VAT or IGIC: how to invoice when you sell to or from the Canary Islands

November is a good time to check how you invoice before the year closes. And if you run a business in Spain with clients or suppliers on both sides of the water, one question comes up on every invoice: does it carry VAT, IGIC or neither?

The answer depends on three things: where you are, where your client is (and whether they are a business or a consumer), and whether you sell goods or services. This guide walks through each one, with the IGIC rates in force, what the invoice must say and the mistakes we see most often.

Why the Canary Islands don’t charge VAT

The Canaries are part of Spain and of the European Union, but they sit outside the territory where Spanish VAT applies. Article 3 of the VAT Act (Ley 37/1992) sets this out, and the official guidance page “Importaciones y exportaciones” puts it plainly: for VAT purposes, the Canary Islands, Ceuta and Melilla are not considered Community territory.

Instead, the islands apply the Canary Islands General Indirect Tax (IGIC). Its core rules (what is taxed, where each transaction is deemed to take place and who must report the tax) are in Ley 20/1991. Rates, exemptions and special schemes are in the consolidated text approved by Decreto Legislativo 1/2025 of October 13, which you can read consolidated in the BOE. IGIC is managed by the Canary Islands’ own tax administration, not the national one: see the official Canary Islands taxes website.

In practice, a business established in the Canaries charges IGIC on what it sells within the islands, and a business on the mainland or in the Balearics charges VAT on what it sells there: 21% standard, with reduced rates of 10% and 4% (official VAT rates). When a transaction crosses from one side to the other, each tax has its own rules, and the first thing to check is whether you are selling services or goods.

IGIC rates in 2026

The standard IGIC rate is 7% (article 32 of Decreto Legislativo 1/2025). If you provide professional services, that is most likely your rate, unless your activity appears on another list. These are the rates in force as of October 18, 2026:

Each transaction takes the rate in force when the tax accrues (article 32), and rates moved twice this year. The version notes of the consolidated text show it: Ley 9/2025, the Canary Islands budget law for 2026, added the 1% rate and changed the 5% rate from January 1, and Decreto-ley 3/2026 amended some rates effective July 1. If your products sit on the line between two lists, check the current wording before you invoice.

Small turnover: the small business scheme

If you are an individual (a self-employed autónomo, for example) and your turnover in the previous calendar year did not exceed €30,000, the special scheme for small businesses and professionals may apply to you: your sales and services are exempt from IGIC, with some exceptions, such as sales made under the retailer scheme (articles 89 and 90 of Decreto Legislativo 1/2025). Decreto-ley 3/2026 raises that threshold to €50,000 from January 1, 2027. Exempt does not mean no invoice: you still issue it, and it states that the transaction is exempt.

Services: it depends on who your client is and where

For services, VAT and IGIC follow the same logic. If your client is a business or a professional, the service is deemed supplied where your client is established (article 69.Uno.1.º of Ley 37/1992 and article 17.Uno.1 of Ley 20/1991). If your client is a consumer, it is deemed supplied where you are (article 69.Uno.2.º and article 17.Uno.2). Those two rules give you the four usual cases:

From the mainland to a Canary Islands business

The service falls outside Spanish VAT, because it is deemed supplied in the Canaries. It is subject to IGIC there, but since you are not established in the islands, your client reports it: they become the taxable person under the reverse charge (article 19.1.2.º a) of Ley 20/1991). Your invoice goes out with no tax and with the note “inversión del sujeto pasivo” (reverse charge), required by article 6.1 m) of the Invoicing Regulation. It is worth adding the reason too, for example: “operación no sujeta al IVA por las reglas de localización (artículo 69 de la Ley 37/1992)”. Your client includes that IGIC in their own IGIC return.

From the Canaries to a mainland business

This is the mirror image. The service is deemed supplied on the mainland, so it carries no IGIC, and your client reports the VAT under the reverse charge, because you are not established in the VAT territory (article 84.Uno.2.º a) of Ley 37/1992). They record it as output VAT and, if they are entitled to deduct it, as input VAT as well. Again, your invoice carries no tax and the note “inversión del sujeto pasivo”.

To a consumer

With consumers, what matters is where you are: from the mainland, VAT; from the Canaries, IGIC. One detail often surprises people: VAT takes certain services (consulting, advertising, licensing of rights, among others) out of its scope when the consumer is established outside the Community, but that exception expressly excludes consumers living in the Canaries, Ceuta or Melilla (article 69.Dos of Ley 37/1992). Advice you give from Madrid to a private client in Las Palmas carries VAT.

