TAX REBATE CANARY ISLANDS FOR FILM PRODUCTIONS 2025
What is the deduction for investments in Spanish film productions in the Canary Islands ("Tax Rebate")?
According to Article 36.1 of the Law on Corporation Tax, in order to be able to apply the deduction for investments in Spanish productions of feature films and audiovisual series of fiction, animation or documentaries that allow the production of a physical support prior to their industrial serial production that are made in the Canary Islands, the investing entities must fulfil the general requirements that are established for such deductions in Spanish territory, and which are detailed below.
The deduction percentages established in the aforementioned Article 36.1 of the Law on Public Limited Companies have been increased, and the percentages to be applied are as follows:
- 54 per cent with respect to the first million of the deduction base. This percentage may be applied if the aid does not exceed 50 per cent of the eligible costs, as established by Regulation 651/2014 of the Commission of the European Union, which determines the categories of aid compatible with the internal market.
- Of 45 per cent on the excess of the amount applied as established in the previous paragraph.
These limits applicable to the deduction may be increased in the case of La Palma, La Gomera and Hierro up to the joint limit of 60/90 per cent, or 70 per cent.
In addition, Law 19/1994 establishes, with effect from tax periods beginning on or after 1 January 2021, that the maximum amount of the deduction to be applied for Spanish film productions made in the Canary Islands is set at 36 million euros per feature film and 18 million euros per episode in the case of series.

TAX REBATES FOR AUDIOVISUAL PRODUCTIONS IN THE CANARY ISLANDS
What is the deduction for investments in Spanish film productions in the Canary Islands ("Tax Rebate")?
According to Article 36.1 of the Law on Corporate Income Tax, in order to be able to apply the deduction for investments in Spanish productions of feature films and audiovisual series of fiction, animation or documentaries that allow the production of a physical support prior to their industrial serial production that are made in the Canary Islands, the investing entities must fulfil the general requirements that are established for such deductions in Spanish territory, and which are detailed below.
The deduction percentages established in the aforementioned Article 36.1 of the Law on Public Limited Companies have been increased, and the percentages to be applied are as follows:
- 54 per cent with respect to the first million of the deduction base. This percentage may be applied if the aid does not exceed 50 per cent of the eligible costs, as established by Regulation 651/2014 of the Commission of the European Union, which determines the categories of aid compatible with the internal market
- Of 45 per cent on the excess of the amount applied as established in the previous paragraph.
These limits applicable to the deduction may be increased in the case of La Palma, La Gomera and Hierro up to the joint limit of 60/90 per cent, or 70 per cent.
In addition, Law 19/1994 establishes, with effect from tax periods beginning on or after 1 January 2021, that the maximum amount of the deduction to be applied for Spanish film productions made in the Canary Islands is set at 36 million euros per feature film and 18 million euros per episode in the case of series.
What essential requirement must be fulfilled in order to obtain the deduction for investments in Spanish film productions in the Canary Islands ("Tax Rebate")?
In order to obtain this deduction in the Canary Islands, in addition to the general requirements that will be mentioned, the Canary Islands Audiovisual Production Certificate must be obtained , a document issued by the Canary Islands Government that certifies that an audiovisual work meets the requirements established for it to be considered a Canary Islands production. This certificate is essential for production companies to be able to access the tax incentives and specific benefits of the Economic and Fiscal Regime of the Canary Islands.
The requirements to obtain this certificate are as follows:
1.Registration in the Register of Audiovisual Companies of the Canary Islands: This register is established for individuals or legal entities that carry out cinematographic or audiovisual productions , or distribution and exhibition activities, as well as laboratories, filming and dubbing studios, among others.
2. Spanish nationality of the production: The production must meet the criteria established at national level to accredit Spanish nationality.
3. Contribution of the Canarian producer: In the case of general production, the contribution of the Canarian producer must exceed 20% of the total cost of the audiovisual work. In the case of financial co-production, the contribution of the Canarian co-producer must not be less than 10% or more than 25% of the production cost.
4. Filming time in the Canary Islands: Part of the filming must take place in the Canary Islands. The minimum shooting days with the first filming unit, in interiors or exteriors, vary according to the budget of the production:
(a) Real image feature films: if the budget is less than 2 million euros, the minimum shooting time in the Canary Islands must be 11 days. If the budget is between 2 and 4 million euros, the minimum shooting time must be 14 days. If the budget is between 4 and 8 million euros, the minimum time must be 16 days. And if the budget is more than 8 million euros, the minimum time must be 18 days.
