A company doing production activities and activities related to the film sector can be established as a ZEC company and pay a reduced rate of 4% on Corporate Income Tax instead of the general 25% rate currently in force in Spain, provided that they meet the following requirements. ZEC companies can carry out a wide range of activities in the film sector like:

  • Production
  • Production services, on set assistance and post production
  • Phoography and advertising
  • Film distribution

Requirements to be a ZEC company:

  1. To be a new company or branch
  2. At least one of the administrators must reside in the Canary Islands.
  3. Invest a minimum of 100,000 € in tangible/intangible fixed assets within a period of two years from the registration of the ZEC company (flexible amount according to employment volume.
  4. Create at least 5 jobs in the first six months of activity, maintaining this annual average during the entire term of the ZEC company.
  5. At least one of the administrators must be tax resident in the Canary Islands.
  6. The objects of the company must be one of the ZEC authorized activities.

Benefits a ZEC company enjoys:

  1. Reduced tax rate of 4% on Corporate Income Tax.
  2. Exempted from the Property Transfer and Stamp Duty Tax.
  3. Exempted from IGIC on import (both of raw materials and investment materials or finished products), and exemption in operations with other ZEC companies.
  4. The Double Taxation Avoidance Agreements apply as well as the exemption at origin on taxes for capital repatriation through the application of the parent-subsidiary directive.
  5. The restriction to apply the deduction on double domestic taxation on dividends has been lifted.

This ZEC tax incentive is compatible with the tax incentives for film productions described in this website.


For further information