IGIC on Holiday Rentals in the Canary Islands
Do you rent your property in the Canary Islands to tourists? Find out what taxes you pay, what forms to submit, and how to avoid penalties from the Canary Islands Tax Authority.
What is IGIC and why does it affect your vacation rental?
IGIC (Canary Islands General Indirect Tax) is the equivalent of VAT in the Canary Islands. Unlike on the Spanish mainland, where holiday homes may be exempt from VAT under certain conditions, in the Canary Islands tourist rentals are generally subject to the IGIC at a rate of 7%, regardless of whether you offer additional services or not.
This means that if you rent your flat, apartment or villa to tourists through platforms like Airbnb, Booking or Vrbo, you have the obligation to charge the IGIC to your guests, declare it to the Canary Islands Tax Authority and submit the corresponding forms.
Key change that remains in effect in 2026:
Non-resident property owners in the Canary Islands are no longer exempt from IGIC since January 2024. If you own a holiday let in the Canary Islands and live on the Spanish mainland or in another country, you must comply with the same obligations as a Canary Islands resident.
When is your rent subject to IGIC?
| Type of rental | Affected by IGIC? | Type |
|---|---|---|
| Holiday rental (Airbnb, Booking…) | ✔ Yes | 7% |
| Holiday rental with hotel services | ✔ Yes | 7% |
| Main residence rental | ✘ Exempt | — |
| Seasonal rental for non-tourist purposes | ✘ Exempt | — |
| Owner with income < €30,000/year (REPEP) | ⚠️ Exempt (registration required) | 0% / No charge |
Tax obligations of holiday lettings owners
Many owners start renting without knowing all the steps. The result: fines, surcharges, and problems with the tax authorities. Here’s the correct sequence:
Registration with the Tax Authorities — Modelo 400
Before renting out your property on the first day, you must register for IGIC using Form 400, section 1685 "Non-hotel tourist accommodation." This is mandatory even if you believe you will not exceed the REPEP (Special Regime for Small and Medium-Sized Enterprises) threshold. Failure to do so will result in a direct penalty.
Choose: General Regime or REPEP
If your annual turnover is less than €30,000, you can opt for the REPEP. Advantage: you don't charge IGIC to your guests and you don't have to file the quarterly Modelo 420. Disadvantage: you can't deduct IGIC from your expenses.
Issue invoices with IGIC
If you're on the standard tax regime, each stay generates an invoice with the 7% IGIC charged to the guest. Platforms (Airbnb, Booking) are taxed under the reverse charge mechanism: you declare the IGIC on their commission using Form 412.
Quarterly returns — Modelo 420
Each quarter (April, July, October, January) you declare the IGIC collected minus the IGIC paid on expenses. If the result is positive, you pay the difference to the Tax Office.
Annual Summary — Modelo 425
Each January, you must submit the annual summary form for IGIC. This is mandatory even if you are registered under the REPEP and have not charged IGIC to anyone.
Forms you should know
400
IGIC census registration
Registration of business activity. Mandatory before starting.
412
Occasional tax return
For the reverse charge mechanism (Airbnb/Booking commissions).
420
Quarterly self-assessment
IGIC collected less IGIC paid. Reported quarterly.
Why manage your IGIC with Asesorae?
Managing IGIC on holiday rentals is more complex than it seems. Deadlines, regulations, digital platforms, management companies, non-residents… One mistake can cost you much more than the cost of advice.
Frequently asked questions about IGIC on holiday rentals
Do I have to charge IGIC if I only rent for a few months a year?
Yes. IGIC applies regardless of the number of days you rent. What matters is that the activity is of a tourist or holiday nature. The only way to avoid charging IGIC to your guests as an active owner is to register under the REPEP if your annual income is under €30,000, but you must still register using Form 400 and submit the annual summary (Form 425).
What happens if I don't register for IGIC and I'm already renting?
The Canary Islands Tax Authority can detect your business activity through digital platforms (Airbnb, Booking) that are required to report income. Penalties range from fines for late filing to assessments with surcharges of 20% plus late payment interest on the IGIC not declared since the start of your business. It is highly recommended to regularize your situation as soon as possible, often at a lower cost than waiting for an audit.
Can I deduct the IGIC from my holiday home expenses?
Only if you are under the general IGIC regime. In that case, you can deduct the IGIC paid on expenses directly related to the business activity: cleaning, maintenance, supplies, platform commissions, etc. You can only deduct expenses proportional to the rental days, not 100% of the year. If you are under the REPEP regime, you cannot deduct any IGIC paid.
How is IGIC taxed if I have a management company?
It depends on the type of contract. If the management company acts as an intermediary, the owner invoices the guests and declares the IGIC. If the management company has a lease agreement for a use other than residential, they can invoice the tourists, and you receive the net amount. In both cases, you need to check who is liable for the IGIC and how the 19% personal income tax withholding is handled.
Do I pay the IGIC on Airbnb and Booking, or do they pay it?
The platforms are based outside the Canary Islands, so their commission generates a reverse charge mechanism: you are responsible for declaring the IGIC on that commission. If you are under the general tax regime, the transaction is usually neutral (you declare an output IGIC and an input IGIC of the same amount). If you are under the REPEP, you must pay it using Form 412, without the right to deduct it.
Do you want us to manage your IGIC?
Forget about forms, deadlines, and regulations. Our expert advisors in the Canary Islands will take care of all your IGIC, REPEP, and tax matters starting from €57/month.
Shall we talk about your tax situation in the Canary Islands?
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