What if your company could legally pay just 4% corporate tax — in a European Union territory — while your team enjoys year-round sunshine, reliable internet, and a thriving international community? That is exactly what the Zona Económica Especial de Canarias (ZEC) offers, and more European businesses are discovering this opportunity in 2026.
Gran Canaria is quietly becoming one of Europe’s most strategic business locations — combining the fiscal advantages of an offshore jurisdiction with the legal certainty of EU membership, the lifestyle appeal that attracts top remote talent, and the infrastructure to support serious companies.
This guide covers everything you need to know about the ZEC: what it is, who qualifies, how much you can save, and how to set up your business base in Gran Canaria.
What Is the ZEC? (Zona Económica Especial de Canarias)
The Zona Económica Especial de Canarias is a special economic zone created by the Spanish government as part of the Canary Islands’ Economic and Fiscal Regime (REF). It was established in 2000 and authorised by the European Commission as compatible with EU state aid rules.
The ZEC operates across all seven Canary Islands, with Gran Canaria and Tenerife as the two primary hubs. Companies registered under the ZEC benefit from a dramatically reduced corporate income tax rate and a range of other fiscal and operational advantages that make the Canary Islands one of the most competitive business locations in the European Union.
Unlike offshore tax havens, the ZEC is fully transparent, EU-compliant, and subject to Spanish law and OECD standards. This is a legitimate tax optimisation structure — not a loophole — designed to attract investment and jobs to the Canary Islands as an outermost EU region.
The Key Tax Benefits of the ZEC
4% Corporate Income Tax Rate
The headline benefit is the 4% corporate income tax (CIT) rate — compared to 25% standard in mainland Spain, 29.65% in Germany, 25.8% in the Netherlands, and 25% in France. This applies to ZEC entities on income derived from their eligible activities, up to a maximum taxable base that scales with the number of employees.
To put it in perspective: a ZEC company with €500,000 in eligible profits pays €20,000 in corporate tax. The same company on the Spanish mainland would pay €125,000. The savings are real and substantial.
IGIC Instead of VAT — At a Lower Rate
The Canary Islands operate outside the EU VAT area, meaning that instead of standard 21% Spanish VAT, businesses deal with the IGIC (Impuesto General Indirecto Canario) at just 7% standard rate. This simplifies trade with non-EU markets and can reduce costs for locally-consumed goods and services.
Exemption from Transfer Tax and Stamp Duty
ZEC entities are exempt from Spanish Transfer Tax (ITP) and Stamp Duty (AJD) on capital contributions. This reduces the cost of incorporating and expanding your business significantly.
EU Membership — With Customs Free-Trade Benefits
The Canary Islands are part of the EU customs territory (goods circulate freely within the EU) while being outside the EU VAT area. This gives ZEC companies a unique position for international trade — particularly useful for businesses engaging with African markets, Latin America, and the wider Atlantic region.
No Withholding Tax on Dividends to EU Companies
Under the EU Parent-Subsidiary Directive, dividends paid by a ZEC entity to a parent company in another EU country are exempt from Spanish withholding tax. This makes profit repatriation to Germany, the Netherlands, or other EU jurisdictions highly tax-efficient.
Who Can Register as a ZEC Entity?
Not every company qualifies for ZEC status — there are specific requirements that must be met. Here is what you need to know:
Eligible Sectors
The ZEC covers a broad range of industries, making it relevant to most European tech, services, and trading companies:
- Information and communication technologies (ICT)
- Professional services (consulting, legal, accounting, marketing)
- Technology development and R&D
- Wholesale trade and logistics
- Industry and manufacturing
- Tourism and hospitality
- Healthcare and biotechnology
- Environmental services
Minimum Investment Requirements
To obtain ZEC status, you need to make a minimum fixed asset investment within the first two years:
- Gran Canaria or Tenerife: €100,000 minimum investment
- Smaller islands (La Palma, Lanzarote, Fuerteventura, etc.): €50,000 minimum investment
Minimum Job Creation
- Gran Canaria or Tenerife: Minimum 5 full-time jobs created within 6 months of ZEC registration
- Smaller islands: Minimum 3 full-time jobs
These jobs must be based in the Canary Islands — excellent news for the local economy, and a great reason for your team members to relocate to Gran Canaria.
Corporate Requirements
- The ZEC entity must be newly created (not a pre-existing company converted)
- Registered address must be in the Canary Islands
- At least one director must be resident in the Canary Islands
- Main economic activity must be carried out in the Canary Islands
Gran Canaria vs Other European Tax Hubs
How does the ZEC compare to other popular low-tax jurisdictions for European businesses?
| Location | Corporate Tax Rate | EU Membership | Climate & Quality of Life |
|---|---|---|---|
| ZEC Gran Canaria | 4% | ✅ Full EU | ⭐⭐⭐⭐⭐ Year-round sun, 22°C avg |
| Ireland | 12.5% | ✅ Full EU | ⭐⭐⭐ Rainy, expensive |
| Malta | ~5% effective | ✅ Full EU | ⭐⭐⭐⭐ Small island, limited |
| Netherlands | 25.8% | ✅ Full EU | ⭐⭐⭐ Cold, high cost |
| Cyprus | 12.5% | ✅ Full EU | ⭐⭐⭐⭐ Good climate, smaller |
| UAE/Dubai | 9% | ❌ Non-EU | ⭐⭐⭐⭐ Hot, non-EU legal risk |
The ZEC offers the lowest corporate tax rate of any EU-compliant jurisdiction while combining it with full European legal certainty — a combination no other location can match in 2026.
