Tag: igic
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
If you live in Gran Canaria and want to order a product from a website with a value of more than €150, you need to consider some taxes, customs fees and other costs that are added to the price. In this blog post, I will explain what these costs are and why they exist.
IGIC vs VAT
Gran Canaria is part of Spain, but not of the VAT area of the European Union. That means that there is no VAT on the products you buy, but there is a local consumption tax called IGIC (Impuesto General Indirecto de Canarias). This tax varies depending on the type of product you buy, but it is generally 7% in restaurants, hotels, shops (excluding clothes and shoes which are 3%) and in car rental and jewelry which are 13.5% .
Import Duty
In addition to the IGIC, you also have to pay import duty if you import a product from outside the Canary Islands. This applies also to products that come from Spain or other EU countries. The import duty ranges between 5 and 15% depending on the type of product you import. You also have to fill in a DUA (Documento Único Administrativo), a customs form that is required for personal imports above €150. You can request this form online or at the customs office at the Gran Canaria airport.
NIE Number
Another requirement for importing products over €150 is having a NIE number (Número de Identificación de Extranjero), which is a tax identification number for foreigners in Spain. You need this number to fill in the DUA form and to pay the taxes and fees. You can apply for a NIE number at the local police station or at the Spanish consulate in your country of origin. The NIE number is valid for life and does not need to be renewed.
Why These Costs Exist
These taxes and fees are intended to protect and stimulate the local economy, taking into account the specific characteristics and constraints of the Canary Islands as an outermost region. However, they can also lead to higher prices and longer delivery times for the consumers in Gran Canaria. That is why it is important to be well informed before you make an online purchase and compare whether it is cheaper to buy locally or import. A great alternative to Amazon is the local website www.guanxe.es.