TAX INCENTIVES
Audiovisual Tax Incentives in the Canary Islands
The Canary Islands have a particularly attractive Economic and Tax Regime (REF) for national and international productions.
54% Tax Deduction
Up to a 54% tax deduction on eligible expenses for film productions, series, animation, and post-production carried out in the Canary Islands.
The incentive is divided into two schemes: foreign productions (tax rebate) and and national productions (tax credit).
The minimum required expenditure is €1,000,000, although this is reduced to €200,000 for animation and post-production projects. The maximum deduction limits reach €36 million per feature film and €18 million per episode for TV series.*
National Productions (Tax Credit)
A tax deduction of 50% applies to the first €1 million and 45% 45% to the remaining base, provided that the required certification and nationality requirements are met, including the Canary Islands Audiovisual Production Certificate, the Spanish Nationality Certificate and and the Cultural Certificate, and that at least 50% 50% of the deduction base corresponds to expenses incurred within Spanish territory. *.*
Foreign Productions (Tax Rebate)
A A tax rebate may be applied to expenses incurred in the Canary Islands, with a deduction of 50% on the first €1 million of eligible expenditure and 45% on the remaining amount. 45% sobre el resto.
To access the incentive, it is necessary to hire a production service company with tax residency in the Canary Islands and registered with the ICAA..
Deductible expenses include those incurred in the Canary Islands and directly linked to the production, including costs related to creative personnel resident in Spain or the EEA, as well as services provided by technical industries and other local suppliers.*
4% Corporate Income Tax
Audiovisual companies established within the Canary Islands Special Zone (ZEC) are subject to a reduced 4% Corporate Income Tax rate, instead of the general 25% rate, provided if the ZEC requirements are met.*
ZEC Requirements in El Hierro
A minimum investment of €50,000 must be made within a two-year period, maintaining at least three permanent jobs , and establishing a new company with tax residency in the Canary Islands and authorized audiovisual activity.
The company must obtain authorization from the ZEC Consortium and registration in the ZEC Companies Register (ROEZEC). It may also benefit from exemptions on the Property Transfer Tax (ITP) and the Stamp Duty Tax (AJD), as well as IGIC exemptions on imports. These incentives are compatible with other tax benefits and aid applicable to the audiovisual sector.* con otros beneficios fiscales y ayudas aplicables al sector audiovisual.*
0% IGIC (Canary Islands VAT)
Feature films, short films, fiction series, animation, and documentary productions may benefit from a 0% IGIC exemption on the purchase of goods and services directly linked to the production.*
Zero Rate Procedure
To access this benefit, registration in the Register of Cinematographic Companies and prior recognition previo de la Canary Islands Tax Agencyare required, through the submission of an application including the detailed project. The exemption applies to the supply of goods, imports, and production services, as long as they are used exclusively for the audiovisual work and no IGIC is charged on the provision of the service.*
Other Incentives
Canary Islands Investment Reserve (RIC)
It allows up to a 90% reduction of the taxable base when undistributed profits are allocated to investments in productions holding the Canary Islands Audiovisual Production Certificate, complementing the tax credit and facilitating financing through Canary Islands-based companies.
Deducción del 45% para I+D+i audiovisual
A 45% tax deduction is available in the Canary Islands for activities related to research, development, and technological innovation (R&D&I) applied to animation, video games, VFX, and virtual production, which is monetizable if there is not enough tax liability to offset it.
Deduction for advertising and publicity
Companies can benefit from a 15% tax deduction (10% for SMEs) on multi-year expenses related to international launch, trade fair participation, and promotion, provided that turnover does not exceed €10 million and the number of employees is below 50.
*Important: This information is provided for guidance purposes only. Each project requires an individual assessment by specialized tax advisors.
