In principal it is now relatively simple for a non-resident to establish a registered S.L. company ( a trading company of limited liability ) without having any need for Spanish partners, shareholders or Directors.

The main object of these fiscal rules is to encourage reinvestment by the S.L. companies in the Canary Islands, and to encourage this situation there are now special tax breaks as indicated below :

1. Companies will be able to withdraw up to 90% of their taxable profit for reinvestment in the company itself without being liable for taxation providing:

That the reinvestment is made in the Canary Islands.
The reinvestment must be made within a period of three years of the end of the financial year.
The company must invest in fixed assets such as property or in other items which would prove beneficial to the company´s operations.
2. When purchasing a property in the Canary Islands it is necessary to pay transmission tax (stamp duty) at a rate of 6% of the declared value of the property itself. If, however, the investor purchases the property through their S.L. company, they are exempt from this particular tax. Providing it is not sold within 5 years otherwise the transmission tax is due.

As an example the registration cost saving on a property investment at Euro 120.000 is Euro 7.200, at Euro 210.000. A saving of Euro 12.600, and Euro 300.000 achieves a saving of Euro 18.000.

If the investor wished to rent the property to the tourist market the profits achieved could then be utilised for further property investment or for the purchase of objects that would have a provable benefit to the company.

This is only a brief resume and it is always advisable for investors to seek advise from qualified accountancy practices. If you are interested in pursuing this particular aspect of investment we can certainly connect you with a multilingual Fiscal practice on the island.