The Canary Islands

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Thanks to its excellent infrastructures, its European way of life, the best tax system in Europe and a highly qualified workforce, the Canary Islands offer a strategic location which gives access to world markets.

Why set up your company in the Canary Isands?

The Canary Islands are a Spanish archipelago located in the Atlantic Ocean off southern Morocco. They are made up of 7 islands and there are two capitals: Santa Cruz de Tenerife and Las Palmas de Gran Canaria.

The Canaries are characterised by a highly advantageous tax scheme and a strong involvement in R&D and technological innovation. In this way, the territory benefits from a dynamic and international variety of business sectors, including ICT/digital, biotech, audio-visual, business, and aeronautics.

The archipelago benefits from an ideal climate which guarantees a great quality of life all year round. In terms of talent, the Canaries boast a highly qualified workforce thanks to its 5 universities: University of La Laguna, University of Las Palmas de Gran Canaria, University Europea de Canarias, University Fernando Pessoa-Canarias and University del Atlántico Medio. Studies at these institutions touch upon audio-visual, new technologies and business, as well as fostering and engaging in research and development. The linguistic diversity of the population, further enhanced by 40 international schools, provides companies with multilingual staff.

Financial and tax incentives

The Canary Islands have their own Economic and Tax System (REF) which is fully approved by the EU and applies double taxation conventions and fiscal transparency. The advantageous rates of the archipelago make it a European tax haven.

There are many reasons that the Canaries’ tax environment is considered as one of the most competitive for foreign investors on an international scale:

Corporate income tax rate is only 4%, the lowest in Europe in relation to the European average, which is around 20%
Deductions on R&D and audio-visual expenses are amongst the highest in the world, making the Canaries an ideal place for R&D projects in a wide range of sectors.
Lowest VAT in Europe (7%)
Reduction of up to 90% of retained net profit
There are 2 free trade zones located in the ports.
The port areas are exempt from import taxes, for storage, import, processing, handling and re-export for an unlimited period

To find out more about tax and social security exemptions

To find out more about aid for the creation and development of businesses

ZEC (The Canary Islands Special Zone) promotes the creation of quality employment and the economic and social development of the islands. Some requirements for becoming a ZEC entity:

It must be a newly-created entity with its registered address and place of management
At least one member of the administration must reside in the Canary Islands
The company must make a minimum investment of €100 000 (in the case of Gran Canaria and Tenerife) or €50 000 (in the case of La Gomera, El Hierro, La Palma, Fuerteventura or Lanzarote) in fixed assets related to the activity within the first 2 years
The company must create a minimum of 3 to 5 jobs (5 if in the capital islands), within 6 years of creation. The employment rate must be maintained throughout the existence of the company in the ZEC.

Tax advantages for ZEC entities:

Income Tax Nonresident (IRNR) exemption
Property Transfer Tax and Stamp Duty (ITP-AJD)
Canary Islands General Indirect Tax (IGIC)
Compatibility with other REF tax incentives

Financial support for business creation :

Proexca can provide financial support for expenses related to the creation of the company. This aid, aimed at small and medium-sized companies, supports technological, organisational and economic innovation. It varies from €1,500 to €60,000, paid in advance without requiring guarantees.
Innobonos grants: to support innovation in SMEs, Innobonos provides grants of up to €20,000.
The International Business R&D Programme: managed by ICEX, this programme can finance research and development activities up to €200,000 for any period of three consecutive fiscal years and will be a percentage of the investment made.
Internationalisation: Canary Islands Government grants from €20,000 to €120,000 to cover 50% of eligible internationalisation costs. The project owner must be fiscally domiciled in the archipelago and prove that he/she has the funds and business plan to cover the internationalisation

Legal EU Framework

The Canary Islands follow the legal EU framework which has a maximum guarantee of legal security and protection for companies including in aspects such as

Data protection
Financial regulations
Free competition

All European laws and regulations must be followed as the Islands are part of the EU. However, as an outermost region, the Canary Islands also have economic and fiscal incentives that have been fully approved by the EU, see above.

Connections and accessibility

First of all, it is important to note that the Canaries are located between three continents: Europe, Africa and America. In this way, this archipelago is the perfect location for companies looking to cover the European, African, and American markets. Given its geostrategic position, the Canary Islands have direct daily connections with Spain, Europe, and the countries west of Africa.

