Canary Islands Investment Reserve (RIC): pay less by reinvesting
What is the RIC?
The Canary Islands Investment Reserve (RIC) is a tax incentive under the Canary Islands Economic and Fiscal Regime (REF), regulated by Law 19/1994. It allows for a reduction of up to 90% of undistributed profits in Corporation Tax, or up to 80% in Personal Income Tax for self-employed individuals under direct estimation, provided that this amount is allocated to specific investments in the archipelago within a maximum period of three years.
In practical terms: if your company generates €100,000 in profit, you can allocate up to €90,000 to the RIC, reducing your taxable income to €10,000. At the standard rate of 25%, the savings in tax can exceed €22,000 in a single year, provided the investment is made correctly.
Who can apply for the RIC?
The RIC is not just for large companies. The following can also benefit:
Corporations (Corporate Income Tax)
Self-employed (Personal Income Tax)
Do you have profits in the Canary Islands and are not applying the RIC?
You may be paying more taxes than necessary. At Asesorae, we calculate how much you could save and whether your business qualifies.
What can the RIC be invested in?
The regulations establish a broad catalog of suitable investments:
| Type of investment | Examples |
|---|---|
| New fixed assets related to the activity | Machinery, facilities, software, computer equipment, industrial vehicles, buildings |
| Job creation | Direct and stable jobs linked to the activity in the Canary Islands |
| Shares in Canary Islands companies | Capital subscription in entities with activity in the archipelago or venture capital funds |
| R&D&I | Expenditures on research, development and technological innovation |
| Residential housing for rent | Purchase, development or renovation of a primary residence in the Canary Islands with economic activity of rental |
Investments not allowed in the RIC
Holiday homes and tourist accommodations, assets not related to economic activity, purely financial assets and items that have already benefited from the RIC are expressly excluded.
RIC requirements and deadlines you can't ignore
Applying the RIC incorrectly can be costly. There are four conditions that must be met without exception:
Provision charged to undistributed profits
The reserved amount must come from profits for the year that have not been distributed as dividends or allocated to legal reserves. The maximum limit is 90% of net profit for Corporate Income Tax purposes and 80% of net income for Personal Income Tax purposes.
Implementation within a maximum period of 3 years
The allocated funds must be invested in eligible assets within 3 years of the end of the fiscal year in which the RIC was allocated. If this deadline is not met, the taxable base plus the corresponding late payment interest must be adjusted.
Maintenance of assets for 5 years
The assets used to implement the RIC must remain operational and used for the business activity for at least 5 years. In the case of transport assets and ships, the period is reduced to 3 years or their useful life if shorter.
Separate accounting with express designation
The RIC must be recorded in the company's accounts completely separately from the rest of the reserves and with a name that clearly identifies it. Without this correct accounting record, the allocation may be considered invalid in the event of an audit.
What happens if you don't materialize the RIC within the deadline?
This is the most common and most costly mistake. If the funds allocated to the RIC are not invested appropriately within three years, the Tax Agency will require the regularization of the taxable income for the affected years , plus the corresponding late payment interest. In some cases, it can also lead to penalties . Therefore, planning from the moment the funds are allocated is just as important as the actual use of the incentive.
How we help you with the RIC
The RIC is not managed when filing your tax return. It’s planned from the beginning of the fiscal year: how much to allocate, what to invest in, and how to document it to avoid problems during an audit. At Asesorae, we take care of the entire process.
- We analyze whether your activity generates profits suitable for endowment
- We calculate the maximum amount you can reserve
- We identify the most suitable investments for your profile and timeframes
- We manage the documentation and communication with the Tax Agency
Frequently Asked Questions about the RIC
Can I apply for the RIC if I am self-employed?
How much time do I have to invest the reserved funds?
What happens if I don't invest the reserved funds within the deadline?
Is the RIC compatible with the ZEC?
Can I use the RIC to buy a commercial property?
We manage your RIC
No commitment required · Canary Islands REF
Contents of this guide
Each year without applying the RIC is a tax reduction that does not return
If your business or activity generates profits in the Canary Islands, you still have time to plan for this fiscal year. We’ll get back to you in less than 24 hours.
Do you want to know how much you can save with the RIC?
We are a 100% Canarian tax consultancy. The first consultation is free, with no obligation, and we’ll respond quickly. Tell us about your situation and we’ll show you how to optimize it.
