Tax incentives

50-45% tax credit per investment in Spanish productions

Basic requirements:

• To obtain the Canary Islands audiovisual production certificate (Check procedure).
• At least 50% of the deduction base must correspond to expenditure incurred in Spain.

A company developing Audiovisual activities or auxiliary activities related to film production can be set up as a ZEC entity and pay a reduced corporate income tax rate of 4%, as opposed to the general rate of 25% in force in Spain in general terms, provided certain requirements are fulfilled.

The reduced rate of the Canary Islands Special Zone is compatible and increases the benefits derived from the tax credits and incentives to the sector, up to the applicable accumulation limits.

Basic requirements:

• Being a new company – or branch.
• At least one of the managers must be resident in the Canary Islands.
• To invest at least 100,000 € /50.000 € (depending of the activity being carried out on a capital or non capital island). Most of the activities related to the audiovisual sector will be exempted from this requirement as long as 6 or 4 jobs are created respectively.
• To create at least 5 jobs / 3 jobs (depending of the activity being carried out on a capital or non capital island).
• To establish the business purpose within the scope of ZEC authorized activities.

In addition, as a Spanish Autonomous Community, the Canary Islands are governed by the regulations of the European Union that allow the free movement of its citizens and have the euro as its currency of current use. European residents can also enjoy all the rights and privileges granted to them on the islands by the European citizenship agreements of the 1992 Maastricht Treaty.

More information about How to become a ZEC entity.

A zero rate is applied to the production of feature films, drama, animation or documentary series.

The Canary Islands have other tax instruments that act as incentives for the ordinary operation of companies, regardless of the sector of activity. They are, therefore, perfectly applicable to companies in the audiovisual sector and, unless indicated, are compatible with the specific and general mechanisms described above.

1. The Canary Islands investment reserve (RIC)

This tax break allows a reduction in the taxable base of the Corporate Income Tax of up to 90% of undistributed profit. Production companies can attract RIC from other companies to have it invested in their productions provided that they obtain the Canarian Audiovisual Work Certificate (please do not mistake with the Canarian Certificate of Audiovisual Production) granted by the Government of the Canary Islands. The RIC can be invested in feature films, short films and fiction audiovisual series, animation or documentaries, whenever they have been shot in the Canary Islands.

2. Deduction for R&D+IT (Research & development and technologic innovation): 45%

A 45% deduction on Research, Development and technological innovation carried out in the Canaries. It applies to animation and videogames. If the tax payable were not high enough to cover the full amount of the deduction, the remaining amount can be deducted from the corporate income tax.

3. Deduction for expenditure on promotion and publicity: 15% – 10%

15% to 10% deduction on amount paid for promotion and publicity to launch products and researching foreign markets as well as participating in trade fairs and similar events, including those held in Spain of international scope.