WHY ARE WE IN CANARY ISLANDS?

The Economic and Fiscal Regime (REF) of the Canary Islands is a legal framework that regulates the economic activity of the Canarian Archipelago in a different way from the rest of Spain, with unique advantages, in first position with respect to the rest of the world, and with complete stability and legal security and with full integration and application of the legal system of the European Union (data protection, free competition, financial regulations, anti-corruption measures, fiscal transparency, double taxation treaties...).

The ultraperiphery is the essential element that justifies this singularity and with a history of regulatory particularities that goes back five centuries.

Today, the REF is an extraordinary instrument that allows the establishment of businesses in the Canary Islands under privileged conditions thanks to extraordinary tax incentives and associated financing resources.

The legal norm is extensive, with instruments, tools, vehicles and special incentives with respect to other territorial areas, being among the main ones: the ZEC (Canary Islands Special Zone), with a 4% tax on corporate income tax versus a 23% European average and 25% in the rest of Spain or the RIC (Canary Islands Investment Reserve), with a reduction of up to 90% of undistributed profits in the tax base for corporate income tax or personal income tax which, in addition, becomes a magnificent source of financing since the incentive allows reinvestment in the company itself or in other companies in the Canary Islands.  In addition, among other benefits there are two free zones, the IGIC that replaces the peninsular VAT (7% of application with respect to 21%), exemptions for the constitution or the extension of companies, or for the acquisition of investment goods, as well as important bonuses and deductions in R+D+i, in audiovisual production (the best in the whole planet) or in investments in certain African countries.


The Canary Islands are, therefore, a focus for attracting investment and an ecosystem of companies, together with solid know-how in key sectors:

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The presence of biotechnology businesses is essential, both in red biotechnology (application in medicine and health), white biotechnology (industrial application), green biotechnology (application in agriculture), and blue biotechnology (application in marine and aquatic environments). 

There is also a strong development in Information and Communication Technologies, especially in computing or IT, for the organization and structuring of information and content in digital format, in addition to the analysis, processing, storage, transmission or remote distribution of such information, with options that allow the offshoring of production and associated services; improve the level of company structure and management; expand markets; reduce operational or logistical costs; create new networks of interactive and remote relations, both at personal or business level and for employment (teleworking); develop specific services or products according to the needs of clients or permeate knowledge by making it accessible at any time and without borders. The possible options for implementation are enormous and, in fact, the Islands are considered a friendly territory for digital nomads.

Important support is also given to Innovation in Tourism, a sector that is the main source of income in the area, and more necessary in the new normality, which needs to establish new frameworks for action based on analysis and measurement; improvements in marketing strategies, the relationship with suppliers or additional services for customers using science and technology, seeking to improve the business model (especially in hotels and restaurants), creating new lines of work, optimizing processes or services, and providing added value with the requirements established worldwide after the pandemic.

This innovation is also present in activities related to the provision of food and beverages; transport (by land, sea and air) in its different variants; travel agencies and virtual services or cultural, sports and recreational activities that are being reinvented, considering greater simplification in processes, cost reduction, time optimization, interaction with the client, added services and greater individualized communication through scientific and technological developments to improve their competitiveness or improve their promotion where, for example, digital developments and applications, artificial intelligence and big data are key.

The New Technologies have a special attention within the information and communication enhancing its accessibility, immateriality, instantaneousness, digitalization, automation, interconnection, diversity and quality (in image and/or sound) with companies focused on inventions ranging from microchips to optical or any other kind of information systems, system design, software or artificial intelligence in quantum physics, satellites, optical fiber or cable, and support technologies (virtual keyboards, voice recognition systems, screen magnifiers, spoken browsers...)

 

The Audiovisual industry is redefined as Multimedia, since, in addition to cinema and television, digital content on the Internet, music publishing, content for mobile devices or video games are added, being of paramount importance in the global economy and that, in recent times is experiencing a total revolution of their working methods, formats, associated technologies, production techniques, distribution and exploitation windows. The Canary Islands have the best incentives in the world, as well as extraordinary sources of financing that produce a call effect on both national and international production (especially Hollywood films).

Likewise, the Islands are experiencing a boom in the development of Internet Platforms or Portals, the most widespread being those for entertainment, education, social relations and systems associated with e-commerce.


