New tax rules for investing in the Canary Islands

Automatic summary, not yet reviewed

1. The Canary Islands investment reserve can now also be materialized by creating jobs not linked to an initial investment, capped at 50 percent of contributions and at a maximum of 36,000 euros per worker.
2. How to materialize the reserve is made more flexible: any financial instrument issued by financial institutions, shares in Canary Islands Special Zone entities, and the requirement to submit an investment plan is removed.
3. A new 15 percent deduction is created for small Canary Islands companies that invest in subsidiaries in West African countries or incur foreign advertising and publicity expenses.
4. The Canary Islands Special Zone is extended to the whole archipelago, admits branches, raises the taxable base limits for the special 4 percent rate, and its term is extended to 2026, with registrations allowed until 2020.
5. A control system for state aid is established: beneficiaries must file an informational declaration, and exceeding the aid accumulation limits is an offense punished with a fine of 20 percent of the excess.
6. The deduction for technological innovation in the Canary Islands rises to 45 percent, higher limits are set for film and live performance deductions, and the renewables calendar for non-peninsular power systems is changed until December 31, 2015.

Who it affects

• Companies taxed in the Canary Islands that use the investment reserve: They have new ways to materialize it and new maintenance and reporting requirements.
• Small and medium companies with tax domicile in the Canary Islands: They can apply the new deduction for investing in West Africa or for advertising expenses.
• Entities in the Canary Islands Special Zone and those seeking registration: The territorial scope is expanded, branches are admitted, and investment and job requirements change.
• Beneficiaries of state aid under the Canary Islands Economic and Fiscal Regime: They must file an informational declaration and respect accumulation limits, with fines if they do not.
• Developers of renewable installations in non-peninsular power systems: The Government may exempt them from competitive tendering until December 31, 2015.

Words worth knowing

Reserva para inversiones en Canarias (Canary Islands investment reserve)

Part of a company's profit that is not distributed and is set aside to invest in the Canary Islands, reducing the tax due.

Zona Especial Canaria (Canary Islands Special Zone)

A regime with tax benefits for companies registered in an official registry that meet investment and job requirements.

Ayudas de Estado (state aid)

Public advantages that benefit certain companies and that the European Union monitors to protect competition.

Base imponible (taxable base)

The amount on which the tax is calculated, after applying reductions.

Concurrencia competitiva (competitive tendering)

A process where several projects compete and the best one is chosen to receive a specific compensation regime.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries