Selling to the Canary Islands: No VAT, 7% IGIC, DUA
Your Canary Islands sale is outside EU VAT. Here is who pays the 7% IGIC, who clears the DUA and the wording your invoice needs.
Series: Canarias a Fondo
Key takeaways
- No, you do not charge VAT on a sale of goods or a B2B service to a Canary Islands customer. The Canary Islands are excluded from the EU VAT territory by article 6(1)(b) of Directive 2006/112/EC and are not part of the UK — a Canarian buyer settles IGIC, generally at 7 per cent, when the goods clear customs.
- From the EU mainland, a shipment of goods is an exempt export under article 21 of Ley 37/1992, and a B2B service is not in the Spanish VAT territory under article 69.Uno.1.º. From the UK, a shipment of goods is a zero-rated export under VAT Notice 703 section 2.1, and a B2B service falls outside UK VAT because the customer belongs outside the UK.
- IGIC general rate is 7 per cent (article 32.1 of Decreto Legislativo 1/2025, BOC of 20 October 2025). Other rates in force are 0 per cent, 3 per cent, 5 per cent, 9.5 per cent, 15 per cent and 20 per cent, plus the 1 per cent legal rate of article 33 bis for petroleum products, their refining derivatives and gas, which is not the rate in force today: fuel stays at zero per cent until 31 December 2026, unless it ends early in November or December under the fuel-price (CPI) clause of article 1 of Decreto-ley 6/2026.
- One common exception: a supplier established in mainland Spain invoicing a private individual resident in the Canary Islands for services generally does charge Spanish VAT, because art. 69.Dos of Ley 37/1992 withholds the outside-the-Community carve-out (advertising, consulting, legal, accounting, data processing, translation and similar) from recipients in the Canary Islands, Ceuta and Melilla.
Contents
No, you do not charge VAT or UK VAT on a sale of goods or a B2B service to a customer in the Canary Islands. The Canaries sit outside the EU VAT territory under article 6(1)(b) of Directive 2006/112/EC and are not part of the UK. Your customer settles the local IGIC, generally at 7 per cent, when the goods clear customs.
This guide answers the cross-border version of the same question. If your tax seat is in mainland Spain, the EU, the UK or Ireland and a buyer in Las Palmas, Tenerife or Gran Canaria asks for an invoice, this is what your bookkeeping has to look like.
The two territories the Canary Islands sit in
For customs purposes the islands are inside the European Union customs territory. Article 4(1) of Regulation (EU) No 952/2013 defines the customs territory as including “the territory of the Kingdom of Spain, except Ceuta and Melilla”. The Canary Islands are not excepted. Union goods shipped there stay Union goods; goods that come from outside the Union, such as the UK, are not Union goods and can bear EU customs duty unless they qualify for preferential origin (for the UK, under the EU-UK Trade and Cooperation Agreement, with proof of origin).
For VAT purposes the islands are outside the EU VAT territory. Article 6(1) of Directive 2006/112/EC disapplies the Directive to a list of territories that do form part of the customs territory, and its letter (b) is the Canary Islands. Spanish law mirrors it: article 3.Dos.1.º.b) of Ley 37/1992 excludes Canarias as a territory “excluded from the harmonisation of turnover taxes”.
The UK sits in a different place. The United Kingdom left the EU on 31 January 2020 and, since the end of the transition period on 1 January 2021, has its own VAT territory under VAT Act 1994, administered by HMRC. Article 6 of the VAT Directive is no longer relevant to a UK supplier; instead, VAT Notice 703 governs goods exported out of the UK, and the place-of-supply rules govern services.
Decision table: from where, what you sell, to whom
The table covers three starting points that account for most cross-border invoices into the Canary Islands: a supplier in mainland Spain or the Balearics, a supplier in another EU member state, and a supplier in Great Britain. Each cell states the VAT position on your invoice, who settles the Canarian tax, and the supporting document.
