ZEC or autónomo: starting a business in the Canary Islands
Anyone who moves to the islands and wants to work here hears these two words sooner or later. One comes up on a forum: “set up a ZEC company, the tax there is 4 per cent”. The other is the more sober advice: “register as an autónomo and that's it”. The two circulate side by side as if they were two dishes on the same menu.
Two things are worth knowing up front. These two routes are not meant for the same person. And under the law in force today, registration in the ZEC can only be authorised until 31 December 2026. This article is not tax advice: it sets out where the law and the authorities stand as of October 2026, and ends with who to ask.
Not two doors into the same house
Put that way, the question “ZEC or autónomo?” is misleading.
Look at it from the other side. The ZEC, short for Zona Especial Canaria (Canary Islands Special Zone), is a low-tax regime within the Canary Islands' economic and tax regime (REF). Under Ley 19/1994, however, only a newly created legal entity or a new branch can be a ZEC entity, entered in the official ZEC register (ROEZEC). A self-employed individual, an autónomo in Spanish, does not fit into it.
On the other side, it is the other way round. According to the Canary Islands Tax Agency (Agencia Tributaria Canaria, ATC), the small-business IGIC exemption (REPEP) is only available to individuals, not to companies.
Taken together, the two rules show that this is not a choice between two options for one person, but two sizes of project. The autónomo is one person working under their own name. The ZEC is a new company, with employees and investment. If you are starting out on your own, the ZEC cannot be met without employees in the first place.
One single article of law shows this most clearly: article 31 of Ley 19/1994. It lists what a ZEC company needs.
What the ZEC gives, and what it asks in return
A ZEC company's special corporate tax rate is 4 per cent. But not on all of its profit: only on the part that comes from activities actually carried out on the islands, and only up to a cap. The cap is the lower of two amounts. One of them is 1.8 million euros for a company that meets the minimum headcount, and it rises by 500,000 euros for each additional job, up to 50 jobs.
In return, article 31 and the Consorcio de la Zona Especial Canaria, which runs the ZEC, ask for the following:
A new company or a new branch. According to the Consorcio, the activity itself may already exist, but then new jobs, new investment and an additional contribution are required.
Registered office and effective management on the islands.
At least one director who lives in the Canary Islands. The Consorcio phrases this as tax residence in the Canary Islands.
Jobs within six months of registration: at least 5 on Gran Canaria and Tenerife, at least 3 on El Hierro, Fuerteventura, La Gomera, Lanzarote and La Palma, and this annual average must be maintained for the entire period of the benefit.
Investment within two years: at least 100,000 euros on Gran Canaria and Tenerife, at least 50,000 euros on the other five islands, in tangible or intangible fixed assets. The law allows the investment to be waived if the company creates more jobs than the minimum.
A business plan (memoria) on viability and on the contribution to the islands' development, with binding content.
An authorised activity. The annex to the law lists by NACE code what qualifies, for example programming (62), travel organisation (79) or audiovisual activity (59, except film screening). Food service, accommodation (55 and 56) and retail (47) are not on the list. The full list can be read on the BOE.
How the ZEC works, and the 2026 dates
Prior authorisation: you need the Consorcio's authorisation, with an application, a business plan and a deposit or bank guarantee for the amount of the registration fee. The fees are listed on the Consorcio's website.
Two months for the decision: the governing board (Consejo Rector) must decide expressly within two months of receiving the application, otherwise the application is deemed rejected.
While you wait, according to the Consorcio, you may not carry out the activity, hire anyone or invest.
Incorporation: notary, commercial register (Registro Mercantil), tax identification number (NIF) and at least one director resident in the Canary Islands.
Registration: after the authorisation you have 18 months to register (plus 9 months on request), otherwise the authorisation lapses. The decision takes at most 10 days, and only then can the company start its activity.
Article 29 of Ley 19/1994 ties the authorisation of registrations to the validity of the EU General Block Exemption Regulation (Regulation (EU) 651/2014), or of the rule that replaces it. Regulation (EU) 2023/1315 extended it until 31 December 2026. After that, the benefit continues for another six years: according to a Canary Islands Government press release of 8 June 2023, anyone who registers in 2026 can enjoy it at least until the end of 2032.
What comes after 2026, we do not know today. The European Commission plans to adopt the new block exemption regulation by the end of 2026, to apply from 1 January 2027. Whether that automatically extends the ZEC registration deadline, or whether an amendment to Spanish law is needed, the sources do not settle, and in early October we found not a single sentence about it on the Consorcio's website.
Let's put the dates side by side. This article comes out on 31 October. The deadline in force today is 31 December. The Consejo Rector has two months to decide. What this means for your case is something the Consorcio can tell you.
Autónomo: the route for individuals
RETA: anyone who works for themselves regularly, personally and directly, for profit, must register with the social security scheme for the self-employed (Régimen Especial de Trabajadores Autónomos, RETA). The contribution depends on your annual income, and the bands are set every year by the Budget Act. The 2026 table is on the Seguridad Social website.
