Company Formation in the Canary Islands: Step-by-Step Guide (2026)

Setting Up a Company in the Canary Islands

The Canary Islands offer one of the most attractive business environments in the EU, combining Spain's legal stability with the lowest corporate tax rate in Europe (4% under the ZEC regime). This guide walks you through the entire process of forming a company, step by step.

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Step 1: Choose Your Legal Structure

The most common forms of business entity in Spain are:

Sociedad Limitada (S.L.) — Private Limited Company

• Minimum capital: €3,000 (can be contributed in kind)
• Liability: Limited to share capital
• Management: One or more administrators (no board required for small companies)
• Best for: Most SMEs, ZEC companies, startups

Sociedad Anónima (S.A.) — Public Limited Company

• Minimum capital: €60,000 (at least 25% paid up at formation)
• Best for: Larger companies, companies planning to raise external capital

For most foreign investors, the S.L. is the right choice — lower costs, simpler governance, and fully compatible with the ZEC regime.

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Step 2: Reserve the Company Name

Before incorporating, you must reserve your chosen company name with the Registro Mercantil Central in Madrid. This takes 1–3 business days and costs around €15–20.

Rules:

• The name must be unique
• Must include the legal form (e.g., "Company Name, S.L.")
• Cannot be identical or confusingly similar to existing registered companies

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Step 3: Open a Bank Account and Deposit Capital

You need a Spanish bank account in the company's name to deposit the minimum share capital (€3,000 for an S.L.) before signing the incorporation deed.

Practical note: Opening a Spanish business bank account as a non-resident can be challenging without local representation. We assist our clients with this process.

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Step 4: Sign the Incorporation Deed (Notary)

The founding shareholder(s) sign the escritura de constitución before a Spanish notary. Required documents:

• Valid passport or ID of all shareholders and administrators
• NIE (Número de Identificación de Extranjero) for non-Spanish nationals — we can help obtain this
• Bank certificate confirming capital deposit
• Approved company statutes (we draft these)

Cost: Notary fees typically €300–600 depending on capital and complexity.

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Step 5: Register at the Registro Mercantil

The notarised deed is submitted to the Registro Mercantil (Companies House) of Las Palmas or Santa Cruz de Tenerife, depending on the company's registered address.

Timeline: 5–10 business days Cost: €100–200 in registration fees

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Step 6: Tax Registration (Agencia Tributaria)

Once the company is registered, you must:

1. Obtain the CIF (company tax identification number) from the Agencia Tributaria
2. Register for the relevant taxes: IS (corporate tax), IGIC (Canary VAT), etc.
3. Register the company's activity in the IAE (business activity tax)

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Step 7: ZEC Registration (Optional but Highly Recommended)

If you want to benefit from the 4% corporate tax rate, you must apply for ZEC status with the Consorcio de la Zona Especial Canaria.

This requires:

• A business plan describing the activity and projected employment/investment
• Commitment to hire at least 1 employee in year 1 (3 from year 2)
• Commitment to invest a minimum in fixed assets (€100K in Gran Canaria/Tenerife, €50K elsewhere)
• The activity must be on the eligible activities list

Timeline: 4–8 weeks for Consorcio approval Cost: No administrative fee from the Consorcio

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Step 8: Additional Registrations

Depending on your activity, you may also need to:

• Register with the Seguridad Social (Social Security) as an employer
• Obtain a business license (licencia de apertura) from the local municipality
• Register with the Data Protection Agency (AEPD) if you process personal data
• Obtain sector-specific permits (e.g., for financial services, food, healthcare)

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Total Costs and Timeline

Total timeline from first meeting to operational ZEC company: approximately 2–3 months.

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Do I Need to Be in the Canary Islands?

Not necessarily. Most of the process can be handled remotely with a power of attorney. You will need to be present (or have a representative) for:

• Signing the notary deed (or via POA)
• Opening certain bank accounts

We regularly assist clients who never visit Spain during the incorporation process — everything is handled by our team.

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Why Choose ALY Abogados?

• Local expertise: we know the Consorcio ZEC, the local notaries and the Registro Mercantil
• Full service: from company formation to annual compliance
• English-speaking: we communicate in English throughout the process
• Fixed fees: no surprises — you know the full cost from day one

📞 +34 633 572 607 📧 lazaroammen@gmail.com

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