When this article was first published, the Canary Islands -- an Atlantic Ocean
archipelago off the northwest African mainland that is a comunidad autonoma
("autonomous community") of Spain -- was a fledgling tax haven that
sought to enjoy the same benefits as its Portuguese cousin, Madeira.
Unfortunately, the Zone Especial Canaria (ZEC) was quietly strangled to death
by the European Union shortly after the OECD's harmful tax competition campaign
The legislation that it was hoped would revitalise the economy of the Islands
was stripped from the corpse. Although the basic skeleton of original law 6/1994
remains, the ZEC is an aspirant tax haven no more.
The money spent by the Spanish government -- a.k.a. the Spanish taxpayer --
promoting the ZEC during its lavish road show has gone up in smoke. The Canary
Islands must continue to rely on foreign tourism and big brother-style handouts
The irony of this piece of intimidation by the bully-boys of Brussels is that
EU taxpayers will now have to support payouts of subsidies to the Canary Islands
-- whereas a viable, Madeira-style financial centre would have allowed this
comunidad autonoma to be truly autonomous.
One problem was that the European Union did not want yet another tax haven
on its doorstep, especially one that is an inexpensive and popular holiday destination.
Thoughts of over-taxed Klaus from Koblenz or Jan from Amsterdam slipping in
a wad of Euros along with the sunscreen must have seemed alarming indeed.