Reduced contribution (colloquially tarifa plana): when you register for the first time, or if you were not registered in the previous two years, you get a reduced contribution for 12 full calendar months, and for a further 12 months if your annual net income stays below the minimum wage. The reduction must be requested when you register. Between 2023 and 2025 it was 80 euros a month. From 2026 its amount is set by that year's Budget Act, and we found no amount for 2026 in any official source. Ask the TGSS about it.
A company does not get round the RETA either: anyone who works as a company director regularly, personally and for profit, and has effective control of the company, also falls under the RETA. There is control in any case if they hold at least half of the capital.
State tax agency (AEAT): you join the census of businesses and professionals with form 036 (modelo 036). The simplified form 037 was abolished on 3 February 2025; if you see it in an old guide, it no longer exists.
Canary Islands tax agency (ATC): IGIC needs a separate registration, with form 400 (modelo 400). In it you also state whether you are opting for the small-business scheme.
IGIC, not VAT, and the 30,000 euro threshold
There is no Spanish VAT (IVA) in the Canary Islands: the VAT Act expressly excludes the islands from its scope. Instead, the local indirect tax, IGIC, applies, with a general rate of 7 per cent. What that means for you as a shopper, we wrote about on 14 October in our article “What can you take home from the Canary Islands: customs, tobacco, alcohol and IGIC”.
Under the small-business scheme (REPEP), according to the ATC, your IGIC-taxable transactions carried out on the islands are, as a rule, exempt. The conditions and pitfalls:
Individuals only, established in the Canary Islands. It does not apply to companies, nor to anyone who is not resident in the Canaries and has no permanent establishment here.
The previous year's turnover counts, from all of your activities, wherever you carried them out.
In 2026 the threshold is 30,000 euros. If you open article 89 of the Canary Islands IGIC law (Decreto Legislativo 1/2025) on the BOE, you will already see 50,000 euros there. That text only applies from 1 January 2027 (Decreto-ley 3/2026); the BOE shows it in advance.
The 2026 exception is closed: the extraordinary entry at 50,000 euros could be requested between 1 and 31 July.
On the invoice you must state: “Exención franquicia fiscal”.
Watch the first quarter: if you file the year's first-quarter IGIC return on time, that counts as a tacit waiver of the scheme. A voluntary waiver applies for at least three years.
It only covers IGIC. Anything subject to VAT or to another territory's sales tax is not covered by the REPEP.
NIE and residence: who can get started
Either route requires an NIE, the identification number for foreigners; what it is and how to get it, we explained in our guide to the NIE and the padrón.
As an EU or EEA citizen, you can take up self-employed work on the same terms as a Spaniard.
As a non-EU citizen, you need a residence and self-employment permit. The first permit is valid for one year, for one autonomous community and one sector. It is applied for as a visa, from abroad, and within three months of entering Spain you must register with social security.
If you work remotely for a foreign company and are not setting up a business here, our guide for digital nomads is the better starting point.
This is not tax advice: where to ask
Only the authorities or a professional can answer for your own situation:
ZEC: Consorcio de la Zona Especial Canaria, canariaszec.gob.es. According to the Consorcio, its staff help you throughout the whole process. This is the official address; sites with similar names are not.
IGIC and REPEP: Agencia Tributaria Canaria (ATC), the page on the REPEP.
Form 036, state tax census: Agencia Tributaria (AEAT), the form 036 registration page.
RETA, contributions, reduction: Tesorería General de la Seguridad Social (TGSS).
Free help: the Puntos de Atención al Emprendimiento (PAE) network is required to help free of charge with the single electronic form for starting a business (Documento Único Electrónico, DUE). You can find the points on the PAE website.
Accountant, lawyer: we found no official recommendation; we have collected firms on the islands under accountants and legal services.
Sources: Ley 19/1994, articles 29, 31, 41, 42, 43 and 44 and annex; Regulations (EU) 651/2014 and 2023/1315; European Commission (GBER review); Gobierno de Canarias, press release of 8 June 2023; Consorcio de la Zona Especial Canaria; Real Decreto Legislativo 8/2015 (LGSS), articles 305 and 308; Ley 20/2007, article 38 ter; Real Decreto-ley 13/2022, fifth transitional provision; Seguridad Social; Orden HAC/1526/2024; Agencia Tributaria (AEAT); Ley 37/1992 (IVA), article 3; Decreto Legislativo 1/2025 (IGIC), articles 32 and 89; Decreto-ley 3/2026 (Canarias); Agencia Tributaria Canaria (ATC); Real Decreto 240/2007, article 3; Ley Orgánica 4/2000, article 37; Real Decreto 1155/2024, articles 83, 85 and 205; PAE.
Cover photo (cropped): the Edificio de Usos Múltiples II, home to several Canary Islands Government departments, Santa Cruz de Tenerife. Koppchen, CC BY 3.0, via Wikimedia Commons.