The exceptions that change the answer

These are the general rules. Some services have their own: those connected with real estate, transport, restaurant services, admission to events, and electronic, telecommunications or broadcasting services supplied to consumers, among others (article 70 of Ley 37/1992 and article 17 of Ley 20/1991). If you sell online courses or software subscriptions to consumers in the Canaries, check it with your advisor: IGIC places those services in the Canaries when the consumer lives there.

Goods: exports, imports and the customs declaration

For goods, there is a tax border between the mainland and the Canaries, even if you never notice it when you fly. Sales are treated as an export on one side and an import on the other, with customs paperwork.

From the mainland or the Balearics to the Canaries

If you are the one who ships the goods, the sale is exempt from VAT as an export (article 21 of Ley 37/1992), and the exemption is full: you can still deduct the VAT you pay on your costs. Your proof of the exemption is the customs export declaration, known as the DUA (documento único administrativo). For shipments with an intrinsic value of up to €150 there is a simplified procedure with the H7 declaration, and the exit certificate it generates serves as proof of the exemption, according to the official customs page “Presentación de declaraciones de envíos de escaso valor”.

When the goods reach the islands, they are imported. Ley 20/1991 makes imports of goods subject to IGIC, and some products also pay the AIEM (the Canary Islands levy on imports and supplies of goods), regulated in title II of the same Decreto Legislativo 1/2025. Those taxes are paid by whoever imports the goods. If you sell to consumers from an online store, make it clear before the purchase who takes care of import taxes and paperwork, so your client gets no surprise when the parcel arrives.

From the Canaries to the mainland or the Balearics

The reverse route works the same way. The sale is exempt from IGIC as an export (article 11 of Ley 20/1991) and, when the goods enter the mainland, it is an import: the VAT is settled at customs, as the official page “Importaciones y exportaciones” explains. The importer pays it and can later deduct it if entitled to.

What the invoice must show

Spain’s Invoicing Regulation (Real Decreto 1619/2012) also applies to IGIC transactions, with the particulars of the Canary Islands rules (second additional provision). Its article 6.1 lists what a full invoice must include:

• A number and, where relevant, a series, numbered consecutively, and the issue date.
• Name or company name and address of both parties, the issuer’s tax ID (NIF) and, in the cases the regulation sets out, the recipient’s.
• A description of the transaction, with the details needed to work out the taxable base.
• The rate applied and the tax amount, shown separately.
• The date of the transaction, if it differs from the invoice date.
• Any notes that apply: the reference to the exemption or a statement that the transaction is exempt, and “inversión del sujeto pasivo” when your client reports the tax.

Two details that slip through. If you charge IGIC, the invoice says IGIC, not IVA: it sounds obvious, but templates copied from the mainland carry the wrong label. And income tax (IRPF) withholding does not change: IRPF is a national tax and works the same on a Canary Islands professional’s invoices as on a mainland one’s.

Six common mistakes when invoicing between the mainland and the Canaries

How to keep invoicing clean with clients in both territories

With clients on both sides, routine beats memory. Six habits that prevent most problems:

Step 1: Complete every client record

Where they are established, whether they are a business, a professional or a consumer, and their tax ID. Those details decide the tax, so they need to be there before the first invoice.

Step 2: Decide the tax per transaction, not per client

The same client may buy services and goods from you, and each follows its own rule. Go back to the services table and the goods section whenever you sell something new.

Step 3: Write the notes once

The reverse charge note, the export exemption reference, the small business scheme. Draft them with your advisor, save them and use them the same way every time.

Step 4: File the DUA with its invoice

Every export invoice, with its proof of exit next to it. It is the first thing you will be asked for if anyone reviews the exemption.

Step 5: Review rates when the rules change

At the start of each year and whenever a change is published, as happened twice with IGIC in 2026.

Step 6: Close each quarter with your advisor

Reverse charge transactions and exports have their own place in the VAT and IGIC returns. If your quarter is in order, that review is short. And if you are planning next year, our guide to cash planning for a small business shows how to put these taxes on your payment calendar.

In UTILIA OS, each invoice carries VAT or IGIC and, if it applies to you, income tax withholding: when you create it you choose VAT (mainland) or IGIC (Canary Islands), and your organization’s tax settings keep your tax regime, the tax and the withholding. Your client can download it and pay it by card from their client portal, depending on your plan. See how it works on the invoicing page.

Accounting and taxes in UTILIA OS are coming soon (we explain it on the accounting and taxes page): in the meantime, your gestoría keeps handling your returns.