| Your tax seat | You sell | To a Canarian business or public body | To a Canarian private individual | Supporting document on your invoice |
|---|---|---|---|---|
| EU mainland (mainland Spain, Balearics) | Goods | No VAT — art. 21 Ley 37/1992 (exempt export) | No VAT — art. 21 Ley 37/1992 | DUA copy + “Exempt export — art. 21.1.º Ley 37/1992” or “art. 21.2.º Ley 37/1992” |
| EU mainland | Services (B2B) | No VAT — art. 69.Uno.1.º Ley 37/1992 (not subject) | Spanish VAT generally applies: art. 69.Uno.2.º locates the service where you are established, and art. 69.Dos does not let the listed services leave when the recipient is in the Canary Islands (special rules of art. 70 aside) | “Not subject to VAT — art. 69.Uno.1.º Ley 37/1992” |
| Another EU member state (DE, FR, NL, IE, IT…) | Goods | No VAT — your national export-exemption provision, art. 146(1)(a) VAT Directive | No VAT — same provision | Your national exemption reference |
| Another EU member state | Services (B2B) | No VAT: art. 44 VAT Directive (B2B general rule) | Depends on the service: check the place-of-supply rules of your own member state (VAT Directive, Title V) | Your national place-of-supply reference |
| United Kingdom (Great Britain) | Goods | No UK VAT — VAT Notice 703, section 2.1 (zero-rated direct or indirect export) | No UK VAT — same notice, same conditions | Commercial or official evidence of export, retained 6 years (Notice 703 section 6.7) |
| United Kingdom | Services (B2B) | No UK VAT: place of supply is where the customer belongs, outside the UK (GOV.UK place-of-supply rule) | Depends on the service: for non-business customers the place of supply is generally where you belong unless a special rule applies; check HMRC’s guidance | Invoice line stating “Outside the scope of UK VAT” and the reason |
The rule that complicates a sale from a mainland Spanish supplier is the B2C service. Under article 69.Uno.2.º of Ley 37/1992 a service to a private individual is located where you are established, which is Spain. Article 69.Dos lets a list of services (advertising, consulting, legal, accounting, data processing, translation and similar) leave Spanish VAT when the private recipient is established outside the Community, but it excludes recipients established in the Canary Islands, Ceuta and Melilla. So you charge Spanish VAT to a private individual in Tenerife, unless a special rule of article 70 moves the place of supply. For a B2B service the general rule of article 69.Uno.1.º locates the supply where the business customer is, so a service to a Canarian business is not subject to Spanish VAT.
For a supplier in Great Britain, the place-of-supply general rule puts a B2B supply where the customer belongs, which is the Canary Islands. Services to non-business customers follow different rules that depend on the service, so check HMRC’s guidance before invoicing them.
From EU mainland or another member state: goods and B2B services
Goods from the EU mainland move under the Spanish export exemption. Article 21 of Ley 37/1992 splits the exemption in two. Point 1.º covers goods “dispatched or transported outside the Community by the transferor or by a third party acting in his name and on his behalf” — you arrange the transport. Point 2.º covers the same goods when they are dispatched “by the purchaser not established in the territory of application of the tax, or by a third party acting in his name and on his behalf” — your buyer arranges it, which is the Ex Works or FCA case. The Canaries are outside the Community for VAT and the shipment is an exempt export either way.
Goods from another EU member state follow the same logic under your own national export-exemption provision. The Directive does the heavy lifting: article 146(1)(a) of Directive 2006/112/EC requires Member States to exempt “the supply of goods dispatched or transported to a destination outside the Community by or on behalf of the vendor”. A German seller cites the German provision; a Dutch seller cites the Dutch one.
The opening words of article 21 of Ley 37/1992 matter: the exemption applies “en las condiciones y con los requisitos que se establezcan reglamentariamente”. It is conditional on evidence that the goods actually left. Keep the export declaration with the invoice — the invoice note alone does not carry the exemption.
B2B services drop out for a place-of-supply reason, not for an export reason. Article 69.Uno.1.º of Ley 37/1992 places a service supplied to a taxable person where that customer has the seat of its economic activity, “regardless of where the supplier is established and of the place from which he supplies them”. Your client’s seat is in the Canary Islands. The Canaries are not the Spanish VAT territory. So the supply is not subject and no VAT is charged.
From the UK post-Brexit: goods clear customs
The UK framework applies on or after 1 January 2021, the day after the Brexit transition period ended. The two relevant guides are VAT Notice 703 on exports — last updated 4 March 2026 — and the place-of-supply rules for services.
