Tax incentives

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The Canary Islands offer a set of attractive tax advantages that are successfully applied to film production thanks to the Canary Islands Economic and Tax Regime (REF), anchored in the Spanish Constitution and the State support authorized by the European Union.

This establishes the Canary Islands as one of the best places in Europe to host film shoots as in addition to these tax breaks, they boast an excellent climate, natural conditions, wide-ranging landscapes, sustainability, and a strong local film industry with equipment and qualified, experienced staff ready to meet your every need.

Guide to tax incentives

The Canary Islands currently have the most powerful system of tax incentives targeting film and audiovisual production in Europe. The existence of this economic and fiscal regime (REF), validated by Spanish and European national legislation, means that the Canary Islands enjoy their own special legal and fiscal framework allowing film productions to benefit from the following tax deductions.

Foreign productions

50-45% tax rebate for foreign productions

Basic requirements:

  •  A million euros spent in the Canary Islands.
  • Minimum production budget 2 million euros.
  • Contracting a film producer registered with the Institute of Cinematography and Audiovisual Arts, (ICCA), who has his/her tax residence in the Canary Islands.
  • For Animation the mininum spent in the Canaries is 200.000€.

Spanish productions

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.

4% Corporate Income Tax rate

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.

0% IGIC (Regional VAT)

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

Other incentives in the Canary Islinds

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.

More information

Gobierno de Canarias, Certificado Canario de Producción Audiovisual | +34 922 531 101 Ext. 4320