ECONOMIC AND FISCAL REGIME OF THE CANARY ISLANDS: MAIN MODIFICATIONS INTRODUCED BY ROYAL DECREE-LAW 31/2021 of december 28

The Royal Decree-Law 31/2021, of December 28 (published in the BOE of December 29, 2021), extends certain terms related to the Canary Islands Special Zone (ZEC) and the anticipated investments of future allocations to the Reserve for Investments in the Canary Islands (RIC).

Specifically, with effect from January 1, 2022, the following modifications are introduced in Law 19/1994, of July 6:

RIC –  Reserve for Investments in the Canary Islands: Modification of article 27.11 of Law 19/1994

Law 19/1994 allows advance investments to be made, which will be considered as materialization of the RIC endowed with a charge to benefits of the period in which the investment is materialized or in the three subsequent ones, provided that the other requirements established by the the law are met. 

As a novelty, these investments can be made against profits obtained until December 31, 2023 (until now, December 31, 2021).

ZEC: Canary Islands Special Zone: Modification of article 29 of Law 19/1994

The validity of the ZEC has been extended to December 31, 2027 (previously, December 31, 2026), extendable with prior authorization from the European Commission.

The authorization of the registration in the Official Registry of ZEC Entities (ROEZEC) has been extended to 2023 and will be limited to December 31, 2023 (until now the deadline was December 31, 2021).

In any case, regional aid (which includes the tax incentives of the REF, Economic and Fiscal Regime of the Canary Islands) must have the authorization of the European Commission, which conditions the effectiveness of these  modifications to the obtaining of such authorization.