How to Produce Films and TV Shows in the Canary Islands

Film crew shooting on the Tenerife coast with Mount Teide in the background

A legal and tax roadmap for international producers

The Canary Islands are no longer just a beautiful backdrop. They are a serious European production hub with strong tax incentives, mature local crews, film commissions, varied locations and year-round shooting conditions. But the business case only works if the structure is built properly from the start.

That point matters more than ever. Canary Islands Film reported 180 productions in 2025, generating EUR 432 million in revenue and 20,000 direct hires. The slate included feature films, documentaries, fiction series, animation, television programmes and short films. In other words, the industry is established, not experimental.

For foreign producers, the attraction is clear: a tax incentive that can reach up to 54% on the first EUR 1 million of eligible Canary Islands expenditure and 45% on the excess, subject to the applicable conditions and aid-intensity limits. For Spanish productions and co-productions, the framework can also be highly competitive. But none of that removes the need for correct company setup, permits, payroll, indirect tax treatment and audit-ready accounting.

What can be produced in the Canary Islands?

The Canary Islands framework is broad enough for:

  • Feature films
  • TV series and limited series
  • Documentaries
  • Animation projects
  • VFX and post-production work
  • Commercials and photo productions
  • Spanish productions and official co-productions
  • Foreign productions using a local production service company

The first strategic decision is the production model. A foreign service-production structure is not the same as a Spanish production or co-production. The compliance route, certificates, tax treatment, rights position and production paperwork are different, so that choice should be made before major contracts are signed.

Why producers keep choosing the Canary Islands

Tax. The headline incentive is what gets attention, but the real value is that the regime sits within Spain and the European Union. That combination of incentive plus legal certainty is unusual.

Locations. Tenerife Film Commission highlights that Tenerife alone offers more than 321 kilometres of coastline, 31 municipalities, 48% protected natural spaces and two international airports. That range helps productions move from coast to volcanic terrain, urban settings or resort environments without leaving the island.

Operational ecosystem. The islands already have film commissions, production service companies, equipment providers, animation and post-production capacity, local crews and service businesses accustomed to international productions.

Practical base in south Tenerife. Adeje deserves a measured mention here. It does not create a separate tax regime, but it helps explain why Tenerife works in practice. For many crews, the south of the island functions as a real operational base, with hotel capacity, road access, coastal looks and service support in one area. If you want a grounded version of the "capital del cine" idea, Adeje helps make that case. Tenerife Film Commission also lists Adeje among the municipalities used by major productions such as Fast & Furious 6.

EU and Spain legal framework. Productions work within euro-denominated contracts and a familiar framework for corporate, tax, labour, social security and immigration compliance. That predictability is often just as important as the incentive itself.

How the foreign production incentive works

This is the section most foreign producers should understand first. In practice, the beneficiary is usually the Canary Islands or Spanish production service company, not the foreign studio directly. The economic benefit is then reflected through the production services structure.

The official framework for foreign productions generally requires:

  • Eligible expenditure in the Canary Islands of at least EUR 1 million, or EUR 200,000 for animation
  • A minimum global production budget of EUR 2 million
  • Hiring a production company registered with the ICAA and tax resident in the Canary Islands
  • Planning for the required cultural certification and related formalities

The foreign production incentive can reach up to 54% on the first EUR 1 million and 45% thereafter, subject to the specific production profile and aid-intensity limits. Current guidance from the island institutions also points to a cap of EUR 36 million per feature film and EUR 18 million per episode for series.

Eligible expenditure generally includes creative staff with tax residence in Spain or another EEA member state, plus expenditure on technical industries and suppliers directly connected with the production. What matters in real life is not only whether a cost sounds production-related, but whether it is correctly documented, allocated and supportable if reviewed later.

One of the most common misunderstandings is assuming that the foreign producer simply files for the deduction in Spain. That is usually not how the structure works. If the local production company, the contracts and the accounting do not line up with the legal requirements, the incentive can be reduced or lost.

Spanish productions and co-productions

Sometimes a foreign producer should consider a Spanish production or co-production route instead of a pure service-production model. That can make sense for projects with a Spanish financing element, rights sharing, nationality objectives, local subsidy strategy or long-term distribution goals.

For Spanish productions made in the Canary Islands, the deduction base can include production cost plus copies and publicity or promotion expenses, with promotion capped at 40% of production cost. At least 50% of the deduction base must correspond to expenditure incurred in Spain.

Where the production seeks the Canarian Certificate of Audiovisual Production, the applicant company must be registered in the Canary Islands audiovisual registry and meet Canary-specific production conditions. Official guidance includes minimum shooting thresholds for live-action features depending on budget, minimum Canary Islands percentages for series, and local hiring requirements such as one creative role and nine technical professionals across at least five departments for feature films and fiction series.

This is where legal structuring becomes decisive. A co-production is not just a tax choice. It can affect chain of title, financing, creative control, accounting treatment, contractual authority, recoupment and certificate strategy. If the production wants the tax outcome of a Spanish project, it must also accept the legal and operational consequences of that choice.

ZEC is not the same as the film rebate

The Zona Especial Canaria (ZEC) is a separate regime and should never be confused with the film production incentive. The film rebate relates to qualifying production expenditure. ZEC is a corporate tax regime for qualifying entities carrying out qualifying activities in the Canary Islands.

AEAT states that the special 4% tax rate applies to the part of the taxable base corresponding to operations carried out materially and effectively within the geographical area of the ZEC. That is an important limitation. Setting up a company in the islands without real substance, real management and real local operations is not the point of the regime.

For the audiovisual sector, official Canary Islands guidance shows why ZEC often enters the conversation. Qualifying activity blocks can include production, production services, VFX, sound, camera, lighting, carpentry, art department support, casting, locations, dubbing, post-production, photography, advertising, marketing and related support services.

