IGIC in the Canary Islands: What it is, types, how it is calculated and who must declare it
IGIC (Canary Islands General Indirect Tax) is the indirect tax levied on the consumption of goods and services in the Canary Islands, with a general rate of 7% compared to the 21% VAT rate in mainland Spain. It is administered by the Canary Islands Tax Agency, not the Spanish Tax Agency (AEAT), and is declared using forms 420 and 425. This guide includes the current tax rate table, the 2026 deadlines, who is exempt, and a calculator to determine the IGIC amount due on any given amount.
7%
General IGIC rate (vs 21% VAT)
6
Different tax rates
€50,000
Exemption threshold for the self-employed
+300
Self-employed and managed SMEs
IGIC in the Canary Islands: key points
- The general rate is 7%. It is the residual rate: it applies to everything that the regulation does not subject to another rate.
- Several types coexist, from 0% for basic necessities to increased rates of 9.5% and 15%.
- Those who pay taxes under the general regime submit form 420 every quarter and form 425 as an annual summary.
- From July 1, 2026, self-employed individuals with a turnover of up to €50,000 per year can opt for the REPEP and not charge IGIC on their invoices.
- Everything is managed through the Canary Islands Tax Agency : its own electronic headquarters, its own forms and its own calendar.
What is IGIC and why does the Canary Islands have its own tax
Its state basis is Law 20/1991. The Canary Islands regulations governing exemptions, tax rates, and special regimes have been consolidated since October 2025 in a single text, approved by Legislative Decree 1/2025 of October 13, which integrated Law 4/2012 and other scattered regulations into a single legal instrument. The Canary Islands Tax Agency is responsible for administering the tax.
If you are considering setting up your business in the islands, this tax is just one part of the Canary Islands Economic and Fiscal Regime, which also includes the Canary Islands Investment Reserve and the Canary Islands Special Zone.
Differences between IGIC and mainland VAT
IGIC - Canary Islands
7%
General rate
- Only in the Canary Islands
- 6 different rates (0% to 20%)
- Forms 420 / 421
- Management: Canary Islands Tax Agency
- Exemption up to €30,000/year
VAT - Mainland Spain and Balearic Islands
21%
General Rate
- Mainland Spain + Balearic Islands
- 3 types (4%, 10%, 21%)
- Forms 303 / 390
- Management: AEAT (Spanish Tax Agency)
- No general exemption threshold
| Concept | IGIC (Canary Islands) | IVA (Mainland Spain) |
|---|---|---|
| Territorial Scope | Canary Islands | Mainland Spain + Balearic Islands |
| General Rate | 7% | 21% |
| Reduced Rate | 3% | 10% |
| Super-reduced Rate | 0% | 4% |
| Number of Rates | 6 rates | 3 rates |
| Managing Body | Canary Islands Tax Agency | Spanish Tax Agency |
| Declaration Form | 420 / 421 | 303 / 390 |
| Exemption for small businesses | Up to €30,000/year | Not Applicable |
If you issue invoices in both directions, it’s important to understand how each transaction is documented. We explain this in the guide to VAT form 303 and the guide to Intra-Community invoice.
IGIC rates in the Canary Islands in 2026
| Rate | % | Application examples |
|---|---|---|
| Zero rate | 0% | Water, basic foodstuffs, medicines, books, newspapers, construction work in subsidized housing, inter-island transport, electricity (housing ≤10 kW) |
| Retail surcharge | 1,5% | Imports of goods subject to the special regime for retail merchants |
| Reduced Rate | 3% | Mining, chemical, textile, wood, paper, freight transport, agricultural sector, primary residence, non-exempt health products |
| General Rate | 7% | All goods and services not included in other categories: hospitality, commerce, professional services, telecommunications, rental of premises... |
| Increased Rate | 9,5% | Motor vehicles, recreational boats, jet skis, furniture construction projects |
| Special Rate Inc. | 15% | Alcoholic beverages, jewelry, furriers, perfumery, cartridges |
| Special Rate | 20% | Dark tobacco products. Blonde tobacco is taxed at 35% |
What rate of IGIC applies to each sector
Food
- Fresh fruits, vegetables and greens
- Bread, cereals and legumes
- Fresh meat and fish
- Milk and eggs
Hospitality and tourism
- Restaurants and bars
- Hotels and tourist apartments
- Travel agencies (special regime)
- Leisure and entertainment
Professional services
- Consulting and management services
- Lawyers and notaries
- Architects and engineers
- Computer science and software
Construction and housing
- First transfer of main residence
- Rehabilitation works
- Building materials
- Social housing: 0%
How is the IGIC calculated?
Who has to declare IGIC in the Canary Islands?
