Key Considerations For Moving To The Canary Islands

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Many people consider the idea of moving abroad to be a distant fantasy. The increasing spread of modern technology and convenient transportation make it much easier than you think to slow your life down and move it permanently to sunnier climes.

The Canary Islands is a very attractive target for both a happy retirement and a more pleasant working life. There are seven main islands to choose from, offering you an impressive array of new environments. If you're considering a permanent move to the Canaries and make it your home, your decision needs to reflect careful thought on some key factors:

Local news sites offer a variety of info to get things rolling.


Businesses Operating In The Canaries

The Canary Islands are especially attractive for businesses looking to move abroad thanks to their highly favourable tax policies. The looming uncertainties of Brexit have only made this sort of migration more attractive. These are some of the most significant incentives for businesses:

  • 1. Favourable VAT. While the Islands are a part of the European Union, they fall outside the scope of Spain's mainland value-added tax (VAT). Rather than the standard Spanish rate of 21 per cent, the Islands pay IGIC at a general rate of just seven per cent.

2. West African tax credits. Canary Island businesses can take advantage of a 15 per cent tax credit on certain investments (those made in subsidiary incorporations) and certain advertising expenditures.

3. The Reserve for Investment in the Canary Islands (RIC). This scheme allows Island businesses to reduce taxable profits if they reinvest in qualifying local assets - primarily limited companies and sole traders. The profit reduction can be as high as 90 per cent.

There are many additional tax deductions that favour businesses in the Canary Islands over those subject to the general Spanish tax deductions. Deductions are available for research, development, and innovation. Asset acquisition and specific types of businesses (like film production) are eligible for even more deductions.

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Healthcare

Provided you register as a worker in Spain and contribute to the national insurance program, you effectively become a Spanish national in terms of access to the state healthcare system. If you retire to the Canary Islands while receiving an old age state pension from the UK, you can register for free Spanish healthcare by completing the Overseas Healthcare Team's S1 form. Spanish law provides protected, universal access to healthcare for pregnant women and children.

If you fall outside all of these groups, you can still be covered for state-run healthcare. Regional health authorities in the Canary Islands offer a pay-in scheme, the 'Convenio especial'. This public scheme is available throughout Spain, but it is separately managed in each autonomous region.

The Convenio especial allows you full access to healthcare in exchange for a monthly fee. This is €60 for individuals under 65 years of age and €157 for those above. Note that this scheme does not cover any prescriptions, so you would be responsible for 100 per cent of your prescription costs. The Convenio especial does not currently cover an EHIC. If you plan to travel, private insurance is a must. Check local coverage in the region you plan to travel to carefully before departing.


Retiring In The Canaries

Retirement abroad is an attractive option for many people as they come to the end of their careers. Spain is a particularly popular destination for UK retirees thanks to its comfortable climate and low cost of living. Although personal allowances on income tax are lower than in the UK, the effective standard of living your savings will buy you is significantly higher.


The Canarian Special Zone (ZEC)

The Canary Islands enjoy a specialised low-tax designation authorised in 2000 by the European Commission. This offers a significant slate of benefits to new companies that comply with the rules laid out by the ZEC Consortium Board. Some of the available advantages include:

1. A Corporate Income Tax rate reduced from the current 25 per cent to just four per cent.
2. Property Transfer and Stamp Duty Tax exemption.
3. IGIC exemption on imports and trade with other companies within the ZEC.
4. Tax at source exemption on ZEC company dividends sent to a parent company operating outside Spain. Such dividends are still subject to the International Double Taxation Agreement upon arrival.

The main qualifications required for a ZEC company:

a. Founded as a new company or branch.
b. At least one permanent Canary Islands resident serving as an administrator.
c. Minimum investment of €100,000 or €50,000 depending on location.
d. Creation of at least five or three jobs depending on location.

The investment and job creation requirements apply at the higher figures for businesses on the capital islands of Gran Canaria and Tenerife. The lower figures apply to companies on the smaller islands.

Owning a property in Tenerife or any of the other islands is a fantastic proposition and many have made these islands their home as well as their futures via investments.

For more information about property investments in Tenerife and the Canaries, take a look at this list of Tenerife estate agents to get a proper assessment of the specific area of interest and your investment type.

Make sure you look here fir Tenerife auction property as there are a few on the market already.

 

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