Specialities of the Tax System

Regulation: Articles 43 Law 19/1994 and 30 bis LIS

Entities of the ZEC will pay Corporate Tax with the following specialties:

1. They will apply the special tax rate of 4 percent that part of the tax base that corresponds to the operations that they materially and effectively carry out within the geographic area of the ZEC.

   Keep in mind:

   According to the provisions of the Fourteenth Additional Provision bis of Law 19/1994, of July 6, in the case of branches of the ZEC of entities with tax residence in Spain , the application of the special tax rate will not prevent said entities from forming part of a tax group that applies the tax consolidation regime provided for in Chapter VI of Title VII of the LIS.

   In these cases, the part of the tax base of entity that forms part of a tax group and that is attributable to the ZEC branch will not be included in the individual tax base of entity for the purposes of determining the tax base of the tax group, being the subject of a separate declaration in the terms that are determined by regulation (see the section on how ZEC entities must complete form 200 ).

2. They will keep their accounting in accordance with the provisions of the Commercial Code and other accounting regulations that apply to them, with the following specialties:

   1. They must individualize in separate accounts the operations that must appear in the numerator of the fraction by which the percentage to be applied to the tax base is calculated to determine the portion that will be taxed at the special rate.

   2. They must keep separate accounting records from those kept by the branches to which the benefits of the ZEC do not apply.

   3. must include in the report breakdown of the part of the profit and loss account, as well as of all those accounts that reflect the application of the profit, which comes from the operations carried out effectively and materially in the geographical area of the ZEC.

3. Entities in the Canary Islands Special Zone will apply the minimum taxation regulated in article 30 bis of the LIS, taking into account that the positive tax base on which the 15 percent percentage referred to in section 1 of the aforementioned article 30 bis of the LIS is applied will not include the part thereof corresponding to operations carried out materially and effectively in the geographical area of said Zone that are taxed at the special tax rate of 4 percent. You can consult the general rules for calculating minimum taxation in Chapter 6 of this Practical Manual.