ZEC Las Palmas 2026: reduce your Corporation Tax to 4% — less than seven months left to register

ZEC Las Palmas 2026: the EU’s most significant corporate tax regime closes to new registrations on 31 December

The Zona Especial Canaria (ZEC) is the most favourable corporate tax framework within the European Union for internationally active businesses: a 4% Corporation Tax rate on income from eligible activities, versus 25% in the Spanish general regime and 15–25% in most European low-tax frameworks. It is fully legal, European Commission-approved, and requires genuine economic substance in the Canary Islands.

Las Palmas de Gran Canaria is the ZEC’s capital city. The ZEC Consortium — the body that processes registrations, supervises compliance and issues rulings — is headquartered here. BMC has its own office in Las Palmas, providing direct access to the Consortium and the local infrastructure required to set up and operate a ZEC entity efficiently.

The factor that makes the ZEC an urgent priority in 2026 is the calendar: the current EU authorisation expires on 31 December 2026. After that date, no new applications will be accepted until a new EU authorisation is obtained. Companies that do not act before that deadline may lose access to the regime under its most favourable terms.

What is the ZEC and how does it work

The ZEC was created by Law 19/1994 as part of the Canary Islands Economic and Tax Regime (REF), as a compensation mechanism for the structural disadvantages of the Canary Islands as an EU outermost region: geographical isolation, higher logistics costs and a small domestic market. The European Commission authorised it as state aid compatible with the internal market precisely because it requires genuine economic substance — not paper structures.

The 4% rate and its application

The 4% rate applies to the taxable base of the Corporation Tax derived from ZEC-eligible activities. It is not a rate on gross revenue, but on the net profit of those activities. A ZEC entity is taxed at 4% on those income streams and at the general 25% rate on any non-ZEC income.

This treatment allows structuring activity so that the highest-volume, highest-margin revenues (international trade, technology licences, services to foreign clients) flow through the ZEC entity at 4%, while domestic mainland activity remains in the existing structure.

Eligible sectors for the ZEC

The approved activity catalogue covers a broad spectrum:

Technology and digital services: Software development, cloud services, data processing, telecommunications, technology R&D, cybersecurity, artificial intelligence and digital platforms. The fastest-growing sector in Las Palmas ZEC, driven by Gran Canaria’s emergence as an Atlantic technology hub.

International trade and distribution: Import/export, international commercial intermediation, distribution platforms for African, Latin American and European markets. Las Palmas is a free port and a natural logistics hub between Europe, Africa and the Americas.

Maritime activities: Ship management, cargo services, shipping agencies, port services, ship repair. The Port of Las Palmas is one of the busiest ports in the Atlantic.

Manufacturing for export: Food processing, transformation, production for external markets.

Professional services for international clients: Consulting, engineering, environmental services, international advertising and marketing, educational activities.

The December 2026 deadline: why waiting is costly

The authorisation that permits new ZEC registrations has an explicit expiry date: 31 December 2026. This is not an internal administrative deadline — it is the limit of the current EU authorisation.

After 31 December 2026:

• The ZEC Consortium will stop accepting new registration applications
• Entities already registered retain their status and the 4% rate under the existing regime
• No access to the regime will be available for new entities until a new EU authorisation is approved
• There is no guarantee that a new authorisation will maintain the same terms (4% rate, eligible sectors, substance requirements)

The remaining useful time is shorter than it appears. The full registration process — eligibility analysis, entity incorporation, application preparation and Consortium resolution — typically takes three to six months. For businesses with complex corporate structures or that require prior reorganisation, it can take longer. To guarantee registration before 31 December 2026, the process should begin no later than mid-2026.

ZEC vs. RIC: the two pillars of Canary Islands tax efficiency

The ZEC and the Canary Islands Investment Reserve (RIC) are the two main pillars of the REF incentive framework. They are not mutually exclusive — they are designed to be combined.

The ZEC reduces the Corporation Tax rate on ZEC-eligible income from 25% to 4%.

The RIC further reduces the taxable base before applying the rate: a company can allocate up to 90% of its profits to the RIC, and that portion of the taxable base is deferred provided it is invested in eligible assets in the Canary Islands within the following five years.

