Welcome to Money Beng, even today we have a very interesting article for you, in particular we will help you understand whether investing in the Canary Islands is really worthwhile but above all where to invest and in which sectors of the Canarian economy.
However, before moving on to the core of the article, let’s see what exactly the Canaries are and how they are organized on a territorial level.
What are the Canaries
The Canaries are an archipelago of islands off the west African coast, therefore they are located in the Atlantic Ocean.
Contrary to what is often mistakenly thought, the Canary Islands are not independent, on the contrary they are part of the Spider of Spain, constituting a Spanish extraterritorial territory.
Precisely because of their distance from the mother country, the Canary Islands can benefit from some tax relief with the help of the European Commission itself.
And it is precisely because of these benefits that the Canary Islands represent a very advantageous place for investors.
The Canaries are in fact part of the ZEC, “Zona Especial Canaria“, or a special economic zone that allows them to have very low taxes compared to their Mediterranean compatriots.
Tax regime of the Canaries
As even a little anticipated, the Canary Islands have a privileged tax regime compared to the rest of Spain to say the least, but why did the European Commission grant them this particular status?
The answer lies precisely in their geographical location, in fact, precisely because of their distance from the rest of Europe, the Canary Islands could be subject to mass emigration to European countries, therefore these benefits are granted to promote the economic and social development of the archipelago.
No VAT and reduced tax
Among these benefits, one of the main ones that characterize the Canary Islands is precisely the absence of VAT on primary goods, while on all other goods and services the VAT is only 13%, far from the Italian 22%.
This is not a small benefit considering the quantity of goods and services that are marketed every day on the Canary archipelago.
How much do Irpeg pay in the Canary Islands
What you see below are the rates to be paid based on personal income.
- 19% for incomes below €12,450;
- 24% up to 20,200 euros;
- 30% on amounts that do not exceed €34,000;
- 45% for income over 60,000 euros.
We are far from the tax burden that instead characterizes the Italian state, for example, where it can even affect 60% of a company’s revenue.
How much taxes do companies pay in the Canary Islands
We have seen that natural persons have a very advantageous income tax compared to the majority of European states but also companies are subject to a very advantageous tax regime and that we are seeing now.
In fact, companies are subject to a flat tax of 15% for the first two years of activity which rises to 25% after the two years.
Clearly, the advantages of the tax regime in the Canary Islands certainly do not end here, just think that there are no taxes on new buildings, reduced costs for transfers, succession and so on.
It is a tax regime that needs to be explored and discovered in order to have a complete picture of this small tax haven in the Atlantic Ocean.
What to invest in the Canary Islands
The answer to this question is also a bit obvious, in fact given the considerable tourist flow all year round thanks to the mild climate 365 days a year, it is clear that the best investments in the Canary Islands concern everything related to tourism.
Therefore, from real estate to catering, to travel agencies and tour operators, everything revolves around tourism in the Canary Islands.
Invest in real estate in the Canary Islands
The first investment to make concerns the real estate sector, taking advantage of the absence of taxes on new buildings and such a constant flow of tourists, it is not difficult to understand that it is an almost safe investment.
In fact, once the buildings have been built, it will be possible to rent them to tourists or even sell them with a return on investment that is certainly greater than in other locations.
The Canarian economy is experiencing particular moments of frenzy, construction is increasing and the economy is functioning, foreign tourism contributes largely to making it flourishing.
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Invest in online services
If you offer online services, the best place to move your tax residence is precisely to the Canary Islands, this because by moving it you can take advantage of the preferential regime we were talking about a moment ago and you can therefore obtain a better profit with a clear reduction in taxes payable by you.
What is needed to have tax residence in the Canary Islands?
Simply being a European citizen, staying 6 months a year in the Canary Islands, having an apartment or an annual rental contract.
Invest in the Canary Islands in catering
Another very interesting investment in the Canaries is represented by catering, precisely because it is an activity closely connected to tourism.
The best places to open a restaurant and invest in the Canary Islands are Lanzarote and Fuerteventura, two well-known islands also frequented by very famous personalities on the international scene.
Tenerife and Las Palamas are the two largest islands and certainly also offer great investment opportunities.
Are the Canaries a tax haven?
Before closing with this article entirely dedicated to the Canary Islands, let’s answer this last question that we are often asked when talking about the Spanish archipelago.
The Canaries are not a tax haven, this is because their interbank system communicates with other European countries and there is a very transparent exchange of information, we do not have absolute privacy protection like some tax havens in the Bahamas, where not even in the event of an investigation they can be retrieved information on private accounts of bank customers.
However, the favorable tax regime makes the Canary Islands a place to invest that is certainly better than any European country where taxes affect the costs of any business and investment activity too much.
And what do you think? Let us know by commenting below and we will be happy to read your opinion and respond as soon as possible.
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