Santa Cruz de Tenerife (EFE).- The European Commission has authorized the extension of the period of enjoyment of the tax advantages of the Canary Islands Special Zone (ZEC) until the end of 2032, according to the letter sent this Thursday by the former to the Government of Spain, reports the Canarian Ministry of Finance.
In the letter, the Treasury details in a statement, it is expressly stated that “the European Commission takes note that the ZEC regime (…) will be implemented, from January 1, 2024 in accordance with article 15.4 and other applicable regulations of the future General Regulation of Exemption by Categories, subject to some specific conditions regarding, in particular, the period during which the beneficiaries could enjoy the tax advantages, which the Spanish authorities plan to extend until the end of 2032″.
The acting vice president and counselor for Finance, Budgets and European Affairs of the Government of the Canary Islands, Román Rodríguez, appreciates this communication from the Commission inasmuch as “it includes the demands raised by the autonomous Executive in relation to the ZEC and, specifically, the difference of six years between registration in the Zone and the enjoyment of its tax advantages.
Rodríguez emphasizes that “The Government of the Canary Islands has effectively defended the interests of the archipelago before the Spanish and European authorities and the extension of the ZEC is a magnificent example of the work carried out in the last four years in defense of our jurisdiction.”
The Commission’s authorization comes after the meeting held by the General Directorate for European Affairs of the Government of the Canary Islands with the Commission last April.
The letter sent today, indicates Rodríguez, puts an end to the issue that had arisen with the latest amendments to article 29 of Law 19/1994, in which the Government of Spain had decided to extend the date of registration in the ZEC until December 31, 2023, extending the validity of the benefit period only until December 31, 2027, to make it coincide with the end of the validity of the regional aid map of Spain.
This option reduced the traditional difference of six years between registration and enjoyment that had been maintained since 2007, which had previously been endorsed on several occasions by the European Commission.
The difference between registration and enjoyment is justified by the need to provide legal certainty to companies that register in the ZEC at the end of the period of validity of the aid, guaranteeing them, from now on, that, even if they register in 2026, they will be able to enjoy the incentive, at least, until the end of 2032.
This ensures a minimum period of six years so that these companies can amortize their investments and the creation of jobs associated with registration in the ZEC, the Canarian executive abounds in the note.
The next step, in the hands of the Government of Spain, will be the modification of article 29 of law 19/1994, of modification of the Economic and Fiscal Regime of the Canary Islands, extending the registration period in the ZEC until December 31, 2023 and the enjoyment of tax benefits until December 31, 2032.
The modification must be approved by the Congress of Deputies, with a mandatory report from the Parliament of the Canary Islands, before the end of this year. EFE