The combined effect: a ZEC entity that maximises the RIC can achieve an effective tax rate well below 1% on reinvested profits — one of the lowest effective rates legally achievable within the EU. BMC models the optimal annual RIC allocation as an integral part of the ZEC compliance service.

ZEC minimum substance requirements in Las Palmas

The ZEC is not a paper regime. It requires genuine economic substance in the Canary Islands, and the ZEC Consortium monitors compliance on an ongoing basis.

Registered address and effective management in ZEC territory. The ZEC entity must have its registered address in the Canaries and exercise effective management of its ZEC operations from there. A postal address is not sufficient: the entity’s governing bodies must make decisions from the Canary Islands.

5 full-time employees within the first six months (3 on minor islands). Profiles are flexible — technical, administrative or commercial staff directly connected to the ZEC activity qualifies.

€100,000 in tangible fixed assets within the first two years (€50,000 on minor islands). Technology equipment, vehicles, office furniture or owned premises all count.

BMC’s Las Palmas office and the ZEC process

BMC’s physical presence in Las Palmas de Gran Canaria provides concrete advantages for ZEC mandates:

• Direct relationship with the ZEC Consortium: in-person submission of applications and hands-on follow-up when needed
• Local provider network: access to notaries, registries, banks and partner firms in Las Palmas to accelerate incorporation
• Local labour market knowledge: advice on available employee profiles and real cost of meeting ZEC staffing requirements
• Complete fiscal coordination: the same team manages the ZEC, RIC, IGIC and all other REF obligations

High-impact ZEC sectors in Las Palmas in 2026

Technology companies and digital platforms

Gran Canaria has consolidated itself as the Atlantic technology hub. Software companies, SaaS platforms, cloud service providers and AI startups are finding in Las Palmas a unique combination: ZEC at 4%, operating costs significantly lower than Madrid or Barcelona, qualified local talent (the University of Las Palmas de Gran Canaria has relevant computer engineering departments), and top-tier data connectivity (Las Palmas is a node on transatlantic submarine cables).

Distribution and international trade

Las Palmas is the gateway to African markets and a redistribution hub towards Latin America. The archipelago’s privileged geographic position, combined with the ZEC, makes Gran Canaria a particularly competitive distribution platform for businesses operating on the Europe-Africa-America axis.

Maritime activities and naval logistics

The Port of Las Palmas (Puerto de La Luz y de Las Palmas) is one of the most active Atlantic ports, with heavy traffic in cargo vessels, cruise ships, industrial fishing and maritime supply. Ship management, shipping agencies, provisioning and repair activities are ZEC-eligible.

Why companies choose BMC for the ZEC in Las Palmas

• Physical office in Las Palmas: local presence with direct access to the ZEC Consortium and the Canary Islands provider network
• REF specialisation: the same team that manages the ZEC handles the RIC, IGIC, Canary Islands Corporation Tax and international taxation
• International group experience: expertise in integrating a ZEC entity into a multinational structure (transfer pricing, dividend repatriation, double taxation treaties)
• Multilingual service: Spanish, English, German and French
• Urgency-aware: in the period leading to the deadline, execution speed is critical — BMC has the resources to accelerate when necessary

Consult before the window closes

If your company has activity in technology, international trade, logistics, maritime services or consulting with clients outside Spain, the ZEC eligibility analysis is the mandatory first step. It costs nothing and can be worth hundreds of thousands of euros per year in tax savings.

The deadline is 31 December 2026. The complete process takes three to six months. If you are reading this after June 2026, the margin for guaranteeing registration is running out.

Case studies: who benefits most from the ZEC in Las Palmas

Technology company with international licensing income

A software company with B2B clients mainly in Latin America, Africa and the Middle East generates €1.5 million in net annual profit from SaaS licences. Currently taxed at 25% under the general regime. If a ZEC entity is created in Las Palmas to channel international licence income, the tax saving on that base would be €315,000 per year (€1.5M × 21 percentage points). With reasonable substance costs in Las Palmas (5 employees, office, investments: approx. €150,000/year), the net saving exceeds €150,000 per year on an ongoing basis.

