How to Invest in the Canary Islands, Spain: Legal & Tax Guide for Foreign Investors

Why the Canary Islands for Foreign Investment

The Canary Islands offer a combination of advantages that few places in the world can match: EU legal certainty, the lowest corporate tax rate in the European Union (4%), a strategic location between Europe, Africa and the Americas, and one of the best climates on Earth.

For foreign investors and entrepreneurs, this makes the Canary Islands not just an attractive destination — it's a serious business decision.

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Key Investment Advantages

1. The ZEC: 4% Corporate Tax

The Zona Especial Canaria (ZEC) provides eligible companies with a corporate tax rate of just 4%, compared to 25% in mainland Spain and 19–25% across most of the EU.

This is not a loophole or a grey area — it is a regime authorized by the European Commission and fully compliant with EU state aid rules.

→ Read our full ZEC guide

2. Strategic Location

• 1 hour from mainland Spain by air
• 3–4 hours from major European capitals
• Closest EU territory to Africa and the Americas
• Major port hub (Las Palmas is one of Europe's busiest ports)

3. Real Estate

The Canary Islands real estate market offers:

• No wealth tax for non-residents on Canarian assets below certain thresholds
• Reduced ITP (Transfer Tax) compared to mainland Spain
• Strong rental demand from tourism and expats
• Capital appreciation in prime areas (Las Palmas, south Tenerife)

4. Digital Nomad and Residency Options

Spain offers a Digital Nomad Visa and a Startup Visa, both accessible from the Canary Islands. Combined with the ZEC or local company structures, this allows remote workers and entrepreneurs to live and work legally in the EU.

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Legal Structures for Foreign Investors

Option A: ZEC Company (lowest tax, active business)

Best for: service companies, consulting, IT, e-commerce, logistics

• 4% corporate tax on eligible profits
• Requires real substance (office, employees) in the Canary Islands
• Minimum investment from €50,000 (smaller islands) or €100,000 (Gran Canaria/Tenerife)

Option B: Standard Spanish S.L. (Sociedad Limitada)

Best for: small businesses, real estate holding, family offices

• Standard 25% IS (or 15% for new companies in years 1–2)
• No minimum employees or investment required
• Still benefits from RIC, investment deductions and IGIC (7% VAT)

Option C: Spanish Branch of a Foreign Company

Best for: multinational companies testing the Canary Islands market

• Simpler than incorporating a new company
• Subject to Spanish taxation on Canarian profits
• Can later convert to a subsidiary

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Taxes You Need to Know

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Real Estate Investment in the Canary Islands

The Canary Islands receive over 16 million tourists per year, creating strong demand for holiday rentals, long-term rentals and hotel properties.

Key points for foreign real estate investors:

• Non-residents can buy property freely in Spain (including EU and non-EU nationals)
• Golden Visa: investments of €500,000+ in real estate qualify for Spanish residency (program under review as of 2025, check current status)
• Holiday rental licenses: regulated at the regional level in the Canary Islands, with specific requirements per island
• Rental income tax: non-EU residents pay 24% on rental income; EU/EEA residents pay 19%

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How to Get Started: Step by Step

1. Initial consultation — we analyse your business or investment plan and recommend the optimal structure
2. Tax planning — we model the tax impact of different structures and timelines
3. Incorporation — we handle all legal paperwork (company formation, notary, Registro Mercantil)
4. ZEC registration — if applicable, we submit the Consorcio application
5. Banking — we assist with opening a Spanish business bank account
6. Ongoing compliance — annual accounting, tax filings, ZEC compliance monitoring

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Working with ALY Abogados

ALY Abogados is a law firm based in Las Palmas de Gran Canaria specializing in:

• ZEC company formation and compliance
• Spanish business law and corporate structuring
• Real estate investment legal support
• Tax law and international tax planning
• Second Chance Law (debt restructuring for individuals)

We work in Spanish and English with clients from across Europe, the UK and internationally.

Lázaro Héctor Amable Méndez — Bar No. 5,231 ICALPA (Ilustre Colegio de Abogados de Las Palmas)

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Free Consultation

Contact us for a free initial consultation to discuss your investment plans.

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

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