Air transport

Europe is very well connected with the Canary Islands as their 3 airports fly to 132 destinations, including Madrid (2h50m) and Barcelona (3h15m), and several major destinations in France as well as other European capitals and large African cities.

France

Paris 3h45m away
Lyon 3h40m away
Lille 4h10m away
Bordeaux 3h15m away

Europe

Lisbon 2h15m away
Basel/Mulhouse 4h away
London 4h10m away
Amsterdam 4h15m away
Zurich 4h30m away
Brussels 5h away
Berlin 5h away

Africa

Marrakech 2h away
Casablanca 2h40m away
Nouakchott 1h50m away

Sea transport

The two main ports of the Canaries are Las Palmas and Tenerife. They guarantee an excellent connectivity with all the world’s main ports.

Furthermore, the Canary Islands are the main handler of containers in the Mid Atlantic (more than 1.5 million TEUs per year) and offer maintenance, repair, and emergency services all year round. Indeed, the islands’ ports also provide repair services to around 20% of platforms in western Africa.

All these advantages make the Canaries a centre of maritime activity.

Sectors of excellence in the Canary Islands

ICT/Digital

Companies in the digital marketing sector have an excellent opportunity in the Canary Islands because of their strategic position close to the African coast. This territory is ideal for reaching African countries and developing its international market. Furthermore, the Canaries have many great advantages that are not to be missed:

The best tax benefits in the world for R&D
Digital ecosystem with all the latest technologies
Application of European legal framework
Local qualified workforce enriched by the digital sector
Modern, cosmopolitan, and multicultural European region with an exceptional quality of life for its climate

Biotechnology

The Canary Islands benefit from a very rich biodiversity which is crucial for the biotech sector, which is growing quickly:

The Canaries offer the ideal geographical and environmental conditions, especially algae and aquaculture, to foster the development of new technologies.
Every island has at least one experimentation site: the site at Fuerteventura is dedicated to solar energy and the site at El Hierro is completely self-sufficient in energy.
This richness in research allows the Canaries to share their expertise with their neighbouring African countries to provide basic services such as electricity and water supply.

Audio-visual

The film industry is one of the fastest growing sectors thanks to the Canaries’ tax benefits for audio-visual production:

40% direct deduction for foreign productions
45% deduction for investment in Spanish productions
The islands offer a wide range of landscapes for every type of shot
A skilled and experienced workforce in the audio-visual industry, with 260 audio-visual companies, 214 film producers and 12 animation studios
High quality accommodation for cast and crew

The Blue Economy

The strategic position of the Canaries encourages a strong presence in the maritime operations and offshore services sectors.

A complete offshore service which offers maintenance of ships, supply of goods, fuelling, and subsea activities
The largest centre of naval repairs in the region
Proximity to extraction zones such as the Gulf of Guinea
Extensive knowledge of water desalination

Business with Africa

The Canary Islands are only 90km from the African coast, with excellent connections with West Africa’s ports.

Daily flights connect the Canaries to Morocco, Senegal, and Cape Verde
EU support for the creation of a common economic development zone between the Canaries and the neighbouring African countries
Long-term commercial and cultural ties

Aeronautics

The Islands have infrastructures and cutting-edge technologies for R&D in aeronautics, which is an up-and-coming field:

Astrophysics Institute of the Canary Islands – international centre of astrophysics research
The quality of the sky in the Canaries is exceptional and is in fact protected by law
The astronomical observatory ‘Roque de los Muchachos’ in La Palma houses one of the largest telescope collections in the world

Many national and international companies have chosen to set up in the Canary Islands, such as Atos, KONGSBERG, EON Reality, Amuse Animation, KOYI, El Ranchito, Netflix, WB, Disney, Lucas Film Ltd, Universal, Johnson & Johnson.

R&D

The archipelago has several development and R&D centres dedicated to different sectors of excellence: Marine Economy, Tourism, Cleantech, Astrophysics, Oil & Gas. Other specialities of the islands include software publishing, data centres, next generation vehicles, and digital government services.

Digital marketing and e-commerce

In-house digital marketing teams or digital marketing companies serving international clients can benefit from the exceptional environment in the Canary Islands.