ERP for the Canary Islands: IGIC, ZEC, AIEM and Verifactu

The Canary Islands in one view: IGIC, customs and incentives

Businesses in the Canary Islands charge the Impuesto General Indirecto Canario (IGIC) instead of VAT, at a general rate of 7%, file it with the Agencia Tributaria Canaria, and treat goods arriving from mainland Spain as imports. It matters because an ERP set up for peninsular VAT gets the tax codes, the returns and the cost of imported stock wrong in the islands.

This page covers what differs from the rest of Spain. Corporate tax, personal income tax withholding, Social Security, the Spanish chart of accounts, statutory audit and the Verifactu invoicing-software rules work as they do on the peninsula, and are covered on our Spain page. What is Canarian is the indirect tax, the customs border with the peninsula and the EU, the AIEM levy on goods, and two corporate tax incentives: the Zona Especial Canaria (ZEC) at 4% and the reserve for investments in the Canaries (RIC).

The legal framework is the Régimen Económico y Fiscal de Canarias: Law 20/1991 on its tax aspects and Law 19/1994 for the ZEC and the RIC. The Canary rules on IGIC rates, exemptions and special regimes, and on the AIEM, were brought together in October 2025 in a single consolidated text approved by Decreto Legislativo 1/2025, which replaced the IGIC articles of Law 4/2012.

• Indirect tax: IGIC, general rate 7%; no Spanish VAT
• IGIC authority: Agencia Tributaria Canaria; state taxes and customs: AEAT
• Returns: model 420 quarterly, model 425 annual, SII for monthly filers
• Goods from the peninsula or the EU: imports, with IGIC and AIEM at the border
• Incentives: ZEC special corporate tax rate of 4%; RIC
• Invoicing software: Verifactu from 1 January or 1 July 2027

IGIC rates and special regimes

Article 32 of the consolidated text of Decreto Legislativo 1/2025, as amended by the 2026 Canary budget law, sets eight IGIC rates. The zero rate covers a list of basic goods and services in article 33, such as drinking water, bread, flour, gofio, milk, cheese, eggs and unprocessed fruit, vegetables, meat and fish. A specific 1% rate applies since 2026 to petroleum and refined petroleum products, extended to gas from 1 July 2026; the Agencia Tributaria Canaria has published monthly notices during 2026 on the rate applied to fuels, so check the current one. The superreduced 3% rate covers the goods and services in article 34, among them solid mineral fuels, metal ores, electricity, textiles, clothing and footwear. The reduced 5% rate applies to soft drinks with no more than 5 grams of added sugar per 100 millilitres.

The general rate is 7%. Increased rates of 9.5% and 15% apply to certain vehicles, boats and aircraft and, at 15%, to items such as spirits and cigars over 2.5 euro, and a special 20% rate applies to tobacco products other than cigars and cigarillos, including disposable electronic cigarettes. The rate that applies is the one in force when the tax falls due, and imports are taxed at the rate for a supply of the same goods, so the rate for a car or a boat depends on its type and emissions rather than on the general rule.

Two special regimes change how small businesses invoice. Individuals whose total operations in the previous year did not exceed 30,000 euro fall, unless they opt out, into the small business regime, and their supplies are exempt from IGIC; Decreto ley 3/2026 raises that limit to 50,000 euro from 1 January 2027. Retail traders are compulsorily in the retailers' regime: their sales in the course of retail trade are exempt, and their taxable imports of goods for resale carry a surcharge at one tenth of the IGIC rate, for example 0.7% on goods taxed at 7%.

• 0%: basic foodstuffs, water and other goods and services listed in article 33
• 1%: petroleum and refined petroleum products, and gas from 1 July 2026
• 3%: superreduced rate, article 34
• 5%: soft drinks with no more than 5 g of added sugar per 100 ml, article 35
• 7%: general rate
• 9.5% and 15%: increased rates for listed vehicles, boats, aircraft, spirits and luxury items
• 20%: tobacco products other than cigars and cigarillos

Filing IGIC: model 420, model 425 and the SII

The Agencia Tributaria Canaria manages the IGIC and the AIEM, while the state Agencia Tributaria keeps corporate tax, personal income tax and customs. Businesses under the general regime file model 420 quarterly and the annual summary on model 425. Retailers have their own model 424, and the annual return of operations with third parties is model 415.