In broad terms, the ZEC route normally requires a new company or branch, at least one manager resident in the Canary Islands, an authorised activity and compliance with substance conditions such as investment or employment thresholds. In practice, this is relevant for groups considering a longer-term Canary Islands presence rather than a single isolated shoot.

IGIC and indirect tax issues

The Canary Islands are outside mainland Spain's standard VAT territory. The local indirect tax is IGIC. For producers, that is not a technical footnote. It affects supplier invoicing, imports, local purchases and how the production cost base is managed.

Canary Islands Film states that a 0% IGIC rate can apply to the production of feature films and fiction, animation or documentary series. The official tax guide also notes that the zero rate can apply to certain supplies, imports and services used for qualifying audiovisual works, but that prior recognition by the Canary Islands Tax Agency is required.

The practical message is simple: IGIC can be favourable, but it should be reviewed before supplier contracts are finalised or equipment starts moving. If a production waits until the accounting close to think about indirect tax, it is already late.

Permits are where productions usually lose time

Permits in the Canary Islands are rarely a single-form exercise. The island, municipality and exact location all matter. Roads, beaches, airports, ports, public buildings, cultural venues and protected natural spaces may each involve different authorities or notice requirements.

Tenerife Film Commission's permit guidance is a good reminder of the operational reality: one island can involve municipalities, roads, protected spaces, airports and specific landmark venues. In coastal areas such as the south of Tenerife, productions also need to think early about public domain rules, local notification and environmental restrictions.

From a risk-management perspective, the worst time to start checking permits is after the shooting schedule is already locked. Permit mapping needs to happen while the production still has room to adapt locations, crew calls and supplier commitments.

Labour, payroll and social security

This is where many otherwise sophisticated productions become exposed. Spanish labour and payroll compliance is not solved simply because the creative side is under control.

A production may need to manage, at the same time:

  • Spanish employees
  • Foreign crew temporarily working in Spain
  • Self-employed local professionals
  • Artists and performers
  • Production service company personnel
  • Freelancers and suppliers
  • Non-resident directors or producers
  • Seconded workers from another country

The key compliance issues usually include contract structure, social security registration, payroll withholding, posted-worker documentation where relevant, classification risk for freelancers, working-time controls, health and safety coordination, and correct treatment of artists and performers. Productions that underestimate this area often discover too late that labour compliance can affect both cost and timetable.

Immigration and work authorisations

Immigration planning should run in parallel with production planning, not after it. EU nationals, non-EU cast, technical crew, executives, visiting producers and service staff may all require different analysis depending on nationality, role, duration of stay, payroll structure and who is treated as the employer.

There is no single "film visa" shortcut that solves everything. The correct route depends on facts. For that reason, travel bookings, contracts and work authorisation analysis should be aligned early, especially on productions with compressed prep periods.

Build the audit trail from day one

The incentive is numbers-driven. A production should be able to support eligible expenditure with invoices, contracts, payment evidence, payroll data, supplier details, tax residence support and a clear allocation of costs to the Canary Islands.

From a tax perspective, the production file should be built from day one. Reconstructing eligible expenditure after the shoot is always more expensive, and sometimes impossible. Good accounting is not a back-office luxury here. It is part of protecting the incentive.

Recommended step-by-step process

  1. Choose the production model: foreign service production, Spanish production, official co-production or local Canary Islands company.
  2. Review tax incentive feasibility before major commitments are signed.
  3. Set the budget and identify qualifying Canary Islands expenditure.
  4. Select the island or islands and map the likely locations.
  5. Choose the local production and service partners.
  6. Assess whether ZEC or a longer-term Canary Islands entity makes sense.
  7. Map permits by municipality, road network, coastline, airport, protected area or venue.
  8. Build the payroll, freelancer and supplier structure.
  9. Address immigration, posted-worker and social security issues in parallel.
  10. Set up accounting, invoicing control and document retention from day one.
  11. Apply for the required certificates and maintain the audit trail during the shoot.
  12. Close the project with the correct tax filings and supporting documentation.

Common mistakes we see

  • Confusing the foreign production rebate with the Spanish production or co-production credit
  • Assuming the foreign producer can claim the deduction directly
  • Using "up to 54%" as a headline without checking the actual production profile and aid limits
  • Waiting too long to check permits
  • Failing to separate eligible and non-eligible expenditure in the accounts
  • Hiring freelancers without checking Spanish labour and social security risk
  • Creating a Canary Islands company without confirming whether ZEC conditions can really be met
  • Ignoring IGIC or import issues until after supplier contracts are in place
  • Leaving cultural or Canarian certificate planning too late

How Strong Abogados can assist international producers

We are not a location agency or a film production company. We are the legal, tax, accounting and compliance partner that helps make the structure work.

Our role can include:

  • Company formation in Spain or the Canary Islands
  • ZEC feasibility and company setup coordination
  • Tax registrations and ongoing tax compliance
  • Accounting and eligible expenditure tracking
  • Payroll and social security setup
  • Contracts with local freelancers and suppliers
  • Immigration and work authorisation coordination
  • IGIC review and invoicing compliance
  • Corporate tax filings and production documentation support
  • Coordination alongside local production service partners

For international producers, that often means one practical benefit above all: fewer surprises between the budget model and the legal reality on the ground.

Official sources and further reading

Conclusion

The Canary Islands can be one of the strongest production jurisdictions in Europe for international film, television, documentary and animation projects. But the real advantage is not the headline percentage alone. It is the ability to combine incentives, permits, payroll, immigration, accounting and local execution without losing control of the production.

If the project is structured correctly from the beginning, the saving can be material. If it is structured badly, the incentive can be diluted by avoidable legal, tax and operational mistakes.

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