Fiscal Incentives: The best in the world with up to 54% CASH REBATE & 0 % VAT

In the Canary Islands we have a specific tax regime (REF) which allows us to offer international production companies much greater tax incentives than in the rest of Spain, making it the most powerful and effective production incentive in the world. You’ll be able to pay back your bridge loan in up to 1 year maximum.

54-45% deduction for foreign and Spanish productions (tax/cash rebate)

We provide production services for foreign and Spanish films and series
54% Tax deduction for the first million euros spent in the Canary Islands, and 45% thereafter.
Minimum expenditure: EUR 1 million
The Canary Islands Special Zone (ZEC), setting up companies in the Canary Islands at a reduced rate of 4% on Corporate Income Tax, which is compatible with the above mentioned tax reliefs
36,000,000€ QUOTA deduction maximum limit for feature films
18,000,000€ QUOTA deduction maximum limit per episode, for TV series

Eligible expenditure in the Canary Islands directly related to production

Creative team with residence in the European Community
Spending on technical industries and other suppliers
The local production or service company must be resident for tax purposes in the Canary Islands.
The total cost of production will be at least EUR 2,000,000.
Investments in feature film, TV series, animation, documentary and short film production
54-45% tax credit for investments in Spanish productions and co-productions.
Investments in the production of feature films, TV series, animation, documentaries and short films.

In addition, audiovisual works, except for advertising works, which are produced through a production service, can benefit from 0% IGIC.
If you need more information, please do not hesitate to contact Tom Perry, our EP in the Spanish office.

FAQ´s

Canary Islands Film Tax Incentive / Rebate

To benefit from the Canary Islands film tax incentive, foreign production companies typically need to:

Contract a Canary Islands Service Company: Engage a service production company that is tax resident in the Canary Islands. This local company acts as the legal entity that incurs the eligible expenditure and generates the tax rebate.
Obtain a Cultural Certificate (ICAA): The project must obtain a Cultural Certificate from the Institute of Cinematography and Audiovisual Arts (ICAA), Spain’s national film body. This involves meeting specific cultural and artistic criteria, often through a points-based system.
Obtain a Canarian Certificate: Obtain the Canarian Certificate of Audiovisual Production, issued by the Canary Islands Government, confirming the project’s compliance with regional requirements.
Minimum Local Expenditure:
- For live-action feature films and series: A minimum eligible expenditure of €1,000,000 in the Canary Islands.
- For animation works: A minimum eligible expenditure of €200,000 in the Canary Islands.
Maximum Eligible Expenditure: The eligible expenditure cannot exceed 80% of the total production cost of the work.
Minimum Overall Project Budget: The global budget of the production must be at least €2,000,000.
Credit Requirements: Include specific acknowledgment of the tax incentive, the relevant Film Commission, Government/Regional Government, and filming locatio

Yes, a 100% American film (or any other foreign production) can absolutely qualify for the Canary Islands tax rebate without requiring direct Spanish financial or creative participation in the traditional sense of a co-production. The incentive is specifically designed to attract international productions that utilise Spanish (and specifically Canarian) production services. While some “cultural points” for the ICAA certificate might be awarded for EU/EEA crew or cast, the core eligibility for foreign productions hinges on engaging a Canarian service production company and incurring significant local expenditure.

The Canary Islands offer one of the most competitive film tax rebates in Europe:

50% on the first €1,000,000 of eligible expenditure incurred in the Canary Islands.
45% on the remaining eligible expenditure incurred in the Canary Islands.
This percentage can increase to 54% on the first €1,000,000 of eligible expenditure if the total eligible spend in the Canary Islands exceeds €1,900,000.

Yes, there are specific budget thresholds:

Minimum overall production budget: The global budget of the production must be at least €2,000,000.
Minimum eligible expenditure in the Canary Islands:
- €1,000,000 for live-action feature films and series.
- €200,000 for animation works.
Maximum tax rebate amount per project:
- Up to €36,000,000 for feature films.
- Up to €18,000,000 per episode for series.

No, there is generally no longer an annual cap on the total amount of tax incentives that can be granted across all projects. This is a significant advantage that allows the Canary Islands to attract and accommodate numerous and larger budget productions without being limited by an overall annual ceiling on the incentive pool. The incentive is demand-driven based on qualifying expenditure.

