FILM TAX REBATE CANARY ISLANDS 2026

Canary Islands Tax Rebate 2026: Canary film tax deduction and audiovisual tax incentives

The Canary Islands tax rebate is one of the most competitive incentives in Europe for feature films, series, animation and documentaries. In this guide, we provide a practical explanation of the Canary film tax deduction and the Canary Islands audiovisual tax incentives: rates (54% / 45%), maximum caps (36M€ / 18M€), requirements, certificates, deduction base, compatibilities (ZEC, RIC, R&D/IT) and frequently asked questions.

If you are considering shooting in the Canary Islands and need comprehensive support, visit our service categories: Film production company, film production company in the Canary Islands, shooting and production services, post-production and contact.

For the national (Spain) framework and the specific structure for investors/financing, also check our blog articles: Film Tax Rebate in Spain (Art. 39.7 CIT Law) and Film tax incentives in Spain (Tax Credit and Tax Rebate).

2025 legislative update

Spanish productions in the Canary Islands (Art. 36.1 CIT Law): what is the deduction? (“Tax Rebate”)

Under Article 36.1 of the Corporate Income Tax Law (Law 27/2014), production companies that invest in feature films and audiovisual series (fiction, animation or documentary) that obtain the Spanish nationality certificate and the cultural certificate (issued by the ICAA or the competent regional authority), and that also meet the Canary Islands requirement of holding the Canary Islands Audiovisual Production Certificate, may apply the following deduction:

Important: The percentages and limits indicated (54% / 45%, 36M€ / 18M€) apply to tax periods starting on or after 1 January 2021, under the current wording of Art. 36.1 CIT Law. For productions carried out in La Palma, La Gomera and El Hierro, the limit on the deduction against gross tax liability may reach 100% (instead of the general 90%).

Essential requirement: Canary Islands Audiovisual Production Certificate

To access the deduction in the Canary Islands, in addition to the general Spanish requirements (ICAA certificates), productions must obtain the Canary Islands Audiovisual Production Certificate, issued by the Government of the Canary Islands, which confirms that the work meets the conditions to be classified as a Canary Islands production and is thus eligible for incentives under the Canary Islands Economic and Fiscal Regime (REF).

Minimum shooting/production in the Canary Islands

Hiring requirements (tax residence in the Canary Islands)

Deduction base: which expenses are deductible?

The deduction base consists of:

• Production cost of the audiovisual work.
• Costs of obtaining copies and masters.
• Advertising and promotion expenses borne by the producer, up to a 40% cap of the production cost.

Public subsidies received to finance investments eligible for tax deductions must be deducted from this total. In addition, at least 50% of the base must correspond to expenditure incurred in Spain.

Important note: For productions in the Canary Islands, eligible expenditure must be linked to activities carried out in the archipelago and must comply with the requirements of the Canary Islands Certificate (shooting, post-production, crew with tax residence in the Canary Islands, etc.).

Who can benefit and how is the deduction applied?

The deduction is available to producers whose place of effective economic activity is in the Canary Islands. The amount of the deduction is a tax credit to be offset against the gross Corporate Income Tax liability.

If the tax liability is not sufficient to absorb the full deduction in the year it is generated, any unused balance may be carried forward to subsequent tax years, subject to the joint limit of 90% (or 100% in La Palma, La Gomera and El Hierro) of the gross tax liability.

Practical application: The deduction is generated in the tax period in which the certificates (nationality, cultural character and Canary Islands Certificate) are obtained and the investment requirements are met. If the producer is a film production company based in the Canary Islands, it may apply the tax credit directly in its Corporate Income Tax return.

Canary Islands Tax Rebate for foreign productions (production services) – Art. 36.2 CIT Law

Article 36.2 of the Corporate Income Tax Law governs the deduction for foreign productions (audiovisual works that do not obtain a Spanish nationality certificate) carried out by production companies or production service providers with tax residence in the Canary Islands.

Rates and limits (foreign productions in the Canary Islands)

Key clarification (2025): According to AEAT binding rulings (including V0279-23), the requirement is a minimum eligible spend in Spain of 1,000,000€ (or 200,000€ for animation/post-production carried out entirely in the Canary Islands). There is no requirement for a “global minimum production cost of 2M€” for the whole work; the threshold applies to eligible expenditure in Spain.

Eligible expenses (foreign productions in the Canary Islands)

The eligible expenses for the deduction under Art. 36.2 CIT Law are those incurred in the Canary Islands that are directly related to the production:

• Creative personnel with tax residence in Spain or in another EEA Member State.
• Use of technical industries and other vendors with tax residence in Spain.
• Pre-production and post-production costs incurred in Spain.
• Other costs tied to the production in the Canary Islands (as defined in Royal Decree 1514/2018).

Beneficiaries: Production companies or production service providers with tax residence in the Canary Islands, registered with the ICAA, that have carried out a foreign feature film or audiovisual work.