International trade intermediary company

A company acting as intermediary in agricultural product trade between European producers and West African buyers uses Las Palmas as its natural logistics hub. The Port of Las Palmas has direct connections with the main ports of Senegal, Ghana, Nigeria and Morocco. The ZEC entity channels trading commissions and margins at 4%, and the real geographic position of the hub supports the economic substance argument against any BEPS review.

International consulting firm relocating to Las Palmas

A consulting firm with clients in Europe, the Middle East and Latin America establishes its European headquarters in Las Palmas to take advantage of the ZEC. Five senior consultants relocate to Las Palmas and work from there, with periodic client visits. Fees invoiced to clients outside Spain flow through the ZEC entity at 4%. Combined with the Beckham regime for relocated consultants (24% personal income tax for 6 years), the total tax saving — Corporation Tax plus personal income tax — is very significant.

FAQ for CFOs and Group Tax Directors

Can a Dutch or Luxembourg holding company be a shareholder of a ZEC entity? Yes. There is no nationality restriction for shareholders. The ZEC entity must meet the substance requirements regardless of the group structure. Dividends distributed from the ZEC to a European holding may benefit from the EU Parent-Subsidiary Directive (source withholding exemption) if the participation and holding period requirements are met.

How does the Global Minimum Tax (Pillar Two) affect the ZEC? The 15% global minimum tax affects groups with consolidated turnover above €750 million. For groups below this threshold — the vast majority of ZEC clients — Pillar Two does not apply and the ZEC retains its full effect. BMC analyses the Pillar Two position in the eligibility analysis for each client.

Can a ZEC entity also benefit from the Spanish patent box regime? The regime for reduction of income from certain intangible assets (patent box, Article 23 LIS) can be combined with the ZEC in certain cases. BMC analyses compatibility on a case-by-case basis for clients with intellectual property income generated from Las Palmas.

What happens if the ZEC entity stops meeting the employment or investment requirements? Non-compliance may result in removal from the ZEC register and recovery of the fiscal differential (difference between general Corporation Tax and the 4% applied), with interest and potential penalties. BMC manages ongoing compliance and provides proactive alerts against any compliance risk.

IGIC and the ZEC: the Canary Islands’ indirect tax regime

The Canary Islands operate their own indirect tax system — the IGIC (Impuesto General Indirecto Canario), equivalent to VAT but entirely separate from the continental Spanish IVA regime. The standard IGIC rate is 7%, versus 21% for standard Spanish VAT. This creates important practical effects for ZEC entities:

Services rendered to clients outside the Canary Islands (mainland Spain, EU or third countries) are generally located outside the IGIC territorial scope. The ZEC entity does not charge IGIC on those invoices — similar to zero-rated export services under VAT. For internationally-focused ZEC entities, this means that the effective IGIC exposure is minimal.

Imports at the Port of Las Palmas: The Port of Las Palmas is a free port. ZEC entities with international trade activity can benefit from IGIC exemptions or deferred IGIC on imports, significantly improving cash flow for trading operations.

IGIC on local acquisitions: Input IGIC paid on local purchases in the Canary Islands is generally recoverable against output IGIC in the quarterly self-assessments. BMC manages IGIC self-assessments as part of the annual compliance service.

BEPS substance and the ZEC: a structural advantage for compliant planning

Unlike pure preferential rate regimes that apply low rates without real activity requirements, the ZEC mandates genuine economic substance. This makes the ZEC one of the most defensible low-tax structures within the EU for multinational groups concerned about BEPS exposure.

Transfer pricing: Transactions between the ZEC entity and other group members — licence fees, service charges, distribution commissions — must be priced at arm’s length and documented under OECD standards. BMC prepares transfer pricing documentation (master file and local file) annually as part of the ZEC compliance service.

Pillar Two (Global Minimum Tax): Groups with consolidated revenue exceeding €750 million are subject to the Pillar Two 15% global minimum. For these groups, the 4% ZEC rate may generate a top-up tax in another jurisdiction. BMC analyses the Pillar Two position for each affected client in the eligibility analysis and models mitigation mechanisms including the substance-based income exclusion (SBIE).

