The Canary Islands improve its tax incentives for the start-ups

The Canary Islands are no longer just Europe's sun and beach paradise. The Archipelago is on its way to becoming the most fertile territory for the most innovative startups and SMEs. This was stated today by the president of the Canary Islands Special Zone (ZEC), Pablo Hernández, announcing at the South Summit congress that the Islands make access to their low taxation more flexible by eliminating the obligation to make a minimum investment in assets. The measure will allow companies attached to the ZEC to have a reduced rate of 4% in Corporate Tax, compared to the general 25%, among other unique advantages offered by the special Economic and Fiscal Regime (REF) that the Autonomous Community has.

During his speech at the largest stage of innovation and entrepreneurship in southern Europe, which is being held this week in Madrid and is attended by national and international entrepreneurs and investors, Hernández explained that the measure seeks to adapt the strategic tools that the Canary Islands have to reality of emerging sectors such as audiovisual, science and technology, “which do not require large infrastructures or demand land or natural resources, but which are capable of generating a lot of employment and contributing knowledge to society”.

The Canary Islands Special Zone required investing between 50,000 and 100,000 euros to settle in the Islands. However, based on the agreement adopted, the startups will not have to make this outlay when they commit to generating at least six jobs in the two most populated islands or four in the rest. The contracts must be indefinite and the workforce may not be reduced for five years.

The measure announced by Hernández is protected by Law 8/2018, which gave the power to the Governing Council of the ZEC to authorize the enjoyment of the reduced tax regime to entities that stimulate the labor market. However, in the current context, after the pandemic, zero tourism and the volcanic crisis in La Palma, it is key to commit to innovative projects with high growth potential, which consistently contribute to accelerating the diversification of the economy of the region.

Specifically, the ZEC wants to facilitate the arrival of startups from sections J and M of the NACE codes (the European nomenclature for economic activities), which provide web services and data processing, film, television, music production companies and music studios. animation and video games, and others of a scientific, biotechnological nature and linked to renewable energies, the maritime and aerospace industry, for which the Islands have optimal conditions and an incipient business development.

With this new step, the Canary Islands advance in the creation of an ecosystem of creative and cutting-edge companies. And although it is still far from the figures in Madrid or Barcelona, ​​according to data from the National Institute of Statistics (INE), from 20019 and until the first quarter of this year, it has been the second region, only behind the Basque Country, which more digital talent has been captured in percentage terms, with a 32% increase and a balance of 22,000 active technology workers.

The rise of the Islands began a decade ago. Between 2012 and 2021, it was the eighth European region in terms of high-tech job creation, out of the 400 analyzed in the statistics compiled by Eurostat. With the talent provided by local universities and research centers, tax incentives, the cutting-edge infrastructure that the Archipelago has, its air and cable connectivity, and the quality of life it offers, the region has an unrepeatable opportunity to consolidate itself as a digital reference for remote work and as a node of technological services on the rise.