Notice 703 applies to supplies made on or after 1 January 2021 from Great Britain (England, Scotland and Wales) exported out of the UK, and to Northern Ireland exported out of the UK to non-EU destinations. Section 2.1 sets the principle: VAT is a tax on goods and services consumed in the UK, and exports are “consumed” outside the UK, so the supply is zero-rated when the conditions in the notice are met. Section 2.8 covers direct exports (you arrange the transport yourself or appoint a freight agent), and section 2.9 covers indirect exports (an overseas person or their agent collects the goods from your premises and arranges the export).
The Canary Islands are not part of the UK for VAT purposes and sit outside the EU VAT territory (while inside the EU customs territory). A sale of goods from a UK supplier to a Canary Islands buyer therefore meets the zero-rating condition in section 2.1 regardless of whether transport is arranged by the UK seller or by the buyer. The proof-of-export rules in sections 6 and 7 — official evidence (an export declaration submitted to the Customs Declaration Service with a departure confirmation) or commercial transport evidence (authenticated sea or air waybills, signed international consignment notes, signed certificates of shipment) — apply the same way as for any other export from the UK, and the evidence must be retained for six years (section 6.7).
From the UK post-Brexit: B2B services follow the customer
The place-of-supply rules for services set a general rule: if you supply services to a business customer, the place of supply is where the customer belongs. A B2B service supplied by a UK business to a Canarian business is therefore outside the scope of UK VAT, and the sale is recorded in box 6 of the UK VAT return as a sale outside the scope that would be taxable if made in the UK.
Services to non-business customers, and services covered by special place-of-supply rules (land-related services, events, transport, digital services and others), follow different rules. We do not cover them here: check HMRC’s guidance for your specific service before invoicing a private individual in the Canary Islands.
Who actually pays the IGIC, and on what base
The importer pays. Article 21 of Ley 20/1991 makes the taxable person on imports “those who carry them out” and defines importers as “the recipients of the imported goods, whether purchasers, transferees or owners… or consignees acting in their own name”. Your customer is the importer; you are not. The carrier or customs agent files the DUA and bills the buyer for the IGIC, any AIEM and a handling fee.
When the importer is a Canarian business and the supplier is not established in the islands, the burden moves by operation of law. Article 19.1.2.º.a) of Ley 20/1991 reverses the taxable person onto the recipient — provided the recipient is a business, professional, public body or legal person — whenever the operations “are carried out by persons or entities not established in the Canary Islands, unless the recipient is in turn not established in that territory”. Your customer self-assesses and you stay out of the ATC. The reverse charge stops applying when your customer is also not established in the Canaries, when the supply is letting of immovable property that is subject and not exempt or intermediation in such letting, or when you have a fixed place of business in the islands.
The base is not the invoice total. Article 25 of Ley 20/1991 builds the IGIC base on the customs value plus any tax due on importation — excluding IGIC and AIEM themselves — plus “accessory and complementary costs such as commissions, packaging, carriage, transport and insurance arising from entry into the Canary Islands to the first place of destination” inside them. So the 7 per cent lands on a figure slightly above what you billed and is invisible on your paperwork.
There is a low-value carve-out for consignments under 150 euros. Article 14.11 of Ley 20/1991 exempts “imports of goods whose global value does not exceed 150 euros”, with alcohol under CN codes 22.03 to 22.08, perfumes and eaux de cologne, and raw or manufactured tobacco carved out. Below the threshold the simplified H7 declaration replaces the full DUA, under the Orden of 29 July 2016 as amended on 29 July 2021, which exempts those consignments from the DUA. The ATC’s H7 instructions PDF confirm the threshold and add that AIEM has no low-value exemption, so goods in Annex I of Ley 4/2014 cannot use H7 at any amount.
