Spain free zones in 2023
The Spanish Government operates 4 Free Zones: i) Ceuta and Melilla free zones ii) Cadiz Free Zone iii) Vigo Free Zone and iv) Canary Islands Free Zone. These zones offer multiple benefits including i) reduced corporate tax rate of 4% ii) reduced VAT rate of 7% iii) transfer tax exemption and iv) stamp duty exemption.
- Companies registered under the Canary Islands Special Economic Zone (ZEC) enjoy multiple fiscal benefits which include i) a low corporate income tax rate of 4% and ii) tax exemption on dividend withholding tax and regional indirect tax (IGIC);
- Businesses performing activities relating to industrial, commercial and services are permitted to register under the ZEC;
- Basic requirements to secure ZEC registration approval:
- at least one director/administrator must be resident in the Canary Islands;
- minimum investment commitment of €100,000 within 2 years of obtaining ZEC status and;
- within 6 months of registration approval, the ZEC company must hire at least 5 local staff or relocate existing employees and maintain the same throughout ZEC status.
- Supplementary information on the ZEC website;
- The Canary Islands Tax Incentives – report by PWC Spain.
Ceuta and Melilla
- These two are part of the special tax territories that do not impose the Spanish VAT but rather a reduced tax on imports, production and services (IPSI). The IPSI rates vary from 0.5% to 10%;
- Resident companies enjoy 50% exemption on corporate income tax, 10% in the first 2 years and 11.5% in the third year and thereafter;
- Ceuta and Melilla are considered as free ports, consequently there are no custom duties on import/exports. These make it ideal for trading companies importing from Africa and re-exporting globally or vice versa;
- To enjoy the above tax benefits, companies must appoint an administrator locally to control and manage the company to prove the business has actual substance in these territories.
- Taxation in Ceuta and Melilla – Spanish Chamber of Commerce (in Spanish).
Free zone ports in Spain
- There are in total seven free zone ports in Spain which are located in Vigo, Cadiz, Barcelona, Santander, Sevilla, Las Palmas de Gran Canaria and Santa Cruz de Tenerife;
- These free zone ports all fall under the European Union Customs Union customs allowing free circulation of goods within EU;
- Vigo is known to be the biggest fishing port in the European Union, having the one of the largest cold warehousing facilities;
- The goods that arrive at these ports for re-export purposes are exempt of custom duties and VAT.
- European Commission Trade Desk – information on Spain free zone ports.
|Free zone comparison||Canary Islands||Ceuta and Melilla||Cadiz||Vigo|
|Spanish free trade zone used mostly by which industry?||Construction||Textiles||Manufacturing||Automobile|
|Average annual Industrial space rent per 1000 sq. m.||€35,000||€40,000||€38,000||€35,000|
|How long to set the company up?||5 weeks||5 weeks||5 weeks||5 weeks|
|How long to open company bank account?||4 weeks||4 weeks||4 weeks||4 weeks|
|Quality of Utilities||Good||Good||Good||Good|
|Allowed to sign sales contracts with Spain Clients?||Yes||Yes||Yes||Yes|
|Allowed to invoice Spain Clients?||Yes||Yes||Yes||Yes|
|Corporate tax payable in Spain||4%||4%||4%||4%|
|Corporate bank account||Banco Santander||BBVA||La Caixa||Banco Sabadell|
|Physical office space required||Yes||Yes||Yes||Yes|
|Allowed to import raw materials?||Yes||Yes||Yes||Yes|
|Allowed to export goods?||Yes||Yes||Yes||Yes|
|Can be wholly foreign owned||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff in Spain?||Yes||Yes||Yes||Yes|
|Minimum number of directors||1||1||1||1|
|Minimum number of shareholders||1||1||1||1|
|Tax registration certificate required||Yes||Yes||Yes||Yes|
|Individual shareholders allowed||Yes||Yes||Yes||Yes|
|Corporate shareholders allowed||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors||Yes||Yes||Yes||Yes|
|LLC company allowed?||Yes||Yes||Yes||Yes|
|Annual audited financial statements||Yes||Yes||Yes||Yes|
Frequently asked questions
How to register a company in Spain free zone?In order to incorporate in the Spain free zone, our Clients will be required to apply for approval from the relevant from the authorities. Next steps will include i) reservation of business name ii) preparation of incorporation documents iii) notarization of the documents and iv) tax and business license registration.
Do I need any resident directors to register a company in a Spanish free zone?No. A Spanish free zone company can be 100% foreign owned and does not need any local directors.
What is the corporate tax rate payable if I establish a Spain free zone companyCompanies in the free zone will have to pay corporate tax at the reduced rate of 4%, compared to the standard corporate tax rate of 28% .