Strategic Location: Why Gran Canaria Works for International Business
Tax benefits alone are not enough to relocate a business. Gran Canaria checks every other box too:
Time Zone
The Canary Islands operate on GMT/WET (one hour behind mainland Spain), which means near-perfect overlap with Central European Time. Scheduling calls with London, Berlin, Paris, Lagos, or New York is straightforward — your team stays connected without unsociable early starts.
Connectivity
Gran Canaria Airport (LPA) connects directly to over 60 European cities, including multiple daily flights to Amsterdam, Frankfurt, London, and Madrid. Getting to a client meeting in Berlin takes roughly 4 hours — comparable to flying from Munich to London.
Digital Infrastructure
Las Palmas de Gran Canaria has fibre internet infrastructure throughout the city, with coworking spaces and offices offering speeds of 500Mbps to 1Gbps. Multiple submarine cable systems (including MAREA and EllaLink) connect the island to Europe, the Americas, and West Africa with ultra-low latency.
Cost of Operations
Operating costs in Las Palmas are significantly lower than in any northern European capital. Office space, salaries for local support staff, and daily operational expenses run 30-50% cheaper than equivalent positions in Amsterdam, Berlin, or London.
How to Set Up Your ZEC Entity in Gran Canaria: Step by Step
Step 1: Assess Eligibility
Work with a ZEC-specialised legal or tax advisor to confirm your activity qualifies and to plan the optimal structure. This typically takes 1-2 weeks of consultation.
Step 2: Incorporate the ZEC Entity
Incorporate a new Spanish SL (Sociedad Limitada) in the Canary Islands — equivalent to a UK Ltd or German GmbH. A local notary and gestor can handle this in 3-5 business days, with typical costs under €2,000.
Step 3: Apply to the ZEC Consortium
Submit your application to the Consorcio de la Zona Especial Canaria along with your business plan, investment commitment, and employment plan. The process typically takes 1-3 months from submission to approval.
Step 4: Establish Physical Presence
You need a real office address in the Canary Islands. A serviced office, virtual office with hot-desk access, or flexible coworking membership can satisfy this requirement while keeping costs manageable. Work in Cholas in Las Palmas offers professional domiciliation services and flexible office plans specifically suited to ZEC entities and startups.
Step 5: Create the Required Jobs
Hire your initial 5 employees within 6 months of ZEC registration. These can include directors, operations, sales, or tech roles — they must be registered under Spanish Social Security and working from the Canary Islands. Many ZEC companies find this easier than expected, as Gran Canaria has a strong English-speaking professional pool and attracts international talent.
Step 6: Enjoy Your 4% Tax Rate
Once ZEC status is confirmed, your eligible income is taxed at 4%. The ZEC regime is currently approved until at least 2027, with extensions widely expected — the European Commission has consistently renewed it as a strategic development tool for an EU outermost region.
Repeople and Work in Cholas: Your Gran Canaria Business Ecosystem
Setting up under ZEC means you need a genuine operational base in Gran Canaria. This is where Repeople and Work in Cholas come in — offering the infrastructure, community, and support that ZEC companies actually need on the ground.
Work in Cholas (Las Palmas de Gran Canaria) provides:
- Professional business domiciliation address for ZEC registration and correspondence
- Flexible desk and private office memberships for your local team
- Meeting rooms for client, investor, and board meetings
- A growing community of international entrepreneurs, developers, and tech professionals
- Access to a trusted network of local legal advisors, accountants, and gestores
Repeople’s El Cabo coliving provides:
- Premium accommodation for founders, directors, and visiting team members
- Dedicated coworking area with 500Mbps fibre internet and private call booths
- A resident community of 20-40 international professionals
- Social events, retreats, and community activities to build team culture
Together, they create a complete ecosystem: professional infrastructure for compliance, comfortable accommodation for team members, and a community that makes Gran Canaria genuinely enjoyable to work from — not just fiscally attractive.
“We moved our European operations entity to Gran Canaria under ZEC in 2024. The tax savings alone were transformative — but what surprised us most was how much our team loved it. Nobody wanted to leave after the first month.” — Tech startup founder relocating from Amsterdam
Frequently Asked Questions About ZEC
Can a UK company benefit from the ZEC after Brexit?
Yes. While UK companies are no longer EU members, they can still establish a new Spanish subsidiary under ZEC. The ZEC entity is a Spanish legal entity and benefits from Spain’s double taxation treaty with the UK.
Can the ZEC entity invoice clients across the EU?
Yes. A ZEC entity is a Spanish company and can invoice clients across the EU. B2B intra-community supplies to VAT-registered EU businesses follow standard 0% rules for VAT purposes.
Is the ZEC compatible with BEPS substance requirements?
Yes, when structured correctly. The requirement for real jobs, physical presence, and genuine economic activity in the Canary Islands is precisely what makes the ZEC BEPS-compliant and EU state aid approved. This is not a shell structure.
When does the ZEC regime expire?
The current ZEC framework runs until at least 2027. Given the Canary Islands’ status as an EU outermost region and consistent European Commission support, renewals are widely expected — but always take current professional advice.
Ready to Set Up Your European Business Base in Gran Canaria?
The ZEC is one of Europe’s most powerful and underutilised fiscal tools. A 4% corporate tax rate, full EU legal standing, year-round warm weather, and a growing ecosystem of international tech companies and remote professionals make Gran Canaria a genuinely compelling choice for your next business entity.
If you are evaluating Gran Canaria for your next business structure, or want to connect with the local ecosystem before making a decision, get in touch with the Repeople team. We can introduce you to trusted ZEC advisors and show you everything Las Palmas has to offer your business — and your team.
Gran Canaria is ready. The question is: are you?
