- Novara Capital Group
What makes the Canary Islands different?
The differentiating factors that make the Canary Islands unique and help their companies to go outside and also attracts foreign investment are:
Favorable conditions and adequate infrastructure to generate innovation:
The public system of Innovation and Development (R & D) is composed of Universities and research centers. Canarian universities and knowledge centers have been specializing in priority areas and have been economic development tractors of the region (for example marine sciences, astrophysics and, energy, among others).
The economy of the Canary Islands also has unique R & D infrastructures, among which are:
- The Canary Islands Oceanic Platform (PLOCAN), a high competent center in the marine-maritime sector that provides an infrastructure for scientific development and technological research.
- The Canary Islands Institute of Astrophysics (IAC) whose main purposes are astrophysical research, scientific instrumentation development (linked to astronomy) and, the training of researchers.
- The Technological Institute of the Canary Islands (ITC) that carries out activities framed within the fields of research, development, and innovation, mainly in the areas of energy, water, and cleantech.
The island also has a technology parks network that stimulate and manage the flow of knowledge and technology among universities, research institutions and companies. The aim is to promote the creation and growth of innovative companies through incubation mechanisms and value-added services, in addition to high-quality spaces and facilities.
In the Canary Islands, there are collaborative spaces that come from the private initiative, united through the Canary Association of Collaborative Spaces (ACEC), seeking to attract and retain talent, focusing on the development of a digital and collaborative economy.
There is an increasing commitment from the Government of the Canary Islands that encourage innovation and technologies in the private sector through public policies.
Among the actors that promote this area are the Ministry of Economy, Industry, Commerce, and Knowledge, financing lines managed by the Society for Economic Development of the Canary Islands and the Innovation Bonus Program (INNOBONOS).
The Canary Islands are very well digitally connected with the world, this help to position the Canary Islands as an optimal territory for the establishment and development of any economic activity done "remotely", in particular, those related to the IT sector and communications.
A large number of transcontinental fiber-optic submarine cables allow the islands to be connected to the outside and between islands optimally. This situation makes the Canary Islands one of the most important submarine communications knots at a global level, Its extensive satellite coverage (around 50 satellites provide service in the islands) and the D-ALIX data center complete the scenario for an excellent ICT connectivity.
Other examples of relevant infrastructure in the Canary Islands are the Teide-HPC supercomputer,(the second most powerful in Spain), and the IT Demonstration Center for Tourism Innovation.
Regarding the penetration of IT infrastructure into the economy, it can be highlighted that in recent years there has been an increasing evolution of Internet access, more use of new technologies and e-commerce consumption. This is a consequence of social evolution, private investment and, the modernization policies promoted by the Public Administration. An example of these are the actions carried out by the Ministry of Economy for the deployment and implementation of necessary infrastructures to facilitate the access to high-speed broadband on the islands of La Gomera and El Hierro.
Lastly, the level of IT equipment in the Canary Islands is the same of any developed country and similar to the Spanish national average. The internet access in the Canarian household is 82.1% (in Spain in 81.9%).
As a consequence of the economic crisis, there has been a wage reduction throughout Spain including the Canary Islands. This situation represents more competitiveness with respect to other European territories with higher wages, such as France or Germany. However, the labor cost of an unskilled person is not competitive in comparison to India or China.
In the fourth quarter of 2017, the archipelago was the autonomous community with the lowest labor cost per hour, € 17.42, while for Spain was € 20.79. According to Eurostat data, the countries with the highest labor cost are Norway (€ 51.2), Denmark (€ 41.3), Belgium (€ 39.1), Sweden (37, € 4) and France (€ 35.1).
Also, as stated by Eurostat data, 26.6% of the Canarian population between 25 and 64 years old have higher education. Spain in total has a percentage of 35.1%, in Germany 27.6%, in Ireland of 42.8%, in France 34.1% and in Denmark 37.1%.
As we can see, the mix "qualification-labor cost" in the Canary Islands is Highly competitive within the European Union. This represents a short-term opportunity for investment attraction.
Besides labor costs, many other costs are also more competitive in the Islands. For example, the office square meter leasing is 15€ while in London is 90€ and Paris 68€. The gasoline has an average cost of 0.95€ per liter while in Germany is 1.43€/liter and Ireland 1.39€/liter.
All these factors represent a significant reason for the attraction of activity and investment in all sectors and activities that can be done in an office and/or need operative personnel (call centers, back office, procurement and development centers, R & D, etc.)
In another article, we discussed the benefits of open a subsidiary or relocate your Headquarters to the Canary Islands. Now, we show three aspects explaining why the islands are so unique for attracting investment.
There are big companies that already set up a contact center, a subsidiary or a factory under the ZEC regime.
If you want to enjoy the benefits or you want to have more information, please don´t hesitate in contacting us, our consultants will be glad to advise you.
Novara Capital Group is an international tax & capital investment consulting firm. We specialise in Corporate Structuring, European Union Tax Incentives, IP Positioning, and Transactions / M&A. We provide intelligent corporate structures, advice, and an integrated service which cross delivers in businesses. We advise companies globally to accelerate international growth, optimise net profits, and enhance equity value leveraging Intellectual Property and Licences. Our in-house experts specialise in International Tax Law, Company Law & Cross Border Jurisdiction, Investment & Asset Management, Mergers & Acquisitions, and Operational Management.
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