Yes, the Canary Islands benefit from a unique economic and fiscal regime (REF – Régimen Económico y Fiscal) within Spain, which offers several additional tax advantages:

IGIC (Canary Islands General Indirect Tax) instead of VAT: The Canary Islands have their own indirect tax, IGIC, which typically has a standard rate of 7%, significantly lower than mainland Spain’s VAT (which is 21%). For most audiovisual production services (excluding commercials), a 0% IGIC rate can apply, subject to prior authorization from the Canarian Tax Authorities.
Canary Islands Special Zone (ZEC – Zona Especial Canaria): Companies established within the ZEC framework can benefit from a reduced Corporate Income Tax rate of 4% (compared to the general Spanish rate of 25%), provided they meet specific investment and job creation requirements.
Reserve for Investments in the Canary Islands (RIC – Reserva para Inversiones en Canarias): This allows companies to reduce their Corporate Income Tax base by up to 90% of undistributed profits, provided these profits are reinvested in certain assets in the Canary Islands.
Social Security Bonuses: Potential benefits and reductions on social security contributions for hiring local personnel.

Canary Islands Film Production Models: Service vs. Co-production

This chart outlines the key differences between two common ways international producers can work with Canarian companies to benefit from the film incentive. Most international producers find the "Service Production" model to be the most advantageous for accessing the tax rebate efficiently while retaining creative control.

	Service/Foreign Production with a Canarian Company (Most Common for International Producers), Article 36.2	Co-production with a Canarian Company (Less Common for Pure Incentive Access), Article 36.1
Model Type	The foreign production company hires a local Canarian company as a service provider.	A formal partnership (financial and/or creative) is formed between foreign and Canarian companies.
Legal Status	The Canarian company acts as a local vendor or contractor for the foreign producer. It's the entity that incurs eligible expenses.	Both companies are legally involved in the project's ownership and execution, often sharing intellectual property.
Project Control	Full creative and financial control typically remains with the international producer. The Canarian company executes the production plan.	Shared creative and financial control, as defined by the co-production agreement and subject to international treaties.
Tax Incentive Access	The Canarian service company generates the tax rebate based on its local expenditure, which is then passed on to the foreign producer via contractual agreement.	Each co-producer benefits from the tax deduction/rebate based on their percentage of participation and eligible expenses.
Spanish Nationality	The film generally does not acquire Spanish nationality unless specifically desired or required for other reasons (e.g., national funds).	The film typically acquires Spanish nationality, which may open doors to additional national grants but adds complexity.
Complexity	Generally simpler legally and administratively, as it's a client-service provider relationship.	More complex legal and financial structures, requiring adherence to co-production treaties and cultural criteria.
Risk & Ownership	The international producer retains primary risk and ownership of the film.	Risk and ownership are shared according to the co-production agreement.
Foreign Producer Interest	High – Preferred for maximizing the tax rebate with minimal operational and creative interference.	Lower – Chosen when creative collaboration, shared risk, or access to national Spanish funds are primary objectives beyond just the tax rebate.
Tax Rebate Amount	50% on the first €1,000,000 of eligible local spend. 45% on the remaining eligible local spend. Can increase to 54% on the first €1,000,000 if local spend exceeds €1,900,000.	50% on the first €1,000,000 of the Spanish co-producer's eligible investment. 45% on the remaining eligible investment. Can also reach 54% on the first €1,000,000 under specific conditions.
Minimum Overall Budget	€2,000,000 for the total global production budget.	No specific minimum overall budget required
Minimum Eligible Local Spend	€1,000,000 for live-action feature films/series in the Canary Islands. €200,000 for animation works in the Canary Islands.	No specific minimum eligible expenditure. At least 50% of the deduction base (eligible expenditure) must correspond to expenses incurred in Spanish/Canary territory.
Maximum Tax Rebate Amount	Up to €36,000,000 for feature films. Up to €18,000,000 per episode for series.	Up to €36,000,000 for feature films. Up to €18,000,000 per episode for series.
Maximum Eligible Spend (% of Total)	Eligible expenditure cannot exceed 80% of the total production cost.	Eligible expenditure cannot exceed 80% of the total production cost for the Spanish part.
Canarian Co-producer Minimum Financial Contribution	N/A (not applicable, as it's a service agreement).	For financial co-productions, the Canarian co-producer's contribution must be no less than 10% and no more than 25% of the production cost. For general co-productions, the contribution must exceed 20%.
Financial Terms	Clear fee structure for services. The international producer pays the Canarian company for its services, and the rebate is then factored into this payment or transferred separately. No direct financial investment from the international producer into the Canarian company's capital.	Direct financial contribution from both co-producers to the project's budget. Profits (if any) and losses are shared according to participation percentages. Requires audited accounts for each co-producer to verify their respective contributions.
Funding Structure	Primarily driven by the foreign producer's financing, with the tax rebate reducing the overall local expenditure cost.	Often involves shared financing efforts from both co-producers. Each co-producer may seek funding from their respective national and regional sources (e.g., Canary/Spanish co-producer might apply for regional and national grants, which a service production cannot).