IGIC rates in force in 2026
Article 32.1 of Decreto Legislativo 1/2025, of 13 October, published in BOC of 20 October 2025 (ATC legislación), sets the IGIC general rate at 7 per cent. Articles 33 to 41 of the same text set the other rates in force. The complete list is:
| Rate | What it covers (article in DLeg 1/2025) |
|---|---|
| 0 % | Article 33: the zero rate, for the goods and services listed there |
| 1 % | Article 33 bis: legal rate for petroleum, its refining derivatives and gas (rewritten by Decreto-ley 3/2026, article 2). Not the rate in force today: fuel is at 0 % until 31 December 2026, unless it ends early in November or December under the fuel-price (CPI) clause of article 1 of Decreto-ley 6/2026 |
| 3 % | Article 34: super-reduced rate |
| 5 % | Article 35: reduced rate |
| 7 % | Article 32.1: general rate |
| 9.5 % | Articles 39, 40 and 41: increased rate (land vehicles, ships and aircraft) |
| 15 % | Article 36: increased rate, including cigars priced above 2.5 euros per unit |
| 20 % | Article 37: special rate for tobacco products, except cigars and cigarillos |
The rates 13.5 % and 6.5 % do not exist in the IGIC system. The 1 % rate is specific to petroleum, its refining derivatives and gas; do not apply it to other goods. Fuel is at zero today: Decreto-ley 3/2026 set a temporary zero rate, Decreto-ley 4/2026 of 29 June and Decreto-ley 6/2026 of 28 September extended it, and it applies until 31 December 2026, unless it ends early in November or December under the fuel-price (CPI) clause of article 1 of Decreto-ley 6/2026 (BOC 2026/196/3375). The 1 % of article 33 bis is the legal rate, not the one in force, so check the rate on the invoice date before invoicing fuel.
Worked example: a 4,000 EUR shipment from Manchester to Las Palmas
A Manchester company sells goods worth 4,000 EUR to a business in Las Palmas. The company is established in the UK; it is VAT-registered and arranges transport itself. The buyer is a Canarian business with a Spanish NIF. All amounts are in euros, the currency in which IGIC is computed.
| Line | Amount | Note |
|---|---|---|
| Goods on the UK invoice | 4,000.00 EUR | Exported, zero-rated under VAT Notice 703 section 2.1 |
| UK VAT charged by the seller | 0.00 EUR | Section 2.1, notice 703 |
| Customs value declared on the DUA | 4,340.00 EUR | Goods plus freight to the point of entry |
| Inland leg to first destination | 60.00 EUR | Added by art. 25.2.º Ley 20/1991, because the transport document names the warehouse |
| IGIC base | 4,400.00 EUR | |
| IGIC at 7 % | 308.00 EUR | Art. 32.1 Decreto Legislativo 1/2025 |
| AIEM | 0.00 EUR | Not in Annex I, Ley 4/2014 |
The UK seller keeps 4,000.00 EUR, retains the official or commercial evidence of export for six years under Notice 703 section 6.7, and includes the sale in box 6 of the UK VAT return. The buyer pays 308.00 EUR of IGIC at the DUA and recovers it on its next IGIC return.
This example isolates IGIC. UK goods are not Union goods, so the DUA can also carry EU customs duty, zero if the goods qualify for preferential origin under the EU-UK Trade and Cooperation Agreement and the buyer holds the proof of origin. Any duty or other import levy beyond IGIC and AIEM enters the base under article 25 of Ley 20/1991.
The Canarian buyer’s deduction position has nothing to do with the UK invoice. The DUA is the supporting document. Undervaluing the shipment to “help” the buyer reduces the deduction your client can claim and exposes your client as importer of record under article 21 of Ley 20/1991 — not under any UK rule.
The wording your invoice must show
For the goods case from EU mainland, the requirement is literal. Article 6.1.j) of Real Decreto 1619/2012 requires that where the documented operation is exempt, the invoice carry “a reference to the corresponding provisions of Directive 2006/112/EC, or to the corresponding precepts of the VAT Law, or an indication that the operation is exempt”. Any of the three satisfies it. Pick the precise one:
The Canarian buyer typically files the import declaration (DUA) itself or through a customs agent. The DUA copy and the transport evidence (commercial invoice, transport document, customs declaration reference) are the supporting documents the buyer’s accountant will request when claiming IGIC deduction.
When repeated Canarian work forces you to register with the ATC
The reverse charge in article 19.1.2.º.a) of Ley 20/1991 keeps most non-established sellers out of the Canarian tax system. It stops applying when your customer is also not established in the Canaries, when the supply is letting of immovable property that is subject and not exempt or intermediation in such letting, or when you have a fixed place of business in the islands. In any of those cases you are the taxable person on a supply located in the Canaries and you register with the ATC. Periodic returns to the ATC, IGIC charged on your outgoing invoices, IGIC recovered on your costs.
