FREQUENTLY ASKED QUESTIONS

Everything you need to know about tax and accounting in the Canary Islands

FREQUENTLY ASKED QUESTIONS

Everything you need to know about tax and accounting in the Canary Islands

Is it better to be self-employed or set up a business in the Canary Islands?

This really depends on your circumstances and the type of business you plan to open or run. If you’re starting small we often recommend setting up as a self-employed “Autonomo” because it’s more straightforward and you don’t need to make any investment to get started. It’s also usually better in terms of the amount of tax you’ll pay at the start.

In that case, you would look at becoming an SL company once your net profit reaches between €40,000 and €60,000 a year, at which point it becomes more beneficial tax-wise.

In some situations, it may be better to start as an SL, especially if it’s important for you to have liability coverage.

It also depends on how big your ambitions are and how large you plan to grow, as well as how fast. If you plan to grow a large company in a small amount of time, there is an incentive from the government for new SL companies allowing you to pay only 15% tax instead of 25% for the first two years. There is a catch though. If you’ve been working as an “Autonomo” in the same industry, you can’t take advantage of this incentive, it only applies if you set up an SL company straight away when you start working in that type of activity.

We’ll look at your business model, projected earnings and growth and advise you as to the best option to get up and running, and moving forward as you scale.

Still stuck?