In E-commerce the needs are increasing, as in the rest of the digital environments, being updated on a daily basis, especially in commercial services, the industry associated with data, Internet marketing or processing of online transactions or electronic transfer of funds.

Science, and in this case aerospace, with all its implications, is a social necessity.  The best European solar telescopes are located on Tenerife and La Palma. Astrophysics in the Canary Islands is considered to be a world leader, being at the forefront of research, especially in the knowledge of the laws that govern the origin and evolution of different types of matter/energy in the universe in key areas such as solar physics, the Sun-Earth connection, exoplanetary systems, the solar system, stellar and interstellar physics, the formation and evolution of galaxies, or astroparticles and cosmology. International meetings with universities, specialized laboratories or consortiums are common in the islands; in addition to participating in different projects related to high-resolution space instrumentation, red or infrared instrumentation, optical instrumentation, microwave instrumentation and advanced technology in telescopes.

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Numerous technological support activities are also carried out in medical instrumentation, electronic systems, precision mechanics, electrical calibrations, solar energy systems and automatic cartography, or studies of astrophysics in the structure of the universe and cosmology, the local universe, the physics of stars, planetary and interstellar systems, the solar system and space instrumentation.

And the new times make us bet even more on the knowledge economy, renewable energies, licenses, brands or patents; in addition to other much younger sectors such as virtual currencies or forex.

The Islands have highly qualified personnel, with a solid knowledge of key sectors, bilingual in any language, and with the lowest job rotation rate in Spain, with 5 universities, 36,000 students, around 400 professional training cycles in 180 vocational training centres and 22 official language schools.

 

Operational costs are lower than in the rest of the European Community.

The quality of life is that of any advanced country in the 21st century, with a cosmopolitan atmosphere, a wide range of cultural and leisure activities (141 cinemas and 31 shopping centres), health (103 health centres and 28 hospitals) and first-rate European education (5 universities, 39 international schools, 180 vocational schools) and the best climate in the world: the average annual temperature is 22 degrees, with 4,800 hours/year of natural light, 141 protected natural areas, 4 biosphere reserves and 256 km of beaches.

The Canary Islands have numerous air connections, with 40 million passengers, 8 airports (6 of them international) and, for example, more than 500 weekly flights to the United Kingdom, 400 to Germany or 1800 to the Peninsula (to name a few destinations), an estimated flight time of between 2 and 4 hours; in addition, it is fully integrated into the main maritime traffic routes, with 26 commercial ports and around 7.5 million passengers.

The technological infrastructures are world-class, ensuring reliable and high-availability connectivity, through the deployment of national and international underwater cables, intercontinental fiber optic connection and a first-class data center, which serves as a neutral point for traffic aggregation and distribution, with Project D-LIX, a connection hub between the three continents (Africa, Europe and America), 50 satellites and the presence of key telephone operators.

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In addition, the Canary Islands are world leaders in aerospace, volcanology, marine sciences and tourism.

 

Finally, there are important relationships with institutions, public and semi-public companies, autonomous organizations, foundations, scientific and technological facilities and initiatives that result in more industries that can be established in their territory, giving quality synergies.

The REF (Economic and Fiscal Regime of the Canary Islands) is constantly renewed with the aim of favouring the creation of employment in more sectors of activity, as well as diversifying investment and the business community, such as drones; the construction of sports boats; environmental development; waste management and water desalination or theme parks or health and welfare assistance, rewarding with extraordinary support of incentives for direct investment in innovation projects.

The competitive advantages of the REF enable the strengthening of the business, economic and financial fabric, as well as having a strong impact on traditional industries.

In this sense, companies, businesses and products attracted to the Canary Islands can benefit, and even more so when new financial instruments will soon be made available to the public.

 


This information has been prepared using the official publications of the REF, Regulations and other legal provisions, official information collected in the publications and websites of the public institutions of the Government of the Canary Islands (as is the case of Proexca, Zec, the Chamber of Commerce and the different Cabildos), specialized bibliography, statements collected in the media and specialized blogs, texts under a Creative Commons license, as well as books and publications by the SENSEI collaborating team, with an exclusively informative and general orientation purpose.