The Canary Islands government has taken the unprecedented step of applying to the Spanish government and the European Union for approval on a 1% corporate income tax, which would be available to international film producers who set up on the islands.
The proposal was put forward by the Canary Islands Special Zone (ZEC, Zona Especial Canaria), which was created within the framework of the Canary Islands Economic and Fiscal Regime (REF), to further incentivise business on the island, including producers contemplating shooting in the Canaries.
“Our proposals have been put forward by the Spanish government and approved by the EU, but implementation of the 1% corporate income tax will have to wait until after Spain’s general elections in November,” Monica Doreste Leander at ZEC told ScreenDaily.
The Canary Islands already offer an impressive 4% corporate income tax to companies registered with ZEC, compared with the average 25% to 35% in the rest of Europe.
Further incentives for international production companies who set up a subsidiary on the island and are approved by ZEC, include a 38% reduction in tax on their total business on the island, plus a 25% reduction in tax for any other international co-producers who worked with a Canary Islands based company on a film project.
If an international producer sets up a subsidiary or new company on the island to receive incentives, that company must have five employees there in the first six months and invest €100,000 in the first two years.
There’s also the benefit of an exemption from paying stamp duty and an exemption from paying the equivalent to VAT on the island for deliveries of goods and services between ZEC and imports, which is hugely beneficial for producers shipping over technical equipment for shoots.
On top of that the Canary Islands government has an annual pot of €1m, which it can distribute among film projects that shoot on the island. The amount of money a project receives depends on certain set criteria, such as how much local crew are used, how long they shoot on the island, local cast etc, and on more selective requirements such as the quality of the script. Funding decisions are made by an independent committee of industry figures from the Spanish mainland.
Major producers are already starting to take note of these incentives and the fact that the islands offer impressive landscapes from subtropical forests to desert landscapes. Warner Bros shot both Clash Of The Titans films on the islands and Paramount’s comedy project Finchley Dreams, starring Sacha Baron Cohen, recently shot on the Canary Island of Fuertaventura with the service support of Spanish outfit Kanzaman Films.