How high is the tax really?

4 per cent corporate tax on the favoured, capped part of the profit (the first 1.8 million euros, rising per job) instead of the usual 25 per cent. Above that, the normal rate applies.

Newly formed companies with registered office, management and real activity in the Canaries that create jobs, invest and operate in an authorised sector.

No. The ZEC is an EU-approved regime that requires real economic substance. Without staff, investment and real activity on the islands, the rate does not apply.

The Consorcio de la ZEC in Las Palmas (zec.org) for the official side, and a tax adviser experienced in the REF for implementation.

Business · Canary Islands

ZEC Canary Islands: 4% tax, 5 jobs, €100,000 investment

Four per cent corporate tax instead of 25 — the figure sounds like a tax haven, and that is often how the Zona Especial Canaria (ZEC) is sold. Both are only half true. The 4 per cent is real and EU-approved, but tied to hard conditions: real activity, jobs, investment. And there are two deadlines that are constantly confused. We explain how the ZEC works, where the catch is — and who it actually pays off for.

29 June 2026 · By Martin Kosinski · Business · 6 min read · Editorial responsibility: Matthias Camenzind, Editor-in-Chief

4% corporate tax in the Canaries: conditions, deadlines and the catch with 2026

The ZEC is meant to bring companies and jobs to the islands — against the disadvantage of their remote location. (Photo: symbolic image)

At a glance

What it is: 4 per cent corporate tax (Impuesto de Sociedades) instead of 25, on profits from activities actually carried out in the Canaries — the ZEC is part of the islands' economic and tax regime (REF)

Legal basis: Law 19/1994, approved by the European Commission in 2000 as permissible aid for outermost regions (Art. 349 TFEU) — not a "tax haven" but tied to real economic substance

Conditions: a newly created entity with registered office and effective management in the Canaries, at least one resident director; 5 jobs (Gran Canaria/Tenerife) or 3 (smaller islands) within six months and maintained; minimum investment of 100,000 euros (GC/Tenerife) or 50,000 euros within two years; only authorised activities; separate accounting

Deadlines (often confused): the registration window currently runs to 31 December 2026 (tied to the EU regulation); those registered by then keep the 4 per cent until at least the end of 2032

Capped: the 4 per cent applies only to a limited part of the taxable base (the first 1.8 million euros, rising per additional job)

Scale: at the end of 2024, around 895 ZEC companies with about 11,045 employees (official register)

Sources: AEAT, ZEC Consortium, Law 19/1994, Government of the Canary Islands

The headline is true — with the small print
What the ZEC is — and what it is not
The conditions: jobs, investment, real activity
The catch with the deadlines — 2026 and 2032
If you are considering a ZEC company
What not to skim over

The headline is true — with the small print

So the headline is correct — and yet misleading if you leave out the small print. The ZEC is not a letterbox model; it requires a real establishment with staff and investment on the islands.

Those who meet that pay 4 instead of 25 per cent on the favoured part of their profits. Those who do not lose the advantage retroactively.

What the ZEC is — and what it is not

The Zona Especial Canaria is a low-tax regime within the Régimen Económico y Fiscal (REF), the islands' special economic and tax framework. The European Commission expressly classified it in 2000 as permissible state aid — justified by the structural disadvantages of the islands as an outermost region: distance, fragmentation, dependence on tourism.

That is precisely why the ZEC is not a tax haven in the classic sense: it requires real economic substance. The 4 per cent rate also does not apply without limit, but only to a capped part of the taxable base — to the first 1.8 million euros, a ceiling that rises with every additional job created.

Above that, the normal rate applies.

The conditions: jobs, investment, real activity

Access is only for a newly formed company (or branch) with its registered office and effective management in the Canaries and at least one director resident there. On top come two hard duties: the creation of at least five jobs on Gran Canaria or Tenerife, or three on the smaller islands, within six months and maintained; and a minimum investment of 100,000 euros (Gran Canaria/Tenerife) or 50,000 euros (other islands) in fixed assets within two years.

For knowledge-intensive and certain priority activities the investment requirement can be waived — in exchange for more staff (six instead of five, four instead of three). Permitted are value-adding activities such as consulting, software development, audiovisual production, logistics, renewable energy, wholesale or training; generally excluded are financial and insurance intermediation, non-industrial construction and the traditional primary sector.

Separate accounting and annual filings (forms 282 and 200) are also mandatory. Those who miss the conditions lose the 4 per cent for the period concerned and must pay the difference to the normal 25 per cent rate plus late-payment interest.

The catch with the deadlines — 2026 and 2032

This is where most of the confusion arises, because two different dates are in circulation. One is the deadline to register a new entity in the official ZEC register at all: under the current official reading it runs to 31 December 2026, tied to the expiry of the EU block-exemption regulation, and subject to extension.

The other is the period for which you then enjoy the advantage: those registered by the end of 2026 keep the 4 per cent, according to official information, until at least the end of 2032. Older figures mentioning 2027 are a now-superseded intermediate stage.

In practice this means the window for a new registration is limited, and because the path from first enquiry to registration typically takes several months, a company formation should not be left to the last minute.

If you are considering a ZEC company

First answer three questions honestly: does your activity fall within the authorised sectors at all? Can you fill the required five or three jobs permanently on the islands — not remotely?

And is your profit large enough that the saving justifies the cost of formation and ongoing compliance? The first official point of contact is the Consorcio de la Zona Especial Canaria in Las Palmas (zec.org), which examines applications and issues an opinion.

For implementation, a tax adviser experienced in the REF is worthwhile. Plan for separate accounting and annual filings from day one; combining the ZEC with other REF incentives such as the RIC investment reserve is possible under conditions.

What not to skim over

The ZEC does not run itself. Without real substance you risk losing the rate and having to repay at 25 per cent plus interest.

The 4 per cent applies only to ZEC operations and only up to the capped limit. The deadlines depend on EU law and can change — the current status is authoritative.

For very large corporate groups the 15 per cent global minimum tax may also apply, partly eroding the advantage; for small and medium-sized companies this is generally not an issue. And the Consortium's opinion does not bind the tax authority AEAT.

The register figures (around 895 companies, 11,045 employees) are official values as of the end of 2024.

Frequently asked questions

How high is the tax really?: 4 per cent corporate tax on the favoured, capped part of the profit (the first 1.8 million euros, rising per job) instead of the usual 25 per cent. Above that, the normal rate applies.
Who can use the ZEC?: Newly formed companies with registered office, management and real activity in the Canaries that create jobs, invest and operate in an authorised sector.
Until when can I register?: The registration window currently runs to 31 December 2026 (tied to the EU regulation). Those registered by then keep the advantage until at least the end of 2032.
Is this a tax haven?: No. The ZEC is an EU-approved regime that requires real economic substance. Without staff, investment and real activity on the islands, the rate does not apply.
Who do I turn to?: The Consorcio de la ZEC in Las Palmas (zec.org) for the official side, and a tax adviser experienced in the REF for implementation.

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As of 29 June 2026. Sources include the Agencia Tributaria (AEAT), the Consorcio de la Zona Especial Canaria, Law 19/1994 (REF) and communications from the Government of the Canary Islands. This article is general information and not tax or legal advice; whether and how the ZEC pays off in an individual case depends on the specific situation and belongs in the hands of a gestor or tax adviser (asesor fiscal). Deadlines, amounts and conditions can change; the current official publications and the information of the Consorcio de la ZEC are authoritative. Symbolic image.