Coinciding with the 25th anniversary of the Canary Islands Special Zone (ZEC) and following the release of its strongest employment and activity figures, CE Consulting notes that, under current regulations, the prior authorization required to register new entities in the Official Registry of ZEC Entities (ROEZEC) has a deadline of December 31, 2026.
Given this timeline, the firm recommends that companies considering establishing a footprint in the Canary Islands begin the process as soon as possible to access the regime. The procedure requires submitting a prior authorization request accompanied by a descriptive memorandum of the business project, and, once authorization is obtained, forming the entity and applying for its ROEZEC registration.
A process that requires planning
The Canary Islands Special Zone forms part of the Canary Islands’ Economic and Fiscal Regime (REF) and constitutes a state aid regime subject to European Union law. Its main appeal is the application of a special 4% rate in the Corporate Income Tax to the portion of the tax base that arises from operations carried out physically and effectively within the ZEC geographic area, provided that the entity meets the requirements set forth by the regulations.
The access procedure begins with the request for prior authorization to the ZEC Steering Council, accompanied by a descriptive memorandum of the business project. The express resolution should be issued, generally, within two months, without prejudice to possible legally provided suspensions. Once authorization is obtained, the promoters have eighteen months to form the entity and apply for its ROEZEC registration.
In this regard, Francisco Martell, managing partner of the Canary Islands regional division of CE Consulting, notes that “the prior authorization from the Steering Council requires preparing a sufficiently detailed business memorandum and completing the corresponding processing. Leaving the application for the last quarter of 2026 poses a real risk that authorization will not be granted before December 31, the date that, under the current regulations, serves as the limit to authorize new registrations.”
To access the ZEC, among other requirements, the entity must be newly created or, when it is a branch, that branch must also be newly created; it must have its registered office and its effective management headquarters in the Canary Islands; it must carry out an authorized activity; it must create the required employment; and it must make the applicable minimum investment. Subsequent regulatory amendments have broadened the approved activities and adjusted certain requirements, expanding the range of projects that can qualify for the regime.
CE Consulting notes that it is important to differentiate the deadline for obtaining the prior authorization from the period of incentive applicability. In accordance with Article 29 of Law 19/1994, the authorization for registration is limited by the end date of the validity of Regulation (EU) No. 651/2014, currently set at December 31, 2026. Entities authorized within the deadline may subsequently apply for registration under the regulatory terms and enjoy the incentives during the six years immediately following the end of the Regulation’s validity, provided they continue to meet the requirements and subject to European Commission reviews and possible extensions.
According to the latest data on the evolution of the ZEC, the regime reached 933 registered entities in 2025 and surpassed 12,560 jobs, after creating nearly 1,500 positions during the year. Meanwhile, the most recent turnover data place the combined volume of ZEC entities above 3.3 billion euros. These figures illustrate the growing impact of the regime as a tool to attract investment and cultivate real economic activity in the Canary Islands.
“The ZEC remains one of Europe’s most competitive tax instruments for projects with real economic activity. Precisely because of this, those evaluating this regime should already assess its viability and plan the process with sufficient lead time,” concludes Francisco Martell.