Exception: In the case of making a minimum accredited expenditure of 15 percent of the budget on post-production processes in the Canary Islands, the minimum shooting required is reduced to 9 days.
b) Live-action series: At least 20% of the filming time of the episodes comprising a season must take place in the Canary Islands. Exception: The percentage is reduced to 15% if a minimum accredited expenditure of 15% of the budget in post-production processes in the Canary Islands is accredited.
c) Documentaries: No minimum shooting time in the Canary Islands is required.
d) Animated works: If the budget is over 5 million euros, the minimum shooting time in the Canary Islands must be 15% of the production time. If the budget is less than 5 million euros, the minimum time must be 20% of the production time. The rendering work cannot exceed 20% of the production time corresponding to the Spanish part.
5. Hiring of personnel with fiscal residence in the Canary Islands: In the case of feature films and fiction series, at least one person from the creative staff (director, director of photography, scriptwriter, composer...); and at least nine people from the technical staff belonging to a minimum of five different work teams, such as production, direction, camera, sound, art, wardrobe, make-up, special effects or post-production, among others. In the case of documentaries, at least two people from the creative staff, including director, director of photography, scriptwriter, executive producer or composer of the original music. And in the case of animated works, the team leader of the production office in the Canary Islands or, failing that, lead animator, senior animator or a dubbing actor/actress in a leading or supporting role.
6. Required documentation: A supporting report must be submitted detailing the identification of the applicant production company, including registration details in the Register of Companies and Audiovisual Works of the Canary Islands; the definitive title and synopsis of the work in Spanish; a list of the credit titles; the total cost of the production, breaking down the contributions of each co-producer and their percentages; the identification of the artistic and technical personnel with fiscal residence in the Canary Islands, attaching certificates of fiscal domicile and copies of employment contracts; the dates and locations of filming, indicating the total duration in interiors and/or exteriors in the Canary Islands; and a copy of the production in digital format for viewing by the Department of the Public Administration of the Autonomous Community of the Canary Islands competent in matters of culture. Subsequently, a copy of the work in perfect conditions of exhibition and conservation must be deposited in the Filmoteca Canaria.
What expenses can be deducted for investments in Spanish film productions in the Canary Islands ("Tax Rebate")?
Regarding the expenses that can be deducted, the basis of the deduction is made up of the cost of the production, expenses for obtaining copies and advertising and promotion expenses paid by the producer, up to a limit of 40% of the cost of the production. This total is reduced by the amount of the subsidies received to finance the investments giving entitlement to the tax deduction. And at least 50 percent of the deduction base must be expenses incurred in Spanish territory.
Who can benefit from the deduction for investments in Spanish film productions in the Canary Islands ("Tax Rebate")?
Producers whose economic activity is based in the Canary Islands can benefit from the tax rebate.
How is the tax rebate for investments in Spanish film productions in the Canary Islandsobtained ? ("Tax Rebate")
The amount of the tax rebate is the tax credit to be deducted from the corporate tax liability. In the event that there is not enough to apply the full amount of the deduction, the remaining amount can be deducted in the following tax years.
What is the deduction for investments in foreign film productions in the Canary Islands ("Tax Rebate")?
In the case of producers with tax residence in the Canary Islands who carry out a foreign production (therefore being a production service company), they can deduct up to 54% of the first million of eligible expenses for audiovisual works in general, and up to 45% of the rest of eligible expenses in Canary Islands territory, except in the case of animation works which can be deducted from eligible expenses that reach 200,000 euros.
The maximum deduction limit is 36 million euros per feature film, and 18 million euros per episode in the case of series.
Which international productions can obtain a tax rebate for investments in foreign film productions in the Canary Islands ("Tax Rebate")?
Foreign productions are those audiovisual works such as feature films, fiction and animated series or documentaries that do not qualify as Spanish and therefore have not obtained a certificate of nationality that accredits their Spanish nationality. In order to obtain the tax deduction, these productions must have an overall minimum cost of 2 million euros.
What expenses can foreign film productions in the Canary Islandsdeduct ("Tax Rebate")?
Expenses incurred in the Canary Islands that are directly related to the production can be deducted, such as creative personnel if they are tax resident in Spain or in a member state of the European Economic Area, as well as the expenses of using technical industries and other departments and suppliers related to the production, as well as pre-production and post-production expenses.