For groups below the €750 million threshold — the vast majority of ZEC clients — Pillar Two does not apply and the ZEC retains its full 4% effect.

First-year operational roadmap after ZEC registration

Once the Consortium ZEC resolution is issued, the first year establishes the compliance and operational foundations:

Months 1–3: Hire and register at least 5 employees at Canarian Social Security; establish physical office in Las Palmas; acquire committed fixed assets; register for IGIC; open a Spanish bank account; produce opening ZEC balance sheet.

Months 4–6: Begin routing eligible activity through the ZEC entity; ensure accounting separation of ZEC and non-ZEC income streams; file first quarterly Corporation Tax instalment (Modelo 202) at 4%; establish intergroup transfer pricing documentation.

Months 7–12: Close first ZEC financial year; determine optimal RIC allocation; file annual Corporation Tax return (Modelo 200) at 4%; submit annual Consortium ZEC compliance confirmation (certifying continued employment and investment conditions); prepare OECD transfer pricing file if required.

BMC provides monthly check-ins with new ZEC clients during the first year to ensure all compliance foundations are correctly established.

ZEC vs. other competitive European tax regimes

International groups considering the ZEC often compare it against other low-rate regimes available in Europe. An honest comparison:

The ZEC delivers the lowest rate (4%) with explicit EU approval and genuine substance requirements. Its critical limitation is the 31 December 2026 deadline and the minimum substance thresholds. For groups with real international commercial activity that can establish a presence in Las Palmas, it remains the most competitive legally available structure in the EU for operational income.

What BMC submits to the ZEC Consortium — the application in practice

The Consortium ZEC application is a rigorous documentary process. BMC prepares and submits the complete file:

Constitutional documents: Articles of association, notarial deed of incorporation, Companies Register entry, tax identification number (NIF), powers of attorney for legal representatives.

Activity memorandum: Detailed description of the eligible ZEC activities the entity will carry out — why they are eligible, how they will be performed in the Canary Islands, and what their international character is.

Business plan: Financial projections covering the first several years, including projected turnover, costs, estimated profit and quantification of the expected tax saving. The Consortium verifies economic coherence.

Employment and investment evidence: Signed employment contracts (or letters of intent for imminent hires), role descriptions for positions created in Las Palmas, and justification for the committed fixed asset investment (purchase invoices, equipment inventory, office lease).

Corporate and tax documentation: Certificate of no outstanding tax or social security debts, most recent annual accounts for existing entities, audit report if applicable.

BMC actively tracks the file through the Consortium’s review process with direct communication with the Consortium’s technical staff.

Las Palmas: the Atlantic hub that makes ZEC substance credible

Beyond its tax advantages, Las Palmas de Gran Canaria is a genuinely strategic location for international businesses. The Port of Las Palmas is one of the busiest in the Atlantic, handling container traffic, bulk cargo and cruise ships. The airport (LPA) has direct connections with over 100 European and African destinations. Gran Canaria sits at the intersection of Europe, Africa and the Americas — a natural crossroads for companies whose operations span these markets.

This geographic positioning reinforces the economic substance argument for ZEC entities with real trading, logistics or maritime activities: the presence in Las Palmas is not merely tax-motivated — it is operationally rational. For technology companies, Las Palmas has developed a growing cluster of digital businesses, co-working infrastructure and talent, making it a credible location for software, data and digital service operations as well.

Executive summary: the ZEC in Las Palmas in 5 points

1. 4% vs. 25%: the 21-percentage-point Corporation Tax differential is the widest legally available within the EU for real operational activities.
2. 31 December 2026: the deadline for new registrations under the current European authorisation. No guarantee of renewal on the same terms.
3. Real requirements: 5 employees in Gran Canaria, €100,000 investment in fixed assets, registered office and effective management in the Canary Islands.
4. ZEC + RIC combination: the effective rate on reinvested profits can fall well below the nominal 4%.
5. Process 3–6 months: start before Q2 2026 to guarantee registration on time.

BMC has an office in Las Palmas. See our Las Palmas office for local support.