Canary Islands ZEC registration is running out. Tax benefits for European Companies wanting to be based in the Canary Islands Spain
John Goldacre Managing Director of GoldAcre Estates who have their head office based in Fuerteventura in the Canary Islands, Spain, stated that some European companies are potential loosing out on the ability to reduce their corporate tax payments by not taking up the opportunity to form Tax entities in the Canary Islands which consists of the 7 Islands of Fuerteventura, Tenerife, Gran Canaria, Lanzarote, La Palma, La Gomera and El Hierro .
These places offer some serious advantages over operating companies from mainland Spain and other European countries and it is surprising that more tax advisors and accountants have not advised their clients of these unique opportunities
Office and Real Estate costs in the Canary Islands offer excellent prices for accommodating the offices and private homes and the links to mainland Europe are well served by major European Airlines with daily services to Madrid and other Spanish mainland airports, Many airports throughout Germany, all major and regional airports throughout the United Kingdom, Ireland, France, Sweden, Holland, Poland, Russia and many more.
What is the Canary Islands Special Zone?
The Canary Islands Special Zone 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.
The Canary Islands Special Zone was authorised by the European Commission in January 2000 and extended in December 2006. The Spanish Government subsequently adapted the regulations concerning the ZEC contained in the Canary Islands Economic and Fiscal Regime, in accordance with the terms of the corresponding authorisations (Title V of Law 19/1994, as amended by Royal Decree-Law 12/2006 and implemented by Royal Decree-Law 1758/2007).
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.
Where can ZEC Entities be set up?
The ZEC covers the whole territory of the Canary Islands, with the following specifications:
Entities whose corporate purpose is the undertaking of service activities may set up anywhere within the territory of the Canary Islands.
Entities whose corporate purpose is the production, transformation, handling or commercialisation of goods may only set up within certain areas designated for these purposes.
Corporate Income Tax
ZEC entities are subject to the Corporate Income Tax in force in Spain, at a reduced rate of 4%. As of 2008, the Corporate Income Tax rate in Spain ranges from 25 to 30%. The special rate of 4% shall be applied to a maximum amount of the tax base, depending on the number of jobs created and the type of activity carried out by the ZEC Entity.
Net Employment Creation
Industrial Activities
Service Activities
Other services *
From 3 to 8 workers
€1,800,000
€1,500,000
€1,125,000
More than 8 and up to 12 workers
€2,400,000
€2,000,000
€1,500,000
More than 12 and up to 20 workers
€3,600,000
€3,000,000
€2,250,000
More than 20 and up to 50 workers
€9,200,000
€8,000,000
€6,000,000
More than 50 and up to 100 workers
€21,600,000
€18,000,000
€13,500,000
More than 100 workers
€120,000,000
€100,000,000
€75,000,000
*“Other Services” are considered to be: wholesale trade and commission trade (except of motor vehicles and motorcycles);
AUTHORIZATION PROCEDURE
Investors wishing to set up in the ZEC are required to obtain the authorisation of the Consortium Board in order to become a ZEC Entity. The procedure for obtaining authorisation is instigated by the interested party on presentation of the following documents at the offices of the Consortium:
Application for autorisation to constitute a ZEC Entity and manual for compiling the report
Receipt for having made a deposit, or a guarantee, for the amount of the fee for registering in the Official ZEC Register (ROEZEC). The Consortium Board is responsible for processing and deciding on applications to become ZEC Entities. Successful authorisations will be notified within two months of the date of presentation of the application.
In order to register an entity in the ROEZEC, the new company must be legally incorporated and registered in the Mercantile Register. The future ZEC Entity must be a newly-created legal entity, which means it must assume one of the legal forms of corporation and be constituted in accordance with Spanish legislation.
The most common legal forms of corporation in Spain are:
Sociedad Anónima, SA. (Joint-Stock Company): a trading company in which the capital, which is divided into shares, is made up of funds provided by the shareholders, who are not personally liable for company debts. The minimum capital is 10,000,000 ptas. (approx. €60,101). These types of companies are constituted by public deed and must be registered in the Mercantile Register. They are governed by the revised text of the Law on Joint-Stock Companies (SA), ratified by Royal Legislative Decree 1564/1989.
• Sociedad Limitada, SL. (Limited Liability Company): a trading company in which the capital, which is divided into shareholding stakes known as participations, is made up of funds provided by all the participation holders, who are not personally liable for company debts. The minimum capital is 500,000 ptas. (approx. €3,005) and there is no upper limit to the capital. Limited Liability Companies (SL) are constituted by public deed and must be registered in the Mercantile Register. They are governed by Law 2/1995 on Limited Liability Companies.
There is a specialist information site where you can find further detailed information on the ZEC entities by visiting http://www.zec.org/
GoldAcre Estates have partnered with specialist Tax Advisors and Lawyers to assist with companies wanting to take advantages of the Canary Islands opportunities, John GoldAcre stated that with our expertise in both the Commercial and Residential Real Estate sector we are well placed to assist any European company with all their requirements regarding ZEC opportunites and of course the economic climate of today ensures you are able to purchase or rent Real Estate at exceptional prices.
For more information eamil info@goldacre-