Eligible expenses that may be subject to tax deduction are detailed in Law 27/2014, of 27 November, on Corporate Income Tax.
Who can benefit from the deduction for investments in foreign film productions in the Canary Islands ("Tax Rebate")?
Production companies or production service companies that have their tax domicile in the Canary Islands, that are registered with the Instituto de la Cinematografía y de las Artes Audiovisuales and that have made a feature film or foreign audiovisual work are eligible for the tax rebate for investments in film productions.
How do you obtain the tax rebate for investments in Spanish film productions in the Canary Islands ("Tax Rebate")?
The amount of the tax rebate for eligible expenses is deducted from the corporate tax liability from the tax period in which the production is completed.
What advantages does the Canary Islands Special Zone (ZEC) offer?
Production companies and those involved in audiovisual production can be incorporated as a ZEC entity, which means that they are taxed at a reduced rate of 4 per cent on Corporation Tax instead of the general rate in force in Spain of 25 per cent if the following requirements are met:
1.Incorporation of the entity: The entity must be a legal entity or a newly created branch. Likewise, it is compulsory for the entity to have its registered office and effective place of management within the geographical area of the Canary Islands.
2.Residence of the Administrators: At least one of the administrators of the entity, or in the case of branches a legal representative, must reside in the Canary Islands.
3. Initial investment: For entities located on the islands of Tenerife and Gran Canaria, a minimum investment of 100,000 euros in fixed assets, whether tangible or intangible, is required. For entities on the islands of La Gomera, El Hierro, La Palma, Fuerteventura or Lanzarote, the minimum investment is 50,000 euros. This investment must be made within the first two years of the entity's registration in the Official Register of ZEC Entities.
4. Job creation: In Tenerife and Gran Canaria the entity must create at least five jobs within the first six months of its registration in the ROEZEC. In the other islands (La Gomera, El Hierro, La Palma, Fuerteventura or Lanzarote) the requirement is at least three jobs in the same period. The entity must maintain this average number of jobs throughout the period in which it enjoys the benefits of the ZEC regime.
5. Economic activity: The entity must carry out economic activities included in the Annex to Law 19/1994, which covers sectors such as services, commerce, industry, information technology, among others. If the entity carries out other activities not included in the ZEC regime, it must keep separate accounts for these.
6. Authorisation and Registration: Prior authorisation must be obtained from the Canary Islands Special Zone Consortium (ZEC) before commencing activities. Once authorisation has been obtained, the entity must register in the Official Register of Canary Islands Special Zone Entities (ROEZEC).
Which audiovisual companies can benefit from the tax regime of the Canary Islands Special Zone?
The activities authorised for development in the Canary Islands Special Zone (ZEC) are production, production services, assistance in filming, post-production, photography and advertising and audiovisual distribution.
What tax advantages ("Tax Rebate") can an entity registered in the Canary Islands Special Zone obtain?
Entities registered in the Canary Islands Special Zone (ZEC) obtain a reduced rate of 4% for Corporate Tax; they are exempt from Transfer Tax and Stamp Duty; they are exempt from IGIC on imports, whether of raw materials, investment material or finished products, as well as exempt from tax on operations between entities registered in the Canary Islands Special Zone (ZEC); the International Double Taxation Conventions are applied to them, and they are also exempt at source from withholding tax on the repatriation of capital by applying the Parent-Subsidiary Directive; and finally, the restriction on the application of the deduction for internal double taxation on dividends is eliminated.
The tax deductions obtained by being an entity registered in the Canary Islands Special Zone (ZEC) are compatible with the tax deductions indicated above.
The Canary Islands also have other tax instruments that can be applied to the audiovisual sector, which are compatible with those described above. These instruments include the following:
- Reserve for Investments in the Canary Islands (RIC): This allows for a reduction in the taxable base for corporate income tax of up to 90% of undistributed profits. Production companies can take this Reserve from other companies and invest it in their productions as long as they have the "Canary Islands Audiovisual Work Certificate" granted by the Canary Islands Government. The Reserve can be applied to feature films, short films, fiction series, animation or documentaries that have been produced in the Canary Islands.