Businesses with a monthly IGIC settlement period must keep their IGIC books through the SII, the Suministro Inmediato de Información of the IGIC: those in the monthly refund register (REDEME), large companies with IGIC turnover above 6,010,121.04 euro, and entities in the IGIC group regime. Invoice records are generally sent within four calendar days of issue or registration, and the agency validates them immediately. SII filers settle monthly on model 417. Any other business can join voluntarily through the census declaration, model 400.

Purchases of services from suppliers outside the islands are a common source of error. Under the reverse-charge rule of Law 20/1991, when a business not established in the Canaries supplies services to a Canary business, the Canary business itself becomes liable for the IGIC and self-assesses it. The ledger therefore needs a reverse-charge treatment for peninsular and foreign service suppliers.

Goods from the peninsula: customs, IGIC on imports and the AIEM

Article 3 of the Spanish VAT Law excludes the Canary Islands from the territory harmonised for turnover taxes, although they remain inside the EU customs union. A peninsular company that sends goods to a customer in the islands therefore makes a supply that is exempt from VAT under the export rules of article 21 of the VAT Law, and the goods enter the Canaries as an import.

On arrival, a customs import declaration (the DUA) is lodged and IGIC on the import is assessed at the rate that would apply to a supply of the same goods. Many goods also bear the AIEM, the Arbitrio sobre Importaciones y Entregas de Mercancías, which taxes goods brought into the islands and the first delivery of goods produced there, to protect local production. The Agencia Tributaria Canaria publishes the IGIC and AIEM rates for frequently imported goods by customs code.

For a finance team this changes the cost of stock and the cash cycle. IGIC paid on an import is normally recoverable input tax for a business under the general regime, but the AIEM and customs costs normally become part of the purchase cost of the goods. Freight, forwarding and customs agents' fees add further lines to each purchase, so landed cost per item has to be built from several documents.

ZEC and RIC: corporate tax incentives

The Zona Especial Canaria covers the whole archipelago. Newly created companies and branches entered in the Official Register of ZEC Entities pay corporate tax at a special rate of 4% on the part of their taxable base that comes from operations carried out materially and effectively in the islands, under articles 43 and 44 of Law 19/1994.

Registration has conditions set in article 31. The entity must have its registered office and effective management in the islands and at least one director resident there, must invest in fixed assets used in the islands within its first two years, and must create jobs within six months and keep that average headcount. Registration is limited to the period of validity of the EU's General Block Exemption Regulation, so check the current deadline with the ZEC authorities before planning a structure around it.

• ZEC investment in Gran Canaria and Tenerife: at least 100,000 euro in two years
• ZEC investment in El Hierro, Fuerteventura, La Gomera, Lanzarote and La Palma: at least 50,000 euro
• ZEC jobs: at least 5 in Gran Canaria and Tenerife, 3 on the other islands
• RIC: taxable base reduced by allocations to the reserve of up to 90% of undistributed profit from Canary establishments

Verifactu, SII and B2B e-invoicing in the islands

The Canary Islands are common tax territory, so the Verifactu rules of Royal Decree 1007/2023 apply to invoicing software, with references to VAT read as IGIC. As of September 2026, companies must run an adapted system before 1 January 2027 and other businesses before 1 July 2027. Each invoice then generates a chained billing record and carries a QR code. The state rules exclude businesses that keep their VAT books through the SII; a Canary business in the SII of the IGIC should confirm with the tax authorities whether that exclusion covers it.

The national B2B e-invoicing obligation of Law 18/2022 and Royal Decree 238/2026 has no effective date yet, because the ministerial order that starts the twelve and twenty-four month periods had not been published as of September 2026. The decree contains no provision specific to the Canary Islands, so plan on the same timetable as the rest of common territory.

Record retention follows the general rules: invoices, copies of invoices issued and IGIC records must be kept, electronically if preferred, at least for the four-year limitation period of the General Tax Law, and the six-year rule of the Commercial Code for books and supporting documents applies as elsewhere in Spain.

