Picture living in paradise and growing the business you have always wanted. Buying a home on Tenerife affords many of the same benefits of tax havens, while opening the door to a new lifestyle in a unique natural environment that’s close to all major European cities. What’s more, at Abama Resort you’ll have access to a world-class golf course and all the amenities of a luxury resort at your fingertips.
Tax advantages on the island of Tenerife make it a favourite business destination for companies that require an environment with competitive economic benefits. If you are not a citizen of the European Union, you can acquire a Residence Visa in Spain and live in the EU, through the purchase of properties with a value equal to or greater than 500,000 Euros. As such, you’ll gain freedom of movement as a European resident and businessperson throughout the European Union. In addition, you can also benefit from tax advantages afforded by the Island Council of Tenerife. These opportunities may provide the push you need to start your business and set up your home in Europe.
Tax advantages when setting up your business in Tenerife
Due to its exceptional climate, its quality of life, and its strategic geographical location between Europe, Africa and America, Tenerife has been, for centuries, a place where entrepreneurship has thrived. With an average temperature of 21º C throughout the year, three seaports (two in the free trade and economic zone), and two international airports that connect with more than 150 European cities, it provides an open door to expansion and emerging markets. However, the special economic and tax framework that offers exceptional conditions for investment and trade are one of Tenerife’s best points as well. Read on to discover some of the advantages of the Canary Island Economic and Tax Regime, (Régimen Económico y Fiscal de Canarias: REF) compiled by Why Tenerife.
ZEC: Canary Islands Special Zone
One of the main factors that makes Tenerife like tax havens is that it is in the ZEC, the Special Canary Islands Zone. This is a low taxation zone within the framework of the Canary Island Economic and Tax Regime (REF), with a corporate tax of 4%, compared to the national 25% and the average European Union rate of 21.3%. It also enjoys a IGIC (VAT) of just 6.5%; a great incentive for the implementation and consolidation of economic activities in sectors including technological development, ICT (Information and Communication Technologies), services to companies and outsourcing, audio-visual activities, tourism, the maritime sector, and transport and logistics, to name a few.
One of the most important requirements for accessing the advantages of ZEC, in addition to being a new company (i.e. newly established), is the obligation of having a legal residence in the Canary Islands of at least one of the entity’s representatives or administrators. With this is mind, buying a luxury property in Tenerife gives you the benefit of obtaining residence in Europe and, as such, enjoying these incredible advantages in developing your new business.
Free Trade and Economic Zone of Tenerife
Another of the tax haven-like advantages of Tenerife is that it has a Free Trade and Economic Zone: a region of the Community customs territory separated from the rest and into which any type of merchandise can be brought (independent of its quantity, nature, origin, origin or destination). In this zone, goods can be stored for an unlimited period of time until a further destination is secured and, during this entire period, they are not subject to customs duties, ordinary taxes, import duties or any kind of control that regulates the import or export of certain products.
In addition, goods in the Free Trade and Economic Zone can be managed to ensure their preservation, improve their presentation and commercial quality, or prepare them for distribution. They may even be processed under prior authorization from the customs authority.
Finally, one of the key values of the Free Trade and Economic Zone that must be highlighted is its simplification of many customs and administrative procedures. If you are evaluation the ideal place to locate your venture in any type of industry, trade, service or business activity, Tenerife is an excellent option.
The Canary Islands Investment Reserve (RIC)
The Canary Islands Investment Reserve (RIC) is, together with the ZEC, one of the most attractive tax incentives of the Canary Islands Economic and Fiscal Regime for companies established in the territory. It is designed to stimulate business investment in the archipelago through self-financing and personal resources.
With this incentive, companies can benefit from tax savings of up to 90% of taxes in exchange for the commitment to reinvest the profits in the same economic area in which they were generated, inside any of the seven islands in the Canaries and within approximately three and a half years. However, there are very strict criteria for determining which investments can comply with this commitment, so tax advice from a professional is advised.
While it’s likely you can find a comfortable, modern home in a variety of places in Europe, there’s nowhere like Tenerife and Abama Resort to offer the same exclusive combination of luxuries, amenities, services, and design in an zone that offers many of the same benefits as tax havens. Read more of our blog to discover why Abama has your ideal property for sale in Spain.