IGIC instead of VAT: what really changes
The tax changes, the administration changes and the forms change. IGIC is a tax of the Autonomous Community of the Canary Islands itself, it is administered by the Agencia Tributaria Canaria, the regional tax authority, and not by the Agencia Estatal de Administración Tributaria, the Spanish state tax authority, and it has its own scale of rates, different from the mainland one.
The practical consequence is that Modelo 303 and Modelo 390 are not your forms: you have a periodic self-assessment and an annual summary belonging to IGIC, with a calendar of their own. And registration is not done with the state census alone: there is a census return to be filed with the Canary tax administration too.
A note on the geography of the tax. Being outside the VAT territory does not mean being outside Spain: income tax, social security and the state reporting duties apply in the Canaries exactly as they do in Valladolid. What is different is the indirect tax and the administration that collects it. Clients who hear "outside VAT" and conclude that they are outside the Spanish system generally arrive having missed the parts that never went away.
An invoice from a Canary business to a mainland one carries neither IGIC nor VAT, and it does not go on Modelo 349 either, because it is not an intra-Community transaction: for VAT purposes the Canaries are third territory, even though they are Spanish territory and share the customs union where that applies. This is the point where we have seen more badly issued invoices than anywhere else.
The special regime for small businesses
IGIC has a franchise for businesses and professionals below a certain volume of operations, which allows you not to charge the tax in exchange for not deducting it. We do not put the figure here because it is one of those that get updated, and because the decision does not depend on the figure alone: if you have investments that bear IGIC, giving up the right to deduct it can turn out expensive.
We look at it with your numbers before the first quarter, which is when it is decided well rather than halfway through the year. And if the registration is still to be done, start with registering as self-employed: the state Modelo 036 and the Canary census return go together.
What does not change: income tax
Income tax is a state tax, with its Canary regional band. The instalment payments, the census registration through Modelo 036 and the information reporting duties are the usual ones. And if you let a holiday home, the boundary between property income and business income under article 27.2 of the Spanish income tax act arises exactly as it does in the rest of the country, even though the indirect tax is a different one. You have it in tourist rentals and in self-employed in Spain.
A practical consequence of having two administrations is that a mistake made with one of them is not corrected by the other. A wrongly issued invoice is put right with a corrective invoice and, where it has already gone into a return, with a rectification of that return before the administration that received it. Working out which one that is takes ten seconds at the start and a good deal longer afterwards.
Who writes to us from Las Palmas de Gran Canaria
| Who | What they usually face |
|---|---|
| Self-employed person invoicing mainland clients | An invoice with neither IGIC nor VAT, outside the 349, and explaining it to the client every single time |
| Owner of a holiday flat by the Canteras beach | IGIC where there are services, income tax on the rent and apportionment by days |
| Digital nomad settled on the island | Tax residence, the treaty with their own country and both the Canary and the state census duties |
| Small shop or workshop | The small-business franchise: whether it applies and whether leaving it is worth it |
| Non-resident owner with an apartment | Modelo 210 per property and per owner, with imputed income for the empty days |
Our way of working in Las Palmas de Gran Canaria
We carry both administrations at once, which is exactly what jams when an adviser works with only one: the Canary calendar and the state calendar do not coincide and have to be squared. We send you a single reminder with the two columns on it.
For the rest, the usual routine: paperwork by quarter, figures before filing and a fixed price. And when a Canary question admits of two readings, we say so in those terms instead of handing you a neat answer that does not exist.
We also keep one list per client of what has to be renewed and when, because here the census, the IGIC registration and the state obligations each have their own anniversary. We do not guarantee an outcome before either administration; what we undertake is that nothing will be missed for want of somebody watching the dates.
A designer in Las Palmas de Gran Canaria invoicing the mainland: working out her Modelo 130
She works from Triana for agencies in Madrid and Barcelona and also takes commissions from private clients on the island and the occasional European client. Her invoices to mainland companies carry neither IGIC (the Canary Islands' indirect tax, which takes the place of VAT) nor VAT, but they do carry income tax withholding, because income tax is a state tax and the business client is obliged to withhold. Invoices to private clients carry IGIC and no withholding.
| Clients in 2026 | Income | Indirect tax on the invoice | Income tax withholding |
|---|---|---|---|
| Mainland agencies | 28,000 € | None | 15 %: 4,200 € |
| Private clients on Gran Canaria | 6,000 € | IGIC at the general rate | No |
| Private clients in other countries | 2,000 € | According to the place-of-supply rules | No |
| Total | 36,000 € | — | 4,200 € |
77.8 % of her income has carried withholding. Having passed 70 % in 2026, in 2027 she is exempt from filing Modelo 130, the quarterly income tax prepayment: her clients are already paying tax in advance for her. If in her first years of activity 7 % is applied instead of 15 %, the exemption sum does not change, but what she will have left to pay in the annual return does. The rule is in Modelo 130, and the form for us to run both her calendars is the one for the self-employed.
Two warnings so the calculation does not fail. First: the withholding is made by the mainland agency, but you issue the invoice, so your invoice has to show it; if you leave it out and the client does not withhold, the year's percentage falls without you noticing. Second: the 70 % is measured on the previous year's business income, so a year with more private clients can send you back to the Modelo 130 the following year even if nothing in the way you work has changed. We review it every January, before the first quarter.
Two columns in the same Canarian year: the state and the regional
| Administration | What she files | When |
|---|---|---|
| State tax authority (Agencia Tributaria) | Modelo 130 while not exempt | 1 to 20 April, July and October, and by 30 January |
| State tax authority | Income tax return for the year | From April to 30 June of the following year |
| Canary Islands Tax Agency (Agencia Tributaria Canaria) | Modelo 420, the periodic IGIC return | According to the Canary agency's calendar, which is checked every year |
| Canary Islands Tax Agency | Modelo 425, the annual IGIC summary | Likewise |
What is unwise is to assume the Canary calendar copies the state one. That is why our quarterly reminder carries both columns, with each administration's date written next to its form, and not a single «20th» for everything.
Everything above applies to services. Someone in Las Palmas de Gran Canaria who sells products — ceramics, clothing, handmade cosmetics — to mainland customers finds that each shipment is, for tax purposes, an export from the Canaries and an import into the mainland, with its customs declaration and with import VAT that someone has to pay on arrival. Many Canary online shops discover this when the mainland customer refuses to pay an unexpected amount to the courier. Who bears that VAT, and how the price is advertised, is decided before opening the shop.