Application: The deduction is applied against the Corporate Income Tax liability from the tax period in which the production is completed. If you need advice on structuring your foreign production in the Canary Islands, see our shooting and production services or contact us.

Canary Islands Special Zone (ZEC): what it is and what advantages it offers

The Canary Islands Special Zone (ZEC) is a special tax regime within the Canary Islands REF that allows film and audiovisual production companies to incorporate as a ZEC entity and pay a reduced 4% Corporate Income Tax rate (instead of the general 25%).

Requirements to qualify as a ZEC entity

• Newly created company or branch with registered office and effective management in the Canary Islands.
• Directors’ residence mainly in the Canary Islands.
• Minimum investment: 100,000€ in Tenerife/Gran Canaria or 50,000€ on the other islands.
• Job creation: 5 employees in Tenerife/Gran Canaria or 3 on the other islands.
• Business activity included in Law 19/1994 (production, production services, shooting support, post-production, photography and advertising, audiovisual distribution).
• Prior authorisation and registration in the ZEC Official Registry (ROEZEC).

ZEC tax advantages

Important: The ZEC regime is particularly attractive for film production companies in the Canary Islands seeking to optimise their tax burden and reinvest in new projects. For more information on how to set up a ZEC entity, see our blog or contact us.

Other REF instruments: RIC and R&D / Technological Innovation (IT)

In addition to the Canary Islands tax rebate and ZEC, the Canary Islands Economic and Fiscal Regime (REF) offers other complementary instruments for the audiovisual sector:

Canary Islands Investment Reserve (RIC)

The RIC allows companies based in the Canary Islands to allocate part of their undistributed profits to a special reserve, reducing their Corporate Income Tax base. The amounts allocated must be invested in eligible assets (equipment, infrastructure, etc.) within a specified period.

R&D and Technological Innovation (IT) deductions

R&D and Technological Innovation (IT) deductions are especially relevant for digital animation, post-production and video game projects. These incentives can complement the tax rebate and optimise the taxation of productions with a strong technological component. For more detail on post-production in the Canary Islands, visit our services page.

General requirements in Spain (ICAA): nationality and cultural character

Generally in Spain (including the Canary Islands), for Spanish productions (Art. 36.1 CIT Law), the following are required:

• Spanish nationality certificate issued by the ICAA or the competent regional authority.
• Cultural certificate issued by the ICAA or the competent regional authority.
• Deposit of a copy with a recognised film library (Filmoteca Española or a regional film library).

Requirements for the Spanish nationality certificate

• Producer domiciled in Spain or in the EEA with a branch in Spain.
• Significant share of the artistic/technical/creative team who are Spanish or from the EEA.
• Language in one of Spain’s official or co-official languages, or in an EEA language (or another language duly justified on artistic grounds).
• Cultural connection assessed through a scoring system (content, locations, etc.).
• Percentage of the budget spent in Spain (at least 50% of the deduction base).
• Regulatory compliance (labour, tax, social security, environmental).
• Application to the ICAA with script, contracts, budget and supporting documentation.

In co-productions, specific rules apply (international treaties, European Convention on Cinematographic Co-production, etc.).

Requirements for the cultural certificate

The cultural certificate confirms that the audiovisual work meets cultural quality criteria and contributes to Spanish film heritage. The criteria include:

• Cultural content (themes, values, representation of Spain’s cultural diversity).
• Artistic and technical quality (evaluation of script, directing, cinematography, editing, etc.).
• Contribution to the sector (training of professionals, technical innovation, etc.).

The application for the cultural certificate is filed with the ICAA (or the relevant regional authority) together with documentation on the work (script, artistic memo, budget, etc.). For further detail on the national framework and financing, see our article on Film Tax Rebate in Spain (Art. 39.7 CIT Law).

Producer’s checklist: documentation and procedures

Frequently asked questions (FAQ): film tax deductions in the Canary Islands

What is the deduction for investments in Spanish film productions in the Canary Islands? (“Tax Rebate”)

Under Article 36.1 of the Corporate Income Tax Law, to apply the deduction for investments in Spanish feature films and audiovisual series (fiction, animation or documentary) that allow the creation of a physical master prior to industrial exploitation and are made in the Canary Islands, investors must meet the general requirements for such deductions in Spain, as detailed above.

The deduction rates provided in Article 36.1 have been increased, and the applicable rates are:

• 54% on the first million of the deduction base. This rate applies if the aid does not exceed 50% of the eligible costs, in accordance with Commission Regulation (EU) 651/2014, which defines categories of aid compatible with the internal market.
• 45% on the excess over the first million.
• These limits may be increased for productions in La Palma, La Gomera and El Hierro up to a joint limit of 60/90% or 70%, depending on the type of project.

