Canary Islands Tax Guide (IGIC Explained Simply)

Moving to the Canary Islands involves more than a change of scenery. The islands have their own indirect tax system, known as IGIC, which affects many everyday purchases and services. Here is a simple overview of what it is and what it may mean for your move.

What Is IGIC?

IGIC stands for Impuesto General Indirecto Canario, or Canary Islands General Indirect Tax. It is a consumption tax generally charged on goods and services supplied in the Canary Islands.

In simple terms, IGIC plays a similar role to VAT in many other places: it is an indirect tax that may be included in the price you pay for products or added to an invoice for services.

Different goods and services can fall under different IGIC treatments. The applicable rate or exemption depends on the item, service, transaction type and current rules. [VERIFY: current rate]

How Does IGIC Differ From Mainland Spain's IVA?

Mainland Spain uses IVA (Impuesto sobre el Valor Añadido), its VAT system. The Canary Islands do not generally use mainland IVA for local transactions; they use IGIC instead.

The important practical point is that IGIC and IVA are separate systems. A business, invoice or purchase involving the Canary Islands may need to be treated differently from an equivalent transaction in mainland Spain.

This does not necessarily mean every purchase will be cheaper or more expensive. Final prices can also reflect transport costs, retailer pricing, import procedures and the specific tax treatment of the product or service.

Why Do the Canary Islands Have a Separate Tax System?

The Canary Islands have a special economic and fiscal status within Spain. This reflects their geographical location, distance from mainland Spain and island-based economy.

The separate system is intended to account for the particular conditions of living and doing business in an archipelago. IGIC is one part of this wider framework, alongside other rules that can affect companies, imports and certain investments.

You do not need to understand every legal detail before relocating, but it is useful to know that the islands are not simply treated the same as mainland Spain for all indirect-tax purposes.

What This Means When You Relocate

Shopping

When shopping locally, prices and receipts may refer to IGIC rather than IVA. Ask whether the displayed price includes IGIC, particularly for larger purchases or when comparing quotes.

Services

Service providers in the Canary Islands may issue invoices under IGIC rules. This can include tradespeople, consultants, accommodation providers and other local businesses. If you are self-employed, own a business or receive professional services, ask how IGIC applies to your situation.

Buying a Vehicle

Vehicle purchases can involve more than one tax or administrative consideration, especially if a vehicle is imported, bought from mainland Spain, brought with you when relocating or purchased locally. IGIC may be relevant, but so may registration, customs-related processes and other charges. Obtain current advice before committing to a purchase. [VERIFY: current rate]

Get Current Professional Advice

This guide is a general introduction only, not tax, legal or financial advice. Tax rules, rates, exemptions and procedures can change, and your position may depend on your residency status, employment, business activity, property plans and where goods or services are supplied.

Before relocating, buying a vehicle, starting a business or making a major purchase, speak with a qualified tax professional familiar with Canary Islands rules.

For help finding relocation and tax guidance, visit relocation123.es tax advice.