Tenerife taxation, beneficial tax and taxes in Canary Islands
Tenerife, in the same way as the rest of the islands that make up the Canary Islands archipelago, enjoys different institutional frameworks with the EU and with Spain. These constitute its differential tax code status, stemming from its ultra peripheral geographical condition within the European Union.
“Tenerife enjoys one of the best fiscal regime in the whole world” asserts Raquel Lucía Pérez Brito, Project Director of SOFITESA.
Those newly created companies that meet certain requirements pay their taxes at a reduced rate (9%) for Corporations Tax during the first five years, as compared to a general rate (from 30% to 37%) in Spanish state territory.
In Tenerife, the basic limit applied on the five municipal taxes (Real Estate Tax, Business Activities Tax, Circulation Tax, Land Tax and Building Tax) is 38.5%, while in cities such as Barcelona for instance, it is more than double this figure. The municipal taxes pressure is one of the lowest in the whole of the Spanish territory.
Furthermore, in line with the policy of support for some strategic sectors that is provided by the Canary Islands authorities, the telecommunications service sector for example, is wholly exempt from any indirect taxation.
The Canary Islands Special Zone (ZEC)
Investments in Tenerife can benefit from a new fiscal reduction approved by the European Union for the whole of the archipelago, the Canary Islands Special Zone (ZEC).
The "Canary Islands Special Zone" (ZEC) is a low taxation regime, created within the framework of the Economic and Fiscal Regime of the Canary Islands with the goal of promoting the economic and social development of the archipelago and diversifying its productive structure.
Among other advantages, all corporations that invest at least 100,000 euros and create five jobs can pay taxes between 1% and 5% for the Corporations Tax