Tax advisor in Las Palmas — the ZEC, RIC and Canary Islands REF specialists before the 2026 deadline

Tax advice in Las Palmas: the Canary Islands REF opportunity before 2026 closes

The Canary Islands Economic and Tax Regime (REF) is one of Europe’s most significant tax advantages for international businesses — a low-tax framework in an EU jurisdiction, backed by European Commission authorisation, that provides a corporate tax rate of 4% for qualifying activities under the ZEC alongside a suite of other incentives that collectively make the Canary Islands one of the most tax-efficient business locations in Europe for the right profile of company.

The current ZEC authorisation runs until 31 December 2026. While a renewed authorisation beyond 2026 is expected — the REF has been continuously renewed since its establishment — the existing authorisation creates a specific and time-limited window for companies to register and lock in access to the 4% rate under the current framework. BMC advises companies on ZEC registration as a matter of urgency for 2026.

The full REF toolkit for Las Palmas businesses

The ZEC’s 4% rate is the headline incentive, but the full REF provides a broader toolkit of complementary advantages:

• ZEC: 4% CIT on ZEC-eligible activities up to the applicable base maximum
• RIC: Up to 90% reduction of taxable income via the Canarian Investment Reserve
• Canarian Investment Deduction: Deduction percentages 80% higher than the equivalent national deduction for fixed asset investment
• IGIC advantage: 7% general rate versus 21% on mainland (where applicable to local operations)
• Las Palmas Free Zone: Duty-free importation and storage of goods without payment of AIEM or IGIC

Used in combination, these incentives can dramatically reduce the effective tax burden of businesses operating from Las Palmas, in a fully compliant EU framework.

Eligible activities for the ZEC: a diverse and expanding list

The ZEC’s eligible activity list is broad and covers most service-sector and commercially-oriented businesses. The most popular categories with international companies registering in Las Palmas include: information and communication technology services (software development, cloud services, cybersecurity, data centres), business process outsourcing and call centres, international wholesale trading (goods traded through the Canary Islands between Africa, Europe and the Americas), logistics and shipping, audiovisual and content production, and business consulting and management services for international clients. BMC verifies eligibility for each client’s specific activity profile before initiating the registration process.

ZEC registration requirements and ongoing substance

Registering in the ZEC requires meeting specific substance conditions that are monitored annually. The minimum requirements are: establishment of a real business presence in the Canary Islands (registered office, physical premises appropriate to the activity), creation of at least one job in the Canary Islands within the first 6 months, and investment of at least €100,000 in the Canary Islands within the first 2 years.

The ZEC does not require all directors to be physically present in Las Palmas, but the management of the ZEC entity must be demonstrably real — not a mailbox. AEAT’s Canary Islands delegation verifies substance through annual compliance reviews that check payroll records, commercial contracts, and evidence of actual activity on the islands. BMC advises on substance planning from the initial registration stage, ensuring that the operational footprint satisfies both the ZEC Consortium’s requirements and AEAT’s verification criteria.

The Canarian Investment Reserve (RIC): a unique deferral mechanism

The Reserva para Inversiones en Canarias (RIC) is available to companies doing business in the Canary Islands — not just ZEC companies. It allows up to 90% of undistributed profits to be transferred to a special reserve that reduces the taxable income for Corporate Income Tax. The reserve must be invested within 4 years of its creation in qualifying assets or activities in the Canary Islands.

Qualifying investments for the RIC include: fixed assets (machinery, equipment, infrastructure) used in the Canary Islands, financial investments in qualifying Canarian companies, and job creation in the Canary Islands. If the reserve is not invested within 4 years, or if the qualifying investment is disposed of before a 5-year holding period, the deferred tax becomes immediately due with interest.

For ZEC companies, the RIC is a complementary tool that can reduce taxable income beyond the ZEC base — effectively creating a double benefit: the 4% ZEC rate applies to the remaining taxable income after the RIC deduction. The combined effective rate on profits reinvested in qualifying Canarian investments can approach zero in optimal planning scenarios.

Las Palmas as an Africa gateway hub

Las Palmas de Gran Canaria’s geographic position — the island group is located off the coast of West Africa and maintains strong historical and commercial ties with Morocco, Mauritania, Senegal, and the broader West African region — makes it Spain’s natural gateway to the African continent for trade, investment, and professional services.

The Port of Las Palmas is one of the largest ports in the world by traffic, particularly for fishing, bunkering, and trans-shipment. International trading companies using Las Palmas as a logistics hub for African markets benefit from both the REF tax advantages and the physical infrastructure — customs warehouse facilities, cold storage, and free zone status that allow goods to be held without triggering Spanish VAT or AIEM (the Canary Islands equivalent of excise duty on manufactured products).

BMC advises international businesses considering Las Palmas as their Africa hub on the complete tax and regulatory framework — from ZEC registration and REF planning to the customs and VAT treatment of goods transiting through the port.

