Canary Island Economy

The economy of the Canary islands is based primarily on tourism, which makes up 32% of GDP. The Canaries receive about 10 million tourists per year. Construction on the islands makes up nearly 20% of the GDP and tropical agriculture products are grown for export to Europe and the Americas.

The Canary Island economy is about €25 billion per year and growth is fueled mainly by huge amounts of foreign direct investment, mostly to develop tourism real estate (hotels and apartments). Additionally, the EU allows the Canary Island’s government to offer special tax concessions for investors who incorporate under the as Zona Especial Canaria (ZEC) regime and create more than 5 jobs.

The Canary islands are outside the European Union customs territory and VAT area. Instead of VAT there is a local Sales Tax which has a general rate of 5%. Goods subject to Spanish customs, excise duties, and the Value Added Tax are therefore significantly cheaper in the Canaries creating a robust shopping culture on the islands.

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