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Practical Manual for Companies 2020.

Canary Islands tax system

  • In the first Final Provision of Royal Decree-Law 34/2020, of November 17, on urgent measures to support business solvency and the energy sector, and in tax matters, the temporal scope contained in article 27.11 relating to early investments and in article 29.2 that regulates the authorization of registration in the official Registry of Entities of the Canary Islands Special Zone (ZEC) of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, establishing December 31, 2021 as the deadline

  • The Second Final Provision of Royal Decree-Law 39/2020, of December 29, on financial measures for social and economic support and compliance with the execution of judgments, introduces a new eighth transitional provision in Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, to extend the deadlines linked to the Reserve for Investments in the Canary Islands, in the terms indicated below.

    The maximum period of three years referred to in article 27.4 of Law 19/1994, of July 6, will be four years for the amounts allocated to the reserve for investments in the Canary Islands endowed , in the terms indicated in its regulatory regulations, with benefits obtained in tax periods beginning in the year 2016.

    Furthermore, the period referred to in the first paragraph of article 27.11 of Law 19/1994, of July 6, will be four years for the advance investments materialized in 2017.

  • The third Final Provision of Royal Decree-Law 12/2021, of June 24, which adopts urgent measures in the field of energy taxation and in the area of energy generation, and on the management of the regulation fee and the water use rate, with effect for tax periods beginning during the year 2020, modifies the Fourteenth Additional Provision of Law 19/1994, of July 6, to update the limit of the deduction for investments in film productions made in the Canary Islands, which goes from 5.4 to 12.4 million euros .

    Furthermore, the third Final Provision modifies the third paragraph of the fourteenth Additional Provision of Law 19/1994, of July 6, to adapt it to the new wording of article 36.2 of the LIS , establishing that in relation to the minimum expenditure amount set by article 36.2 of the LIS, the expenses incurred in the Canary Islands for the animation of a foreign production must be greater than 200,000 euros. As regards the execution of visual effects services , the provisions of letter b) of article 36.2 of the LIS shall apply.

You can consult all the particularities of the Canary Islands Tax Regime in Chapter 12 of this Practical Manual.