In recent years, the Canary Islands have emerged as a hub for small and medium-scale innovation in Spain, with the number of companies recognized with the Innovative SME seal increasing by 294% since 2019. This growth can be attributed to a variety of factors, including tax incentives offered by the government, such as a 45% deduction on expenses for activities with research and development compared to 25% on the Peninsula.
The Canary Special Zone (ZEC) is another factor that has contributed to this growth. As a low tax area authorized by the European Commission, this community offers special characteristics in tax matters that make it an attractive location for businesses looking to innovate. Additionally, the Innovative SME seal has been in existence for a decade and is granted to SMEs that meet certain requirements, such as showing an innovative character through patents or reports supporting it or having official certifications that recognize their capacity for innovation.
According to the Ministry of Science and Innovation’s official portal, companies that receive this accreditation can benefit from express aid to innovative SMEs, Social Security contribution bonuses for research personnel that are compatible with tax deductions for R&D and I, and advantages in public contracting processes through Innovative Public Procurement. These advantages have helped to attract more businesses to the Canary Islands and other regions in Spain looking to innovate.
From 2019 to 2024, a total of 991 companies in Spain have been recognized with the innovative SME seal. In 2024 alone, there were over 3,000 companies registered as innovative SMEs. This growth indicates a growing trend in business innovation across all regions of Spain. Navarra leads in the proportion of innovative companies followed by Catalonia, Madrid and Valencian Community while Balearics added most innovations last year.
