In 2009, the Canary Islands Parliament designated the audiovisual sector as a strategic industry. Fifteen years later, the region has evolved from a “cinema tourism” destination to one of Europe’s fastest-growing visual effects and virtual production centers.
On the back of the Islands’ 50% tax rebate and 4% corporate tax rate under the Special District of the Canary Islands (ZEC), the sector is moving from a service operation to a full-cycle capacity, and that transition is beginning to reshape the way international productions plan pre- and post-production in the region.
“Tourism remains the backbone of our economy, but it is unstable,” ZEC Chairman Pablo Hernández said. “Our approach was to diversify: first live-action, then animation, and now VFX. Each layer adds new technical capabilities and stability.”
new industrial layer
Hernández traces its evolution directly to the animation boom. “Some of the artists were sharing skills between animation and VFX,” he explained. “That overlap, plus the growth of technical education, created the conditions for VFX to become widespread.”
Among the early pioneers was Flaming Flames, founded by Ignacio Caicoya, who originally came to open a branch of Spanish powerhouse El Ranchito. “I fell in love with this island,” Kaikoya told Variety. “We started small, literally in our kitchen, and grew organically, one project at a time.”
Flaming Frames’ breakthrough began with “Stags,” shot in Tenerife, followed by Anthony Horowitz’s show “9 Bodies in a Mexican Morgue” at Eleventh Hour Films. “That gave us a boost,” Kaikoya said. “We handled the entire 3D pipeline, including plane crashes, environments, and explosions, and proved that we can deliver complex work entirely in-house.”
There are currently around 12 VFX studios operating in Tenerife and Gran Canaria, including 22Dogs, Orca Pictures and Poland’s Platige Image. The company recently established a team on the island to service major Hollywood productions. Hernandez said seven companies are currently registered with the ZEC and benefit from corporate tax relief and generous rebates from the islands.
Catching up with infrastructure such as LEDs
If VFX used to follow off-island productions, that may be about to change. In Gran Canaria, public investment has resulted in the completion of one of Europe’s largest LED volume stages, adding a new layer of capability for in-camera visual effects.
Built in just 18 months and funded through Spain’s National Audiovisual Hub Program, the facility represents the island government’s efforts to close the link between live action, VFX, pre and post. “We didn’t just want a soundstage,” said Nuria Guinotto, coordinator of the Gran Canaria Film Commission. “We wanted a high-end digital infrastructure LED, motion capture and digital lab that would allow production to do everything right here.”
Her colleague Miguel Garcia, who oversaw the technical construction and was responsible for project management of the facility, added: “We benchmarked it against the largest scales in Germany and the UK. The result is curved walls 8 meters high and 40 meters wide, two movable ceilings, and the same LED treatment quality used in the top-of-the-line features.”
The company tested the system late last year on its first large-scale shoot, “The Beast,” directed by Renny Harlin and starring Samuel L. Jackson. “We have proven that we can host international productions at a very high level,” says Guinot Siad. “The next step is to ensure that local businesses and staff can thrive.”
This public-private balance is intentional. “We don’t want to replace local service companies,” Garcia explained. “Our role is to do what small and medium-sized enterprises cannot do: build an infrastructure of big capital and let small and medium-sized enterprises run it and learn from their own production.”
Maria Rua Aguete, head of media and entertainment at Omdia, sees the region’s combination of incentives, competitive costs and expanding technological capabilities as increasingly attractive. “Productions choose the Canary Islands not just for location, but for the technological sophistication and skilled workforce that can deliver high-quality productions in a more demanding market,” she told Variety.
“What’s appealing is the marriage of cutting-edge digital artistry with the island’s diverse natural landscape. It’s a formula for creating visually distinctive content that stands out in an increasingly crowded market,” she added.
community approach
The island’s compact size facilitates continued collaboration between companies. “There’s a strong sense of community here,” Kaikoya says. “We help other studios when the workload changes, which is healthy. This industry is still small enough that everyone knows each other.”
That culture extends to training as well. Local technical schools are now incorporating VFX with specialized colleges such as CIFP and César Manrique, with modules offered by the likes of Spain’s Voxel School, starting to offer a hands-on virtual production and digital arts program co-funded by the island’s council.
“We take interns from these courses and train them on real projects,” Kaikoya said. “Older talent is becoming harder to find, but we are slowly building a base of artists who can grow within the studio.”
technology on the horizon
Beyond infrastructure, the Canary Islands are now home to startups that are pushing the boundaries of imaging science and virtual production. One standout is Volinga AI, a spin-off from Tenerife-based Arquimea Research Center that bridges scientific research and entertainment technology. Its software uses advanced Gaussian splatting techniques to transform real-world locations into photorealistic 3D environments.
“Volinga’s mission is to unleash creativity by removing technological barriers,” the company said. Its tools, already used by studios like Paramount Pictures, Netflix, and Amazon, allow productions to recreate real-world environments much faster and at a fraction of the cost than many alternatives. A recent example: 555 Studios in Brazil cut virtual environment build time by more than half after adopting the Volinga suite.
Another company, Wooptix, has developed effective wavefront phase imaging with significant support, having raised over €10 million ($11.7 million) in a Series C round led by Samsung Venture Investment, with backing from Intel Capital, SETT and others. The technology captures not just the amount of light arriving like a standard camera, but how the wavefront changes – a 3D map of the light field. It is hoped that this will be applied to works. These companies with origins in research highlight a broader trend that Hernández sees emerging: “The Canary Islands are merging technology and film in a way that most regions cannot. There, scientific innovation is feeding directly into the film industry.”
From incentives to innovation
Despite all the investment and optimism, challenges remain. Caicoya points out that VFX, unlike animation and post-production, still falls under Spain’s high minimum spending threshold for tax refund eligibility. “That makes it difficult to attract projects based solely on VFX,” he said. “But awareness is increasing and producers are realizing that they can complete entire sequences here.”
The region’s greatest asset may simply be time. “We’ve grown from a few people to a network of studios and now a complete infrastructure,” Hernandez says. “What’s unique is that everything is happening almost simultaneously. Training, technology and production capabilities are evolving at the same time.”
Guinot has his sights set on a broader mission. “We want to democratize access to virtual production,” she says. “You don’t have to go to Los Angeles or London to learn these tools. We want the next generation, whether they’re from home or abroad, to see the Canary Islands as part of the future of filmmaking.”
