The Islands enjoy the greatest tax deductions through ZEC.
Beach El Médano
If you are considering starting an audiovisual company, the Canaries are the ideal place to set it up. Thanks to the special regime of the Canaries Special Zone (ZEC) you can pay a reduced tax rate, 4% business tax, as opposed to the general rate standing at 25-30%. This means it is 8.5 points below the 12.5% applied in Ireland (the second lowest rate available in Europe). In other European Union countries entrepreneurs can hardly afford the rate. In France, for instance, it is set at 34.4% and the average rate in Europe stands at 23%.
But there is still more: ZEC includes other advantages and exemptions in the Canaries General Indirect Tax (IGIC), in the Property Transfer and Stamp Duty Tax (ITP & AJD) as well as in the dividend repatriation of non-resident companies.
Evidently, certain conditions must be fulfilled in order to make use of this system, including the fact that the company must be newly set up and that five jobs must be created within the first six months after setting up. But there is no doubt that the ZEC, along with 38% tax credits for investing in film production and the Investment Reserve (RIC) plus the 7% IGIC rate instead of 21% VAT, turn the Canaries into a most attractive place for investors and entrepreneurs wanting a change of scene (and of costs).
ZEC is a low-tax regime sanctioned by the European Commission (EC) under the Economic and Fiscal Regime (REF) of the Canary Islands with the aim to boost the economic and social development of the Archipelago, and diversify its production structure. Activities allowed in this regime include: audiovisual production, production services, on location assistance, post-production, photography and advertising.