The test is not volume. The test is “am I established in the Canary Islands, and is my customer”. A warehouse, an office or a permanent representative does it; one-off shipments do not.
Three mistakes that make your client pay twice
Charging your own VAT anyway. The client pays your VAT (21 % in mainland Spain, 20 % UK standard rate) and then pays IGIC at the border. Recovering the first one means a credit note and a corrected return on your side. Configure the customer’s country and region before the first invoice, not after the complaint.
Undervaluing the shipment to “help” the buyer. Two problems. The customs value is not yours to compress, and the declared value is the only figure your client can deduct against. Understate it and your client carries a deduction below the goods’ real cost, while any later reassessment — tax, interest and penalty — lands on them as importer of record under article 21 of Ley 20/1991, not on you.
Assuming small parcels are free of everything. Article 14.11 of Ley 20/1991 exempts imports whose global value does not exceed 150 euros, except alcoholic products under CN codes 22.03 to 22.08, perfumes and eaux de cologne, and raw or manufactured tobacco. Below the threshold the simplified H7 declaration replaces the full DUA, under the Orden of 29 July 2016 as amended on 29 July 2021. The ATC H7 guide adds that AIEM has no low-value exemption, so goods in Annex I of Ley 4/2014 cannot use H7 at any amount.
Where Frihet fits
The two references are not interchangeable text, and that is the part worth getting right whatever you invoice from: goods carry the export-exemption reference or the zero-rating notice, services carry the place-of-supply reason, and a bare zero with no explanation is what makes your client’s accountant call you. Decide the wording once, per case, and keep it identical across every Canary Islands invoice you issue.
If your own tax seat is in the Canary Islands, Frihet works from the fiscal zone set on your workspace: invoicing runs on IGIC rather than peninsular VAT, and the quarterly figures feed a modelo 420 preview you review. The preview comes from your posted invoices; the only field you can edit is the carry-forward from the previous quarter (“Compensar anterior”), and exporting it to PDF is a Pro feature. Frihet does not file the return with the ATC for you. The full breakdown of every IGIC rate in force is on our complete IGIC rates table, and the IGIC versus IVA comparison covers the two systems side by side.
You can test it on the free plan, which includes 999 invoices a month and does not ask for a card. Pro is 9 EUR a month and Premium 29 EUR a month; the full breakdown is on pricing.
This guide is general information dated 2026. Your specific transaction, and especially anything involving AIEM classification, VeriFactu scope, or a possible fixed establishment in the Canary Islands, is worth checking with your tax adviser.
Cross-border rules change quietly and the invoice notes go stale first. Get the Frihet journal when we publish, and skip the rest.
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FAQ
Do I charge VAT when selling to the Canary Islands from the EU mainland or the UK?
No, for goods and for B2B services. The Canary Islands are excluded from the EU VAT territory by article 6(1)(b) of Directive 2006/112/EC ([EUR-Lex consolidated text](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02006L0112-20250101)) and Spanish law mirrors it in article 3.Dos.1.º.b) of Ley 37/1992 ([BOE consolidated text](https://www.boe.es/buscar/act.php?id=BOE-A-1992-28740#a3)). A shipment of goods is an exempt export under article 21 of Ley 37/1992, and a B2B service is not located in the Spanish VAT territory under article 69.Uno.1.º. From the UK, a sale of goods to a Canary Islands buyer is a zero-rated export under VAT Notice 703 section 2.1 ([GOV.UK](https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703)), and a B2B service is outside UK VAT because the customer belongs outside the UK under the general place-of-supply rule for business customers ([GOV.UK](https://www.gov.uk/guidance/vat-how-to-work-out-your-place-of-supply-of-services)). The one common exception: a supplier established in mainland Spain invoicing a private individual resident in the Canary Islands generally does charge Spanish VAT on services, because article 69.Dos of Ley 37/1992 expressly withholds the outside-the-Community rule from the Canary Islands, Ceuta and Melilla.
From the UK post-Brexit, what makes a sale of goods to the Canary Islands zero-rated?