- Deduction for R&D and IT: Production companies, as in the rest of Spain, can apply a deduction when the activity carried out is classified as Research and Development, but when the activities are directly carried out in the Canary Islands, the deduction percentage will be 45% (25% in the rest of Spain), reaching 75.6% in the first years of the project's execution. The deduction for technological innovation in the Canary Islands is 45 percent, while in the rest of Spain it is 12 percent. In addition, in the event of insufficient tax liability, the remaining amount that has not been deducted can be requested from the Tax Agency for monetisation. In order to obtain these deductions, a pre-qualification process of the R&D or IT component of the project must be formalised by means of a Reasoned Report. These tax incentives can be applied to digital animation, post-production and video game projects.
What general requirements must Spanish film productions meet in order to obtain a tax rebate in Spain ("Tax Rebate")?
- In general for the Spanish territory, and therefore including the Canary Islands, Law 11/2020 of 30 December on the General State Budget for the year 2021, which is effective for tax periods beginning on or after 1 January 2021, has amended the Corporate Income Tax Law on the deduction for investments in Spanish film productions of feature films and short films, as well as fiction, animation or documentary audiovisual series, establishes a series of amendments to the Corporate Income Tax Act with the aim of boosting audiovisual production and providing a more attractive investment possibility, since it allows that in addition to the producer who makes investments in Spanish feature and short film productions and fiction, animation or documentary audiovisual series that allow the production of a physical support prior to their industrial serialised production, the taxpayer who participates in the financing of these productions can apply the deduction for investments in Spanish film productions if the following requirements are met:
- (a) That the production obtains the certificate of nationality and the certificate accrediting the cultural nature of the work due to its link with the Spanish cultural reality or that it contributes to the enrichment of the cultural diversity of film productions shown in Spain. Both certificates must be issued by the Instituto de Cinematografía y de las Artes Audiovisuales (ICAA), or by the corresponding body of each Autonomous Community with competence in the matter. As a modification of the previous legislation, these certificates are binding for the tax administration competent in the matter, regardless of when they are issued.
- b) That a new copy in perfect condition of the production is delivered to the Filmoteca Española or similar film library of each Autonomous Community that has official recognition.
- c) In order for the taxpayer who participates in the financing of the production to be eligible for the deduction, he/she must sign a financing contract with the producer, which must be presented together with the certificates referred to in section a), and which both the producer and the participating taxpayer must notify to the tax authorities prior to the end of the tax period in which the deduction is generated.
- d) The producer must maintain the same percentage of ownership of the work for 3 years, without prejudice to being able to market all or part of the exploitation rights deriving from it to one or more third parties
What are the requirements to obtain the Spanish nationality certificate for a film production
The certificate of Spanish nationality of a film production is granted by the Instituto de la Cinematografía y de las Artes Audiovisuales (ICAA), and according to the Ley del Cine and associated regulations, the following requirements must be met in order to be granted:
1. The production company must be domiciled in Spain, or in a Member State of the European Economic Area and have a branch in Spain
2. A significant percentage of the actors, technicians and creative staff must be of Spanish nationality or from countries of the European Economic Area, including positions such as director, scriptwriter/s, composer/s, main actors/actresses, etc.
3. The work must be produced in any of the official languages of Spain, in Spanish, in one of the co-official languages or in a country of the European Economic Area. If it is in another language, its artistic or cultural relevance must be justified.
4. The script and the work must have a significant cultural connection with Spain or with the countries of the European Economic Area. This connection is assessed by means of a scale of points defined in the regulations.
5. A percentageof the film's budget must be spent in Spanish territory, including hiring services, renting equipment, contracting personnel, etc.
6. The production must comply with labour, tax and social security legislation in Spain, as well as environmental regulations and established ethical standards.
7. Submit an application to the Instituto de la Cinematografía y de las Artes Audiovisuales (ICAA) including the script of the work, production contracts, detailed budget, certificates of nationality or residence of the technical and artistic team, report justifying the cultural connection of the work and documentation accrediting the expenses in Spain.
The film production must obtain a minimum score in an evaluation system designed by the ICAA, which takes into account the script, language, crew, location and cultural theme.
In the case of international co-productions, the specific regulations on proportional participation of each country must be complied with, depending on whether it is a majority or minority Spanish co-production.
The documentation is submitted by application to the ICAA, which will assess whether the film meets the requirements. If the requirements are met, will issue a certificate accrediting the Spanish nationality of the work.
What are the requirements for obtaining the certificate accrediting the cultural character of a film production
The certificate accrediting the cultural character of a film production.