Canarian IGIC Explained: How VAT Works in the Canary Islands

The Canary Islands have their own tax system, separate from mainland Spain. Because the islands are considered an outermost region of the EU, VAT is not applied here. Instead, you will find a local tax called IGIC, which stands for Impuesto General Indirecto Canario. If you plan to live, work or run a business on the islands, understanding these tax brackets will make your life much easier.

IGIC Tax Rates

The main IGIC brackets currently used are:

0 percent
Applied to essentials like water, certain sanitary products, newspapers, some basic foods, and air or sea transport between islands.

3 percent
Applied to chemical, mineral, textile, wood, paper and transport industries, plus vehicle repairs.

7 percent
The most common bracket. This applies to the majority of everyday goods and services. If you are shopping, this is usually the rate you will see.

9.5 percent
Applied to vehicles.

15 percent
Applied to specific luxury or special products, including certain cigars, alcohol, jewellery, leather goods and perfumes.

20 percent
Applied to black tobacco.

35 percent
Applied to red tobacco.

Most purchases will fall into the 7 percent category, which is significantly lower than the typical 22 to 24 percent VAT seen in much of Europe.

Why Customs Still Apply

Even though IGIC replaces VAT, goods arriving from outside the Canary Islands still go through Customs. This is because the islands are outside the EU VAT zone. Customs exist to protect local businesses and ensure the correct application of IGIC.

This also means that when you fly from the Canary Islands back to mainland Europe, you are technically entering the EU from outside its VAT territory. The duty-free rules for alcohol, tobacco and other controlled products are therefore different from a standard domestic Spanish flight.

IGIC for Companies and Autónomos

If you are a Canarian company or autónomo selling goods or services within the Canary Islands, you must usually apply IGIC on invoices.

If you sell to customers in mainland Spain or elsewhere in the EU, IGIC is removed. The VAT of the country of destination will apply instead, depending on the type of customer and local rules.

For most businesses, this means:

Sales within Canary Islands = IGIC
Sales to mainland Spain or EU countries = no IGIC, VAT handled by the receiving country