🧾 Business Taxes in Tenerife – Overview
Tenerife follows the Spanish national tax system, but with key advantages:
✅ Special tax regime under ZEC (Zona Especial Canaria)
✅ Lower VAT equivalent: IGIC (7%), not standard 21%
✅ Additional tax deductions for investment and job creation
| Tax Type | Applies To | Standard Rate |
|---|---|---|
| Corporate Tax | SL companies | 25% (ZEC: 4%) |
| Personal Income Tax | Freelancers (IRPF) | Progressive |
| VAT / IGIC | Most goods/services | 7% in Canarias |
| Withholding Tax | Employers, landlords | ~15–19% |
| Business Tax (IAE) | Large businesses | If turnover > €1M |
We help you choose between the standard or ZEC regime, depending on your activity and structure.
⚖️ ZEC Tax Regime in Tenerife – Highlights
| Requirement | Condition |
|---|---|
| Location | Must be registered in Canarias |
| Activity | Must be ZEC-eligible sector |
| Investment | ≥ €100,000 (Tenerife) in 2 years |
| Jobs | Create at least 5 jobs |
| Corporate Tax Rate | 4% flat (instead of 25%) |
| VAT | Exempt on most intra-EU services |
💡 We assess your eligibility and handle the ZEC registration process from end to end.
📚 Accounting & Bookkeeping in Tenerife
| Business Type | Bookkeeping Method | Required Filings |
|---|---|---|
| SL Company | Full accounting (PGC) | Annual accounts + ledgers |
| Freelancer | Simplified ledger | Income/expense ledger |
| All | Invoice archiving | 4–6 years (in Spanish format) |
We offer cloud accounting using tools like Quipu, Holded, or your preferred software — fully localized for Canary Islands tax rules.
📅 Tax Filing Schedule
| Form | Frequency | Applies To |
|---|---|---|
| Modelo 200 | Annual | Corporate income tax |
| Modelo 130/131 | Quarterly | Freelancer IRPF |
| Modelo 303 | Quarterly | IGIC (Canary VAT) |
| Modelo 111 | Quarterly | Withheld tax on salaries |
| Modelo 347 | Annual | Informative declaration |
| Modelo 390 | Annual | IGIC summary return |
📌 We submit all models electronically through AEAT and Canary portals.
👥 Hiring Employees in Tenerife – Legal Checklist
If you’re hiring staff (seasonal or permanent), the following rules apply:
| Requirement | Description |
|---|---|
| Employer registration | With TGSS (Social Security) |
| Labor contracts | Must be in Spanish, registered with SEPE |
| Payroll obligations | Monthly salary, IRPF withholding, Social Security |
| Occupational risk plan | Depending on business type |
| Work permits | Required if hiring non-EU nationals |
We provide employment contracts, register workers, and run your monthly payroll filings.
📌 Local Taxes & Licenses in Tenerife
Besides national filings, you may face local municipal taxes:
| Tax / Fee | Applies To |
|---|---|
| Opening License (Licencia de apertura) | All physical premises |
| Signage Tax | If you display a business sign |
| Waste Collection | Based on property size and usage |
| Terrace Fee | If using public sidewalks for seating |
We liaise with Ayuntamiento de Santa Cruz and other local councils to secure all necessary business licenses.
❌ Common Mistakes to Avoid
⛔ Ignoring the IGIC system and using mainland VAT forms
⛔ Missing the ZEC opportunity (huge savings lost)
⛔ Hiring employees without Social Security registration
⛔ Using non-compliant invoices or English-only documentation
⛔ Not filing tax models even during low seasons
🧑💼 Our Services for Tax, Accounting & Hiring in Tenerife
Borderless Lawyers offers:
✅ Tax and accounting setup (SL or freelancer)
✅ Quarterly and annual tax filing for IGIC, IRPF, IS
✅ Payroll and Social Security registration
✅ Labor contracts, employee onboarding
✅ ZEC application and planning
✅ Business license coordination with local councils
📞 Need Help with Taxes or Hiring in Tenerife?
We make compliance simple, whether you run a surf school or tech company — and we can do it all remotely.
👉 Contact us now for tax, payroll, and legal support in Tenerife.