/1994, art. 43 |
| Starting taxable base | €1,800,000 | Ley 19/1994, art. 44.6.b |
| Increase per job above the minimum | +€500,000 | Ley 19/1994, art. 44.6.b |
| Jobs taken into account | up to 50 | Ley 19/1994, art. 44.6.b |
| Absolute cap on the tax reduction | 30% of net turnover | Ley 19/1994, art. 44.6.b |
| Above that base | standard corporate tax rate: 25% in 2026 | Ley 27/2014, art. 29.1 |
| Minimum jobs | 5 in Gran Canaria and Tenerife · 3 in the smaller islands | Ley 19/1994, art. 31.2.e |
| Minimum investment, within two years | €100,000 · €50,000 in the smaller islands | Ley 19/1994, art. 31.2.d |
| Management | at least one director resident in the Canary Islands | Ley 19/1994, art. 31.2.a and b |
The taxable-base brackets of €1.8m / 2.5m / 3.5m / 4.5m / 6m according to the number of jobs, still published by many websites, were repealed in 2015: only the rule above is in force. Authorisation to join the ZEC register is open until 31 December 2026, a date tied to the end of validity of Regulation (EU) 651/2014 « or of the rule replacing it »; a new European regulation is expected for January 2027. General information, to be checked case by case.
Estimate
This tool applies, to the values you enter, the formula for the taxable base eligible for the reduced rate and the limit linked to turnover. It is there to prepare a meeting, not to calculate a tax.
Indicative estimate, calculated solely on the values entered. It takes no account of deductions, carry-forwards or the limits on the accumulation of aid, and it does not check that the activity is eligible for the regime. It is neither a tax calculation nor a commitment by the firm. Every result must be verified against your own file before any decision is taken.
Indirect tax
The archipelago lies outside the VAT territory of the Union: it applies its own indirect tax, the Canary Islands General Indirect Tax (IGIC), with several rates, special schemes and a surcharge for certain retailers. The general rate is residual: it covers whatever falls under no other rate.
Consumption tax: IGIC and VAT, 2026
Standard rates. IGIC is not VAT: the Canaries lie outside the EU VAT territory, the tax has seven rates and special schemes, and purchases from mainland Spain count as imports.
BOC — Decreto Legislativo 1/2025, texte refondu de l'IGIC (2026) · Code Général des Impôts mauritanien (Ministère des Finances, texte consolidé) (2026) · Tax Foundation Europe — VAT Rates in Europe (relevé de janvier 2026) (2026)
| Territory | Standard rate |
|---|---|
| Canary Islands — IGIC | 7% |
| Mauritania — VAT | 16% |
| France — VAT | 20% |
| Spain — VAT | 21% |
Canary Islands investment reserve (RIC)
Up to 90% of the undistributed share of the year's profit arising from establishments located in the Canary Islands.
BOE — Ley 19/1994, régimen económico y fiscal de Canarias (texte consolidé) (2026)
| Item | Value |
|---|---|
| RIC — maximum allocation | 90% |
| RIC — deadline to make the investment | 3 years |
| RIC — holding period of the assets | 5 years — 10 years for land |
| RIC — limit for individuals (IRPF) | 80% |
| RIC — limit for non-initial job creation | 50% |
| RIC — holiday letting (vivienda vacacional) | prohibited |
Reserve for Investments in the Canary Islands (RIC)
The RIC reduces the taxable base by the amount of undistributed profits arising from establishments located in the Canary Islands, on condition that they are reinvested in the archipelago. It is a conditional and monitored advantage, not an exemption acquired once and for all.
The allocation is calculated on the share of the year’s profit that is not distributed and that arises from establishments located in the Canary Islands; under no circumstances may it make the taxable base negative. The sums must then be materialised within the legal period, in eligible investments, and the assets acquired must remain allocated to the activity for a minimum period, longer in the case of land.
Failure has its price: the reserve is reinstated, with late-payment interest and penalties. Some points deserve to be stated before any decision is taken. Materialisation in a dwelling intended for tourist letting is expressly prohibited, on purchase as well as on refurbishment. And the same assets cannot serve both for the reserve and for the investment deductions. Sole traders obtain it through a tax deduction, which is likewise capped.
Complements to the regime
The economic and tax regime does not stop at the ZEC. The measures below answer different situations and do not combine freely: the limits on the accumulation of State aid are checked file by file.
The Spanish investment deductions apply in the archipelago at increased rates and with a higher ceiling for offset against tax. They cover, in particular, research, technological innovation and audiovisual productions.
Part of the tax corresponding to income from the sale of goods produced in the archipelago by the company itself is reduced: farming, livestock, industrial and fishing activities.
Within the free zone precinct, goods are stored, processed and distributed without duties or indirect taxes. Tax becomes due only on release for consumption; dispatch to a third country falls outside it.
The AIEM, the tax on imports and supplies of goods in the Canary Islands, is levied on the import and supply of certain goods in order to support local production. It is a cost for the importer and a support for the producer established in the archipelago.
Frequently asked questions
No. The annex to the law expressly excludes coordination centres and intra-group services from the categories concerned. An application made on that basis does not succeed. The regime is intended for operating activities appearing on the positive list and carried on with real substance in the Canary Islands.
No. The reduced rate covers only operations physically carried out within the zone. An activity conducted in Mauritania raises questions of permanent establishment, controlled foreign company rules and abuse of law. We write this before the study, not after it.
The authorisation to register is tied to the term of the European State aid regulation, and the Commission is preparing the text that will succeed it. The deadline may therefore change, in either direction. We check it when your file is prepared, before any commitment.
No. The prohibition is express and covers the acquisition as well as the refurbishment or conversion of dwellings intended for tourist letting. It is a frequent expectation in Gran Canaria and an avoidable dispute: better to know before allocating the reserve.
Not automatically. The rate is only part of the equation: what counts is the company’s cycle of purchases and sales, the nature of the goods or services sold and the import formalities that are added to them. The calculation is made on the real flows, not on a comparison of rates.
It depends on the measure. The ZEC requires the registered office, effective management and a resident director. The rebate for the production of tangible goods remains available through a branch or a permanent establishment. Every measure has its own conditions, to be examined separately.
This page is general information and does not constitute personalised tax advice. The figures shown carry their source and their reference date: the economic and tax regime of the Canary Islands has been amended several times in recent years, particularly as regards IGIC. Access conditions, sectoral exclusions and the limits on the accumulation of aid must be verified against the specific file before any decision is taken.
Sources and references
Every figure published on this site carries its source and its reference year. The data are reviewed periodically and may change.
First conversation
Describe your situation and your timetable to us. We will tell you what is possible, on what conditions, and what has to be checked before any commitment is made.