In addition, Law 19/1994, effective for tax periods starting on or after 1 January 2021, sets the maximum deduction for Spanish film productions in the Canary Islands at 36 million euros per feature film and 18 million euros per episode in the case of series.

What essential requirement must be met to benefit from the deduction for investments in Spanish film productions in the Canary Islands? (“Tax Rebate”)

You must obtain the Canary Islands Audiovisual Production Certificate (Government of the Canary Islands), which confirms that the work qualifies as a Canary Islands production and is eligible for REF incentives. Key requirements include: registration in the Canary Islands Audiovisual Registry, Spanish nationality, the Canary Islands producer’s contribution, minimum shooting/production in the Canary Islands, hiring crew with tax residence in the Canary Islands and supporting documentation (including deposit with Filmoteca Canaria).

Which expenses are deductible for investments in Spanish film productions in the Canary Islands? (“Tax Rebate”)

The base includes the production cost, costs of obtaining copies and advertising/promotion expenses (up to 40% of the production cost). Public subsidies are deducted, and at least 50% of the base must correspond to expenditure incurred in Spain.

Who can benefit from the deduction for investments in Spanish film productions in the Canary Islands? (“Tax Rebate”)

Producers whose place of effective economic activity is in the Canary Islands. If you are a film production company based in the archipelago, you can apply the tax credit directly.

How is the tax deduction for investments in Spanish film productions in the Canary Islands obtained? (“Tax Rebate”)

The deduction operates as a tax credit against Corporate Income Tax. If the tax liability is insufficient, any unused amount may be carried forward to subsequent tax years, subject to the 90% limit (or 100% in La Palma, La Gomera and El Hierro) of the gross tax liability.

What is the deduction for investments in foreign film productions in the Canary Islands? (“Tax Rebate”)

For production service companies with tax residence in the Canary Islands, Art. 36.2 CIT Law provides for a deduction of up to 54% on the first million of eligible expenses and 45% on the remaining eligible expenses in the Canary Islands. The maximum cap is 36M€ per feature film and 18M€ per episode. The minimum eligible spend in Spain is 1,000,000€ (or 200,000€ for animation/post-production carried out entirely in the Canary Islands).

Which international productions can obtain a tax deduction for investments in foreign film productions in the Canary Islands? (“Tax Rebate”)

These are audiovisual works that are not classified as Spanish (no Spanish nationality certificate). To access the deduction, they must meet the requirement of a minimum eligible spend in Spain of 1,000,000€ (or 200,000€ for animation/post-production carried out entirely in the Canary Islands).

Which expenses can foreign film productions in the Canary Islands deduct? (“Tax Rebate”)

Expenses incurred in the Canary Islands that are directly related to the production: creative personnel with tax residence in Spain or in an EEA state, use of technical industries and related suppliers/departments, and pre-production and post-production costs. The detailed list of eligible expenses is set out in Royal Decree 1514/2018.

Who can benefit from the deduction for investments in foreign film productions in the Canary Islands? (“Tax Rebate”)

Production companies or production service providers with tax residence in the Canary Islands, registered with the ICAA, that have carried out a foreign feature film or audiovisual work. For more information on our shooting and production services, visit our website.

How is the tax deduction for investments in foreign film productions in the Canary Islands obtained? (“Tax Rebate”)

The deduction for eligible expenses is applied against the Corporate Income Tax liability from the tax period in which the production is completed.

What advantages does the Canary Islands Special Zone (ZEC) offer?

A ZEC entity may pay a reduced 4% Corporate Income Tax rate if it meets requirements such as: newly created company or branch with registered office and effective management in the Canary Islands; directors’ residence; minimum investment (100,000€ in Tenerife/Gran Canaria or 50,000€ on the other islands); job creation (5 employees in Tenerife/Gran Canaria or 3 on the other islands); business activity listed in Law 19/1994; prior authorisation and registration with ROEZEC.

Which audiovisual companies can benefit from the Canary Islands Special Zone tax regime?

Authorised activities include: production, production services, shooting support, post-production, photography and advertising, and audiovisual distribution. If you are a film production company in the Canary Islands, you may benefit from this regime.

What tax advantages (“Tax Rebate”) can a company registered in the Canary Islands Special Zone obtain?

A reduced 4% Corporate Income Tax rate; exemption from ITP/AJD; IGIC advantages/exemptions (including import in certain cases); access to double taxation treaties and EU directives (parent–subsidiary); and other benefits. In addition, the ZEC regime is compatible with audiovisual tax deductions (Art. 36 CIT Law).

What general requirements must Spanish film productions meet to obtain a tax deduction in Spain? (“Tax Rebate”)

Spanish nationality and cultural certificates (ICAA or regional authority), deposit of a copy with a recognised film library; and, where an external financier claims the deduction, a financing agreement with the producer and notification to the Tax Authorities before the end of the tax period in which the deduction is generated. The ownership percentage must also be maintained for at least 3 years.