What is the ZEC?
The Canary Islands Special Zone (ZEC) is a low tax zone created within the framework of the Canary Islands Economic and Fiscal Regime (REF) for the purpose of promoting the economic and social development of the Islands and diversifying their production structure.
ZEC was authorised by the European Commission in January 2000. The benefits provided by the Canary Islands Special Zone will initially remain in force until 31 December 2019, and this time frame may be extended on the authorisation of the European Commission. The final date for authorisation to register in the Official ZEC Register (ROEZEC) will initially be 31 December 2013
These companies will have the following advantages:
- ZEC Companies are subject to corporation tax in force in Spain, but at a reduced rate of 4% (compared to 25% on average in Europe).
- Are exempt from withholding of dividends paid by subsidiaries ZEC to their parent companies in another European Union country through the Parent-Subsidiary Directive and with other countries with which Spain has signed an agreement to avoid double taxation (more fifty countries.)
- Exemption from taxation in the Transfer Tax and Stamp Duty.
- Exemption from Canarian General Indirect Tax (IGIC) (equivalent to VAT) for deliveries of goods and services between ZEC and imports.
The requirements for companies to qualify for the ZEC are:
- Being a new entity with domicile and place of effective management in the geographical area of the ZEC.
- At least one of the administrators must be resident in the Canary Islands.
- Make a minimum investment of 100,000 euros (Gran Canaria and Tenerife) or 50,000 euros (in the other islands) in fixed assets within the first two years after enrollment in the ROEZEC.
- Create at least five jobs (Gran Canaria and Tenerife) or three (in the other islands) during the first six months of enrollment in the ROEZEC and maintain this average along the benefits period.
- Develop activities allowed in the ZEC area.