There is no VAT in the Canary Islands: there is IGIC
And in Ceuta and Melilla, IPSI. They are different taxes, with their own rates, their own forms and their own administration. Software that only knows about VAT leaves out more than two million people.
What actually changes
It is not “VAT under another name”: the rates change, the forms change and who collects it changes.
A different tax, not a different rate
IGIC is a tax of the Canary Islands' own, administered by the Agencia Tributaria Canaria, not by the state one. IPSI is administered by each autonomous city.
Different rates
IGIC has its own scale — zero, reduced, general and increased rates — different from the VAT one. IPSI, whatever each city's bylaw sets.
Different forms
In the Canary Islands, the periodic IGIC self-assessments and the annual summary. In Ceuta and Melilla, the ones in their bylaw.
But VeriFactu does apply
The Canary Islands, Ceuta and Melilla are inside the invoicing regulation: references to VAT are read as references to IGIC and IPSI.
Screenshot of the ERP: What actually changes
The IGIC rates
IGIC has a scale of its own, with a zero rate that does not exist in mainland VAT and that applies to essential goods, as well as reduced, general and increased rates for certain goods.
The rates are set by the Autonomous Community of the Canary Islands and have been changed several times in recent years, so we do not reproduce them on this page as though they were stable: the place to check them is the Agencia Tributaria Canaria. In Cairos they come preloaded and are updated when they change.
With IPSI something similar happens, only more so: it is governed by the tax bylaw of each autonomous city, and Ceuta and Melilla do not have the same rates and do not tax exactly the same things.
Invoicing between the Canary Islands and the mainland
Here is the part that raises the most questions, because it is not intuitive: the Canary Islands, Ceuta and Melilla are outside the territory where VAT applies, even though they are inside Spain.
The practical consequence: a supply of goods from the mainland to the Canary Islands is an export for VAT purposes — exempt, with its DUA customs declaration — and on arrival IGIC is settled on the import. It is not a domestic sale at a different rate: it is a different transaction.
On services, the general place-of-supply rule governs, and you have to look at where the service is treated as supplied. It is one of the points where a consultation before issuing the first invoice pays off most.
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Frequently asked questions
Invoicing from the Canary Islands without fighting your software
With IGIC set up and its own forms, not with a VAT you have renamed by hand.
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