Free zone and special zone

The Official State Gazette (BOE), of 28 January 2006, publishes the ministerial order for the creation of a free zone in Santa Cruz de Tenerife Port, which would boost its economic activity and place it on a level with other important port facilities. In this sense, being at the centre of maritime communications and in a strategic geographical location, the new facilities would have the best conditions for promoting foreign trade activities.

The free zone at Santa Cruz de Tenerife Port is a control type II zone for storage, transformation and distribution of goods, which will encompass all port facilities, an ideal addition to the logistics platform in the Canaries. In future, it may be extendable to Granadilla Port.

Accordingly, goods arriving at these ports will be regarded for tax purposes as being outside Community territory. This will mean that firms located in the free zone will be able to benefit from tax exemption or deferred tax treatment and will be able to use facilities for storage and processing.

Investors seeking privileged conditions for their business will find a unique opportunity in Tenerife free zone. This economic regime will result in considerably reduced business costs and will expedite formalities and boost exports.

Santa Cruz de Tenerife Port Free Zone will be administered by a consortium constituted for that purpose and governed by a president, vice-president and a certain number of members in representation of the Ministry of the Economy and the Treasury, the Canary Islands Government, the provincial port authority, Santa Cruz de Tenerife City Hall, Tenerife Island Council, the Chamber of Commerce and the Confederation of Businessmen of Santa Cruz de Tenerife.

For the zone to become operational, authorization was required from the Department of Customs and Special Taxes for byelaws and regulations in order to manage the free zone. These documents have been issued and the first reads as follows: “The aim of the consortium is to establish and manage Santa Cruz de Tenerife Free Zone for the purpose of promoting and boosting activities for industry, commerce and trade, thereby satisfying general interests.

Said consortium may also promote, manage and operate under private law, whether directly or in association with other entities, all nature of properties that are part of its assets located outside the territory of the free zone and that might belong to it by virtue of any deed admissible by law, for the purpose of contributing to the economic and social development and revitalization of its area of influence”.

The declaration of a free zone for Santa Cruz de Tenerife Port is the culmination of a process set in motion by Santa Cruz de Tenerife Port Authority in March 2001, when proceedings began to delimit a free zone in the port area.
These proceedings were closely monitored by the port authority and in 2002 a collaboration agreement was signed with SOFITESA S.A. for precise information at all times about the progress of the application.

Canary Islands Special Zone – Zona ZEC
For many investors, Tenerife offers tax arrangements that are exceptional within the European Union—incentives included in the so-called “Zona Especial Canaria” (ZEC) or Canary Islands Special Zone. The ZEC is a low tax zone created within the framework of the Economic and Fiscal Regime for the Canary Islands for the purpose of promoting the region’s economic and social development and diversifying its productive structure.

The Canary Islands Special Zone was authorized by the European Commission in January 2000 and will remain in force until 2019.

Features
The benefits offered by the ZEC can be enjoyed by industrial, commercial or service companies whose activities are part of a list of approved activities that are set down in Royal Decree 2/2000.

The ZEC encompasses the entire territory of the Canary Islands with certain special features:
Companies whose target is the provision of service activities may operate in any part of the Canary Islands.
Companies whose target is the production, processing, handling and marketing of goods shall be restricted to specific areas destined for such purpose.
Conditions for entitlement to ZEC benefits
Current rules and regulations are summarized in the following conditions:
Be a newly created company with headquarters and effective management in the geographical scope of the ZEC.
At least one of the administrators shall be resident in the Canaries.
Invest a minimum of 100,000 euro* in fixed assets within the first two years after authorization is granted.
Create at least five work posts* within six months after authorization and maintain this average for the years the company is registered in the ZEC.
The object of the company established in the ZEC shall figure among the list of activities set down in Royal Decree 2/2000.
*Islands with capital cities: Tenerife and Gran Canaria. *Islands with no capital cities: La Palma, La Gomera, El Hierro, Fuerteventura, Lanzarote = 50,000 euro of investment and 3 work posts.

www.sofitesa.com
www.proexca.es
www.zec.org