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Living In Gran Canaria: Setting Up A Tax Efficient Company (ZEC)
The Canary Islands offer the most generous tax regime in the whole of Europe for companies and entrepreneurs.
Gran Canaria is part of the ZEC, or Canary Islands Special Zone. What’s special about it?
Well, open a business in Gran Canaria and tick all the boxes, and you pay just 4% corporate income tax and gets a slew of other benefits.
What is the ZEC?
The ZEC is a low-taxation zone focused on the Canary Islands. Its main purpose is to encourage European businesses to move to the Canaries, or set up subsidiaries here, to provide jobs and experience to local people and boost the economy. In exchange, it offers businesses one of the lowest corporate tax regimes in Europe.
The ZEC has the full support of the EU, the Spanish tax authorities, and the Canarian Government. It stands out as one of the few legally sound low-taxation centres in Europe. If you are planning to set up a Gran Canaria business, you need to know about the ZEC.
It’s also well established with over 400 ZEC companies, including Rolls Royce, currently operating in the Canary Islands. ZEC entities employ over 4500 people on the islands.
The advantages of a ZEC business in Gran Canaria
ZEC companies pay Spanish Corporate Income Tax at 4% (the EU average is 23%).
ZEC companies can pay dividends to their EU subsidiaries of parent company without any withholding tax. This is thanks to the Parent-Subsidiary Directive of the European Union.
ZEC firms also benefit from the 85 double taxation treaties established between the EU and other countries.
A ZEC entity is also exempt from Property Transfer Tax and Stamp Duty (ITP-AJD).
Imports made by ZEC companies, and goods and services traded between them, are exempt from Canary Islands General Indirect Tax (IGIC). Canarian IGIC is the equivalent of VAT and is currently 7%.
Why set up a ZEC Gran Canaria business
Gran Canaria has the largest city in the Canary Islands in Las Palmas de Gran Canaria, and the largest port. It’s also well connected to the rest of Europe and to Africa by air, and has a large, and booming tourism industry and a growing oil-services sector.
It’s the logical choice of location to set up a ZEC business as it has the best infrastucture and support services in the Canary Islands (Tenerife may well disagree about this). Salaries are low by European standards, and there is a healthy pool of university-educated Canarians looking for work.
From a lifestyle point of view, Gran Canaria takes some beating. It has excellent weather, a huge range of quality restaurants and bars and all the services and security you’d expect from a European city. In short, an excellent place to live and work.
What are the requirements for setting up a ZEC business in Gran Canaria?
A ZEC company must be a new corporate entity based in the Canary Islands.
At least one of the administrators or legal representatives must reside in the Canary Islands.
A ZEC entity must make a minimum investment of 100,000 euros (in Gran Canaria and Tenerife) or 50,000 euros (in the other Islands) in fixed assets within the first two years. This investment can be in Gran Canaria property.
ZEC companies must create 5 jobs (in Gran Canaria and Tenerife) or 3 (in the other islands) during the first six months, and maintain this minimum number of employees on average.
ZEC entities must also be in one of these sectors or service industries.
NOTE: The list of approved sectors is long and most companies will be able to find a way to fit their activities into the ZEC rules. Service companies can set up anywhere in the Canary Islands.
How do I set up a ZEC company in Gran Canaria?
The first stage is to make contact with the ZEC organisation. They will provide all the information you need to get set up, a road map of procedures, and ongoing support.
There is a fair amount of paperwork associated with the process (you need to get your business activity approved, start a local company, register with tax authorities, etc) so it takes months rather than weeks. The best way to get this done effectively is to use a quality local business consultant, such as Montelongo Asesores, to get all the paperwork sorted.
We’d also advise you to network with people who have already established ZEC businesses on the island. They will give you invaluable advice about how to set up in Gran Canaria.
As for costs, it’s €850 to inscribe your company in the ZEC registry and between €1300 and €1500 per annum thereafter.
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How To Choose A Legal Gran Canaria Airport Transfer
Gran Canaria's hotels have to be licensed and offer a quality level of service as well as having insurance and complying with fire regulations. The same goes for the boats that take people out to watch dolphins, the companies offering jeep safaris, and even the holiday let apartments.
However, not everybody in Gran Canaria follows the rules. For example, there is a significant industry running illegal and uninsured transfers between Gran Canaria airport and the island's resorts. These cars, driven by locals and foreign-residents, are just private vehicles and the drivers are unregulated and uninsured. They don't pay tax and there is no way to hold them responsible if something goes wrong.
At Gran Canaria Info we believe that all people and all companies offering services to tourists should legal and above board.
So, how do you know that your airport transfer service is legal and registered with the Gran Canaria authorities?
Using legal Gran Canaria airport transfers
It is quite easy to know if your airport transfer service is operating in a legal way because all registered transfers have the following...
A blue license plate: Taxis and other public service vehicles in Gran Canaria all have blue plates.
A VTC sticker in the window: This stands for Vehículo de Transporte con Conductor, the official designation for licensed transfer drivers ans chauffeurs.
An SP sticker on the car: This indicates that the car offer a Servicio Publico or public service and is therefore allowed to pick up and transfer members of the public.
Parked in the transport zone: Official airport transfer vehicles don't park in the public car park of the airport. Instead they have their own parking zone right by the arrivals gates at the airport (next to the taxis and package tour buses). Your transfer driver therefore should not have to pay a parking fee before leaving the aiport.
How to spot an unlicensed transfer service
Unlicensed drivers get away with offerring their service because they claim that they are just members of the public picking up a friend. They are allowed to stand at arrivals with a sign (just like any member of the public can).
However, they also have to park their car in the public car park and will walk you there with your luggage, stopping to pay the parking fee at the meter. A licensed transfer driver does not need to do this because they have their own parking zone right by arrivals.
Some unlicensed drivers don't even wait at the arrival gate because the official drivers recognise them and get annoyed. Instead they have to stand further away (often by the Spar supermarket or the car rental desks).
When an unlicensed driver drops you at the airport they will not want to be paid in a public area because this proves that they are charging rather than "transporting a friend" for free.
An unlicensed car will not have a blue license plate, or a SP or VTC sticker, and will often look like a private car (because it is a private car).
What's the problem with unlicensed airport transfers?
Some people use unlicensed cars because they are the cheapest option and don't realise that they are unlicensed.
There are several problems with unlicensed services. The most obvious is that they are uninsured so if something goes wrong or there is an accident, you are not protected. The price that unlicensed drivers offer is only low because they cut corners (hopefully not literally). You have no way of even knowing if your unlicensed driver has a Spanish driving license, insurance and a good driving record. Licensed drivers are vetted regularly and must be fully insured and licensed to work.
Another problem is that unlicensed transfers undermine the legitimate transfer drivers and businesses in Gran Canaria. Local drivers make a living from transfers and offer a legal, regulated service with minimum standards. Every time an unlicensed service undercuts them, it is effectively stealing from local people and the island economy.
We believe that everybody in Gran Canaria deserves better!
Gran Canaria Airport Transfer Services
To find out more about the Gran Canaria airport transfer, see our Gran Canaria airport transfer article which explains the three different models; man/woman from pub with car, online transfer websites, and local transfer services.
Or you can book a legitimate Gran Canaria airport transfer at a great price right here. Our service uses local drivers and supprts the island economy because all the money you spend stays in Gran Canaria.
Alex Says: Using our service also helps the Gran Canaria Info team to keep providing quality local information here and in our Facebook Group
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