ZEC vs Ireland vs Malta vs Cyprus —
Which EU Tax Regime is Best?
A complete, honest comparison of the leading European low-tax jurisdictions for entrepreneurs, startups and investors. Updated for 2026.
Full comparison table
Key criteria for businesses choosing a European tax jurisdiction.
| Criterion | ZEC 🇪🇸 | Ireland 🇮🇪 | Malta 🇲🇹 | Cyprus 🇨🇾 | Portugal 🇵🇹 |
|---|---|---|---|---|---|
Corporate tax rate ZEC offers the lowest headline corporate rate in the EU for qualifying companies. | 4% | 12.5% | 5% (after refund) | 12.5% | 21% (NHR is personal) |
VAT / Indirect tax ZEC companies pay IGIC (7%) instead of VAT. Significantly lower on domestic transactions. | 7% IGIC | 23% VAT | 18% VAT | 19% VAT | 23% VAT |
EU member state All jurisdictions are full EU members — access to single market, EU directives and tax treaties. | ✓ Spain (EU) | ✓ EU | ✓ EU | ✓ EU | ✓ EU |
EU Parent-Subsidiary Directive 0% withholding on dividends to EU parent companies under each national implementation of the Directive (minimum holding in the Directive: 10%; Spain exempts from a 5% holding kept for one year — art. 14.1.h, Non-Resident Income Tax Act). | ✓ Applies | ✓ Applies | ✓ Applies | ✓ Applies | ✓ Applies |
Minimum employees ZEC requires local employment — this is substance, not just a tax structure. It also means real EU market presence. | 5 (GC/TF) / 3 (other islands) | None (tax only) | None (tax only) | None (tax only) | N/A (personal tax) |
Minimum investment ZEC requires a modest minimum investment in fixed assets within 2 years. | €50,000–€100,000 | None | None | None | N/A |
Digital Nomad Visa Spain's international remote-work visa (in force since 23 December 2022) applies in the Canary Islands. Employees holding it may only work for companies located outside Spain (art. 74 bis, Law 14/2013). | ✓ Spain DNV (Law 28/2022) | Limited / N/A | Nomad Residence | ✓ Digital Nomad | ✓ Digital Nomad |
Non-Dom / NHR personal tax Spain's Beckham Law allows qualifying expats to pay a flat 24% personal income tax for 6 years. | Beckham Law (flat 24%) | Remittance basis | Non-Dom (flat) | 60-day rule | NHR 20% (closing 2024) |
Profit reinvestment deduction The RIC (Reserva para Inversiones en Canarias) lets companies reduce their tax base by up to 90% of undistributed profits from Canary Islands establishments, provided the reserve is invested within three years from the accrual date of the tax for the year in which it is set up (art. 27, Law 19/1994). | 90% (RIC) | None | None | None | None |
Set-up time ZEC registration requires prior authorisation from the ZEC Consortium, which by law must be decided within two months of the application (art. 41, Law 19/1994), on top of standard company formation. | Formation + ZEC authorisation (statutory limit: 2 months) | 3–4 weeks | 4–6 weeks | 2–3 weeks | 3–5 weeks |
OECD BEPS compliance ZEC is explicitly approved by the EU as compatible with state aid rules and is OECD/BEPS compliant. | ✓ Fully compliant | ✓ Pillar Two 2024 | ⚠ Under review | ✓ Compliant | ✓ Compliant |
Quality of life Year-round spring climate, direct EU flights, low cost of living vs. Western Europe. | ⭐⭐⭐⭐⭐ Canary Islands | ⭐⭐⭐⭐ Dublin | ⭐⭐⭐⭐ Malta | ⭐⭐⭐⭐ Limassol | ⭐⭐⭐⭐⭐ Lisbon/Porto |
* Rates and rules correct as of April 2026. Tax law changes frequently — always verify with a qualified advisor.
Which regime suits your profile?
Different business models have different optimal jurisdictions.
SaaS / Tech startup
Best: ZECLow corp tax, RIC reinvestment deduction, real EU presence, Spanish talent pool.
Also consider: Ireland (talent), Malta (quick setup)
E-commerce / Amazon FBA
Best: Depends on the activityWholesale trade and trade intermediation (NACE 46) are on the list of eligible ZEC activities, but retail trade (NACE 47) is not (annex to Law 19/1994), so it depends on how the business is classified. Imports of goods by ZEC entities are exempt from IGIC (art. 47, Law 19/1994).
Also consider: Cyprus (VAT optimization)
Holding / Investment company
Best: Other jurisdictionsPure holding and investment activities are not on the list of eligible ZEC activities (annex to Law 19/1994, art. 31.2.c), and the regime requires real local jobs and investment.
Also consider: Netherlands (participation exemption), Malta (6/7ths refund)
Digital nomad / Freelancer
Best: Portugal NHR or CyprusNo employee requirement. Founders who want to build a company in the Canary Islands can consider the ZEC, but the remote-work visa is for remote work for companies outside Spain (art. 74 bis, Law 14/2013), so the residence permit must match your role in the company.
Also consider: ZEC (if hiring 5+ in Gran Canaria/Tenerife, 3+ on other islands), Spain Beckham Law
Manufacturing / Logistics
Best: ZECManufacturing (NACE 10–33, with exceptions) and transport and storage (NACE 49–53) are on the list of eligible ZEC activities (annex to Law 19/1994).
Also consider: Ireland (pharma), Cyprus (shipping)
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