Go4 % corporate tax in the EU
The ZEC is an EU-approved special zone – 4 % CIT with the full legal certainty of Spanish and EU law.
Company formation
Company Formation in the Canary Islands
The Canary Islands are a Spanish region with special EU status: in the Zona Especial Canaria (ZEC), admitted companies pay only 4 % corporate tax – with full EU membership. Requirements are a minimum investment and jobs on the ground; instead of VAT, the lower IGIC (7 %) applies. Legal status: 2026, without guarantee.
ZEC: 4 % CITIGIC 7 % instead of VATEU location with a special zone
Key figures
The Canary Islands at a glance
4 %
Corporate tax in the ZEC
100.000 €
Minimum investment (Tenerife/Gran Canaria)
5 / 3
Minimum jobs (large/small islands)
7 %
IGIC instead of VAT
Advantages
What speaks for the Canary Islands
Low consumption tax
Instead of 21 % Spanish IVA, the Canaries apply the IGIC with a 7 % standard rate.
Location with quality of life
Year-round climate, EU infrastructure, a growing remote and tech community on Tenerife and Gran Canaria.
Tax comparison
Example: €100,000 profit
| Germany | Canaries (ZEC) | |
|---|---|---|
| Corporate tax | ~30 % (effective) | 4 % (ZEC, up to the profit cap) |
| Tax on €100,000 profit | ~€30,000 | €4,000 |
| Special feature | Municipal trade tax | substance duty: jobs + investment on the ground |
The 4 % rate applies up to an assessment cap (depending on the jobs created, base ~€1.8 m profit); above that, the regular Spanish rate applies. Without ZEC admission, normal Spanish taxes apply.
Legal forms
Legal forms at a glance
| Legal form | Minimum capital | Liability | Typical use |
|---|---|---|---|
| SL (ZEC entity) | €1 (in practice usually €3,000) | limited | Standard for ZEC admission |
| SA | €60,000 | limited | Larger firms |
| Autónomo | none | unlimited | Self-employed (no ZEC benefit) |
| Branch | — | parent liable | Market entry (ZEC-eligible) |
ZEC admission takes place before starting the activity via the ZEC Consortium; certain fields of activity are eligible (mainly services, IT, trade, production – no pure finance/holding activities).
Process
How incorporation works
ZEC pre-check
Align activity, business plan and location with the ZEC Consortium.
Form the SL
As in Spain: NIE, notary, entry in the Registro Mercantil.
ZEC admission
Application and entry in the ZEC register before starting the activity.
Make the investment
€100,000 (Tenerife/Gran Canaria) or €50,000 (other islands) within 2 years.
Create the jobs
5 or 3 full-time positions within 6 months – to be maintained permanently.
IGIC & ongoing compliance
Tax registration, annual reports to the ZEC Consortium.
Formation as in Spain (4–8 weeks for non-residents) plus the ZEC admission procedure.
Costs
Costs (indicative)
Spanish formation costs (~€1,500–3,500) plus ZEC registration and annual fees; ongoing accounting/compliance (indicative).
Taxes
Corporate taxes
| Item | Rate |
|---|---|
| Corporate tax (ZEC entity) | 4 % (up to the assessment cap) |
| Corporate tax (without ZEC, Spanish standard) | 25 % |
| IGIC (instead of VAT), standard rate | 7 % |
| RIC (investment reserve) | profit reduction of up to 90 % possible |
The ZEC is part of the EU-approved economic and tax regime of the Canaries (REF) and is regularly extended – check current registration deadlines with the ZEC Consortium. Observe Spanish dividend/exit rules.
Knowledge check
Worth remembering
Tap a card to reveal the answer. Content AI-assisted and editorially reviewed.
CIT in the ZEC?
Show answer
4 % – with ZEC admission subject to job and investment conditions.
Minimum jobs?
Show answer
5 on Tenerife/Gran Canaria, 3 on the other islands.
What applies instead of VAT?
Show answer
The IGIC with a 7 % standard rate.
Location in numbers
The Canary Islands in numbers
| Metric | Value |
|---|---|
| CIT in the ZEC | 4 % (Spanish standard: 25 %) |
| Population | ~2.2 m |
| IGIC standard rate | 7 % (instead of 21 % IVA) |
| Special zone since | 2000 (EU-approved, extended several times) |
Latest developments
Latest developments (as of July 2026)
- ZEC regime regularly extended by the EU as part of the Canarian REF – keep checking registration deadlines.
- Requirements (5/3 jobs, €100,000/50,000 investment) unchanged.
- Growing remote-work and tech community; direct flights to the DACH region.
FAQ
Frequently asked questions about the Canary Islands
How do I get to 4 % tax?
Via ZEC admission: a minimum investment (€100,000/50,000) and jobs (5/3) on the ground are mandatory.
Does EU law apply?
Yes – the Canaries are a full EU and Spanish location; the ZEC is an EU-approved aid scheme.
What happens above the profit cap?
Above the ZEC assessment cap, the regular Spanish rate of 25 % applies.
Is the ZEC worth it for solo founders?
Usually only from a team upwards – the job requirement (3–5 positions) is the central condition.
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Sources & disclaimer
Sources
This page is for general information only and does not replace legal or tax advice. Binding information is provided by the competent authorities of the respective country and by lawyers, notaries and tax advisors licensed there. For the tax consequences of relocating from Germany or Austria, tax advisors licensed in those countries are responsible. All information without guarantee. Status: July 2026. For an individual assessment: contact@goglobal.associates.
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