Cities and regions: where the rules differ

Within the archipelago the IGIC applies as one territory, so a sale from Las Palmas de Gran Canaria to a customer in Santa Cruz de Tenerife, San Cristóbal de La Laguna or Arrecife is an ordinary domestic IGIC supply, with no customs formalities between islands. The same model 420 and the same SII cover a business with sites in Telde, Arona, Puerto del Rosario and Santa Cruz de La Palma.

Where the islands differ is in the ZEC thresholds. The two capital islands, Gran Canaria and Tenerife, require a minimum investment of 100,000 euro and five jobs; El Hierro, Fuerteventura, La Gomera, Lanzarote and La Palma require 50,000 euro and three jobs. La Palma also has zero-rated IGIC for certain operations linked to recovery from the 2021 volcanic eruption, a measure whose period of application Decreto ley 7/2025 extended, so a business rebuilding or supplying there should check whether a sale qualifies.

Spanish is the official language, and invoices follow the state invoicing regulation, which allows any language but lets the tax authority ask for a translation into Spanish. Currency is the euro. Between the islands and the peninsula, the border that matters is the customs border, so the city a customer is in decides whether a sale is an IGIC supply or an export.

• Gran Canaria (Las Palmas de Gran Canaria, Telde): ZEC minimum 100,000 euro and 5 jobs
• Tenerife (Santa Cruz de Tenerife, La Laguna, Arona): ZEC minimum 100,000 euro and 5 jobs
• Lanzarote (Arrecife), Fuerteventura (Puerto del Rosario), La Palma: 50,000 euro and 3 jobs
• Between islands: domestic IGIC, no customs

An ERP checklist for a Canary Islands business

An ERP that runs a peninsular Spanish company can run a Canary one only if its tax model is not hard-wired to VAT. Check the points below with real documents, such as an import from Cádiz with AIEM and a retail sale, before signing.

• IGIC tax codes at 0, 1, 3, 5, 7, 9.5, 15 and 20% with IGIC labels on invoices
• Exempt treatment for retail-regime and small-business sales
• Reverse charge for services bought from outside the islands
• Import IGIC, AIEM and customs costs split between tax and landed cost
• Model 420 and 425 figures from the ledger; SII records within four days where required
• Verifactu-adapted invoicing before your 2027 deadline
• Separate cost tracking for ZEC operations and RIC reserve investments
• Stock by island location with inter-island transfers

How Skyline Nexus ERP handles Canary requirements

Skyline Nexus ERP handles the ledger, stock and reporting side of a Canary Islands business. Tax rates are defined by name and percentage in Settings > Tax Rates, so the eight IGIC rates are set up as IGIC codes, with a 0% code kept apart from an exempt code for retail-regime and small-business sales, and tax groups combine rates where needed. With auto-post on, a final sale posts receivables, revenue by category and output tax computed per line on the same basis as the tax report, and a purchase posts input tax and inventory. The VAT Return screen prefills tax-exclusive bases and tax for a date range and location, a working basis for the model 420 figures. Stock is held per business location, so warehouses in Gran Canaria and Tenerife keep their own stock and their own invoice numbering scheme.

Verifactu and SII connectors for the IGIC are part of our national e-invoicing roll-out, which goes market by market: tell us you operate in the Canary Islands and we will confirm the go-live date for your business. Until then, the working route is to issue invoices from a Verifactu-adapted invoicing system and bring them in with Import Sales, which previews each batch and can revert it, or to connect that system through the Connector module's REST API, which exposes sales, returns, contacts and taxes. Returns are then filed with the Agencia Tributaria Canaria from the ledger reports.

For imports, record the supplier invoice and the customs costs as purchases so they reach stock cost, and post the import IGIC and AIEM with a balanced journal; Logistics and Customs Clearance modules are available by subscription package, while the DUA itself is lodged by your customs agent. Stock transfers between islands move quantities between locations, and a short journal records any value moved between branches. Spanish payroll connectors are on the roll-out list; meanwhile payroll runs in local software and posts a monthly journal. The interface includes Spanish translations, and posted entries are corrected by reversal, with changes recorded in the Audit Trail.

Rates, regimes and deadlines in this summary change, and many countries are actively legislating on e-invoicing. This is general information, not tax or legal advice — confirm the current position with the authority named above or with your tax adviser before you rely on it.