IGIC compliance in detail: the differences from mainland VAT that matter

The IGIC (Impuesto General Indirecto Canario) requires separate compliance from mainland VAT — a Las Palmas business that has mainland VAT registrations must manage the two systems in parallel. Key IGIC compliance obligations:

Quarterly IGIC returns (Modelo 420). Las Palmas entities must file quarterly IGIC returns with the Canary Islands Tax Agency (AEAT Canarias). Large taxpayers file monthly. The IGIC return structure mirrors mainland VAT returns in format, but the rate schedule is different — 7% general, 3% reduced (food, water, passenger transport, newspapers), 0% for certain essential goods, 9.5% for petrol, tobacco and certain services, and 15% for luxury goods.

AIEM (Canarian import duties). The Arbitrio sobre Importaciones y Entregas de Mercancías en las Islas Canarias is a surcharge on manufactured goods imported to the Canary Islands, designed to protect local Canarian production. Businesses importing goods to the Canary Islands must assess whether AIEM applies to their goods (rates vary from 0% to 15% depending on the product) in addition to IGIC. For trading companies using Las Palmas as a distribution hub, AIEM planning is an important element of the landed cost calculation.

Intrastat equivalent. Transactions between the Canary Islands and mainland Spain or other EU countries are treated as international trade — not intra-Community supply. This means export declarations and import entries replace Intrastat reporting for these flows, and the documentary requirements are those of customs law rather than VAT informational returns.

Expat and non-resident tax in the Canary Islands

Non-resident property owners in Gran Canaria and Tenerife face the same IRNR Modelo 210 compliance obligations as elsewhere in Spain, with the same rate structure: 19% for EU/EEA residents (with expense deductions for rental income), 24% for non-EU residents including UK nationals post-Brexit (on gross rental income with no deductions).

British nationals retiring to Las Palmas — attracted by the year-round climate and lower cost of living relative to mainland Spain — should plan the Beckham Law application before leaving the UK. The conditions are the same throughout Spain: five years of non-Spanish residency, a qualifying reason for relocation (employment contract, entrepreneur, highly qualified professional), and a Modelo 149 application within six months of Social Security registration. The Beckham Law is equally accessible in Las Palmas as in Madrid or Barcelona, and the absence of a high-income Catalan or Valencia regional surcharge on top of the national rate makes the Canary Islands an attractive location for high-earning expats.

Residents who do not use the Beckham Law are subject to normal Spanish IRPF on worldwide income. The Canary Islands have their own regional IRPF deductions — including specific deductions for investments in ZEC-registered entities, qualifying Canarian businesses, and certain renovation projects — that Las Palmas residents should review annually.

Corporate restructuring through the Canary Islands: legitimate planning

The ZEC and REF incentives are most powerful when integrated with a group structure designed to concentrate qualifying activities and reinvestment in the Canary Islands. Common structuring patterns BMC advises on include:

Technology IP holding in the Canary Islands. A ZEC-registered entity can hold and exploit intellectual property, receiving licence royalties from group entities across Spain and internationally. Royalties received by the ZEC entity are taxed at 4% rather than 25%. The patent box (Art. 23 LIS) applies on top of the ZEC rate — royalties from qualifying IP are taxed on only 40% of the amount received, resulting in an effective tax rate on royalty income of approximately 1.6% within a ZEC + patent box structure.

Holding and distribution business in Las Palmas. International trading companies that source goods from Africa or the Americas and distribute to European markets can use a ZEC-registered Las Palmas entity as the principal trading entity. The low CIT rate on trading margins, combined with the Las Palmas Free Zone customs advantages, creates a cost-efficient distribution structure. The ZEC requires genuine substance — staff, contracts, management decisions — to be located in Las Palmas.

R&D and innovation centre. Companies investing in qualifying R&D activities in the Canary Islands can access both the ZEC rate on profits and the Canarian Investment Deduction at rates 80% higher than the equivalent national deduction on capital investment. Combined with the RIC, this creates a significant incentive for companies considering where to locate research facilities or innovation centres within Spain.

AEAT scrutiny of ZEC structures: what triggers inspection

The AEAT’s Canary Islands delegation runs annual compliance verifications of ZEC entities, focusing on substance requirements and the accurate attribution of income to ZEC activities. Key risk areas include:

• Employees working primarily from mainland Spain but registered on the Canary Islands payroll — the AEAT can reclassify ZEC income where the employees who generate it are not genuinely based in Las Palmas
• Intercompany pricing of ZEC to mainland transactions — if a ZEC entity provides services to mainland group entities at below-market prices, or receives value from the mainland at above-market prices, the effective transfer of profits to the 4% ZEC environment is subject to transfer pricing adjustment
• RIC materialisation documentation — the AEAT examines whether investments claimed as RIC-qualifying meet the requirements: new assets (not second-hand), used in the Canary Islands, not financed by related parties, held for the required five-year period

BMC prepares clients for ZEC compliance reviews from the outset of the registration, maintaining the documentation file that demonstrates ongoing substance and correct income attribution.