All self-employed individuals and companies with their tax domicile in the Canary Islands that carry out economic activities are required to file the IGIC, unless they are exempt:
- Self-employed and independent professionals who carry out their activity in the Canary Islands
- Commercial companies (SL, SA...) based in the islands
- Landlords and property developers
- Importers of goods from the Peninsula, EU or third countries
- Companies from the Peninsula that import goods to the Canary Islands
Do you want to know if you have to pay IGIC?
Our advisors will analyze your business without obligation.
Who is exempt from IGIC?
IGIC declaration forms in the Canary Islands
Unlike mainland VAT (Modelo 303), IGIC has its own forms (or ‘modelos’) managed by the Canary Islands Tax Agency:
IGIC filing deadlines in 2026
| Period | Months declared | Submission deadline |
|---|---|---|
| First Quarter | January, February and March | From April 1st to 20th |
| Second Quarter | April, May and June | From July 1st to 20th |
| Third Quarter | July, August and September | From October 1st to 20th |
| Fourth Quarter | October, November and December | From January 1st to 30th of the following year |
| Form 425 | Summary of the complete exercise | From January 1st to 30th of the following year |
How to file the IGIC step by step
- Collect the invoices issued and the deductible expenses for the quarter and separate, for each one, the taxable base, the rate applied and the fee.
- Add up the IGIC accrued on your sales and the deductible IGIC on your domestic purchases and imports. The IGIC on an import arriving via a DUA (Single Administrative Document) is also deductible.
- Calculate the fee: IGIC charged less IGIC paid.
- Access the electronic headquarters of the Canary Islands Tax Agency and identify yourself.
- Fill Modelo 420 with the bases and rates for each tax rate, including 0% transactions.
- Submit the declaration within the quarterly deadline and keep the receipt.
A discrepancy between the four quarterly self-assessments and the annual summary of form 425 is one of the most common causes of a request, so it is worth closing each quarter correctly instead of fixing it in January.
Frequently asked questions about IGIC
Is the IGIC tax paid throughout Spain or only in the Canary Islands?
IGIC is exclusive to the Canary Islands. In the rest of Spain (Mainland Spain, Balearic Islands, Ceuta and Melilla), VAT is applied. The Canary Islands have a special Economic and Fiscal Regime that allows them to have their own indirect tax, with rates much lower than the VAT rate on the mainland.
How does a company on the mainland invoice a client in the Canary Islands?
If you sell goods from mainland Spain to the Canary Islands, the transaction is considered an export for tax purposes: the invoice is issued without VAT (exempt). The customer in the Canary Islands will pay the corresponding IGIC upon importing the goods. For services provided to Canary Island companies, the general rule is that they are taxed where the recipient is located, so mainland VAT is not charged.
Can I deduct the IGIC paid on my purchases?
Yes, provided you are under the general tax regime and your purchases are related to your business activity. The IGIC you pay (the tax you pay on your supplier invoices) is subtracted from the IGIC you collect (the tax you charge your customers) in your quarterly tax return. If the result is negative, you are entitled to a refund or compensation.
What happens if I don't file form 420 on time?
The Canary Islands Tax Agency applies surcharges for late filing: 1% per month of delay up to 12 months, and after one year, a 15% surcharge plus late payment interest. If the return results in a payment due and the Tax Agency initiates an audit before you file, the penalties can be considerably higher.
What is the difference between IGIC and AIEM?
The AIEM (Tax on Imports and Deliveries of Goods in the Canary Islands) is an additional tax levied on certain products imported into the Canary Islands to protect local production. It is separate from the IGIC: the same import may be subject to both taxes simultaneously.
Can a self-employed person in the Canary Islands take advantage of the REPEP scheme even if they invoice clients on the mainland?
Yes. REPEP depends on the self-employed individual’s total revenue and their tax domicile in the Canary Islands, not where their clients are located. If you invoice less than €30,000 annually and your tax domicile is in the islands, you may be exempt from IGIC regardless of whether your clients are from mainland Spain, the Canary Islands, or anywhere else.
What type of IGIC applies to renting premises in the Canary Islands?
The rental of business premises is taxed at the standard rate of 7% IGIC. However, the rental of primary residences is exempt from IGIC, as is the case with VAT in mainland Spain. The landlord must issue invoices including IGIC and submit their quarterly self-assessments.
Can I manage the IGIC myself or do I need an advisor?
Technically, you can do it yourself through the Canary Islands Tax Agency’s online portal. However, the IGIC regulations have specific features (special rates, location rules, imports, REPEP, etc.) that can lead to costly errors. A consultancy specializing in Canary Islands tax, like Asesorae, ensures you apply the correct rate, claim all possible deductions, and file your returns on time.
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Contents of this guide
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