Fiscal and Economic System of the Canary
The Canary Islands as an EU outermost region, have an Economic and Tax System (REF) of their own, fully approved by the EU, which applies double taxation conventions and fiscal transparency.
This Canary Islands Economic and Tax Regime (ETR) is expressly recognized and has its basis in the Spanish Constitution (Article 138.1 and Additional Provision Three), as well in the Canary Islands Statute of Autonomy.
As a consequence, within the REF it can be distinguished clearly two different types of tax benefits:
- Tax benefits conditioned to the execution of a productive investment, such as the Reserve for Investment in the Canary Islands, the tax credit for investment in fixed assets, the improved tax credits in the Canary Islands, along with certain exemptions in indirect taxation.
- Tax benefits that reduce significantly the tax burden in the Canary Islands, such as the Special Canary Zone aka ZEC (although a minimum investment is required, the ZEC is mainly a low taxation area), the tax benefit for the production of corporal goods, the Special Register for ships and shipping companies, the regulation of the Canary General Indirect Tax (IGIC), and the specific regulation of Special Taxes.
On November 13th 2015, a royal decree entered in to force approved by the the Council of Ministers amending the Economic and Fiscal Regime (Spanish acronym: REF) in the Canary Islands. The changes relate to fiscal incentives in terms of direct taxation, the Reserve Fund for Investment in the Canary Islands (Spanish acronym: RIC) and the Special Canary Island Zone. These incentives, specified Soraya Sáenz de Santamaría, are focused on job creation, the productive diversification of the Canary Island economic structure, intensive investment in technology and exports to the African continent.
The new legislation amends various articles to adapt them to the new legal regulation of the RIC, adjusts the control and monitoring of State aid included in the REF to national and European legislation and improves the system for preliminary authorizations to be granted by the Governing Council in order to operate in the Special Canary Island Zone.
In the following link the Canary Islands Promotion Agency (PROEXCA) has resumed those amendment on a presentation developed by DELOITTE http://www.slideshare.net/CanaryIslandsHub/canary-islands-hub-tax-system-by-deloitte-55047487?ref
The Royal Decree (in Spanish) can be viewed in the following link: https://www.boe.es/boe/dias/2015/11/17/pdfs/BOE-A-2015-12400.pdf