The UK VAT Notice 703 — last updated 4 March 2026 — applies "to supplies made on or after 1 January 2021 from Great Britain (England, Scotland and Wales) exported out of the UK" and to "Northern Ireland exported out of the UK to non-EU destinations" ([GOV.UK](https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703)). Section 2.1 explains the zero rating as the natural treatment for goods consumed outside the UK. Section 2.8 covers direct exports where you arrange transport, and section 2.9 covers indirect exports where an overseas customer or their agent collects the goods. The Canary Islands are not part of the UK for VAT purposes and sit outside the EU VAT territory (while inside the EU customs territory), so both direct and indirect export routes apply to a UK supplier.
What is IGIC tax in Spain?
IGIC (Impuesto General Indirecto Canario) is the indirect consumption tax that applies in the Canary Islands instead of VAT. It is a state tax whose administration is devolved to the Canary Islands, so returns are filed with the Agencia Tributaria Canaria (ATC), not the AEAT. Its general rate is 7 per cent, set in article 32.1 of Decreto Legislativo 1/2025 of 13 October, published in BOC no. 207 of 20 October 2025. It sits alongside AIEM, a separate levy on certain imported and locally produced goods.
Which IGIC rate applies to my product in 2026?
Article 32.1 of Decreto Legislativo 1/2025, of 13 October, published in BOC of 20 October 2025 ([ATC legislación](https://www3.gobiernodecanarias.org/tributos/atc/legislacion?q=*&tema=67788), [Juriscan ficha id=79559](https://www3.gobiernodecanarias.org/juriscan/ficha.jsp?id=79559)) sets the IGIC general rate at 7 per cent. Articles 33 to 41 of the same text set a zero rate, a 3 per cent super-reduced rate, a 5 per cent reduced rate, an increased 9.5 per cent rate, a 15 per cent rate for cigars priced above 2.5 euros a unit (article 36), a 20 per cent rate for the rest of tobacco products (article 37), and a 1 per cent legal rate for petroleum products, their refining derivatives and gas under article 33 bis. The 1 per cent is not the rate in force today: fuel is at zero per cent until 31 December 2026, unless it ends early in November or December under the fuel-price (CPI) clause of article 1 of Decreto-ley 6/2026 under temporary decree-laws ([BOC 2026/196/3375](https://www.gobiernodecanarias.org/boc/2026/196/3375.html)). Check the rate that applies to your product before you quote a delivered cost to a Canarian customer.
Who pays the DUA charges when shipping to the Canary Islands?
The importer does. Article 21 of Ley 20/1991 ([ATC PDF](https://www3.gobiernodecanarias.org/tributos/atc/documents/d/agencia-tributaria-canaria/ley_20_1991)) makes the taxable person on imports "those who carry them out" and defines importers as "the recipients of the imported goods, whether purchasers, transferees or owners… or consignees acting in their own name". That is your customer, not you. In practice a carrier or customs agent files the DUA and then bills the buyer for IGIC, any AIEM and a handling fee. That is why the tax never appears on your invoice and why quoting a delivered-duty-paid price without budgeting for it destroys your margin on that order.
Is there a value below which no IGIC is due on a shipment?
Yes. Article 14.11 of Ley 20/1991 exempts imports whose global value does not exceed 150 euros, excluding alcoholic products under CN codes 22.03 to 22.08, perfumes and eaux de cologne, and raw or manufactured tobacco. Those consignments are declared with the simplified H7 form instead of a full DUA. AIEM has no equivalent low-value exemption, so goods listed in Annex I of Ley 4/2014 cannot use H7 whatever the amount.
Do I need to register with the Agencia Tributaria Canaria (ATC) as a non-EU or non-established UK supplier?
Usually not. Article 19.1.2.º.a) of Ley 20/1991 ([ATC PDF](https://www3.gobiernodecanarias.org/tributos/atc/documents/d/agencia-tributaria-canaria/ley_20_1991)) reverses the IGIC taxable person onto the recipient — provided that recipient is a business, a professional, a public body or a legal person established in the Canary Islands — whenever the supplier is not established in the islands. The reverse charge stops applying when your customer is not established in the Canary Islands, when the supply is letting of immovable property that is subject and not exempt or intermediation in such letting, or when you have a fixed place of business in the islands. In any of those cases you are the taxable person and you register with the ATC.
