The tax regime in the Canary Islands

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Le Canary Islands, with their unique geographical location, offer an attractive tax regime for anyone wishing to invest or relocate to this Spanish region. Let's see what the main features of this regime are and how it affects taxation for individuals, freelancers and companies.

The Context of the Canary Islands

The Canary Islands are part of the European Union, but are considered Outermost Regions. This special status stems from their geographical location far from mainland Europe. Due to this status, the Canary Islands enjoy certain fiscal advantages over other European states. Let's see what they are:

  1. Extraterritoriality of VAT: The Canary Islands are exempt from VAT, which means it is not due here. This is of particular interest to businesses operating in the archipelago.

  2. Reduced tax rates: For business entities, the Canary Islands offer reduced taxation.IGIC, the local equivalent of VAT, stands at 7 percent for domestic transactions. In addition, the IGIC also acts as a customs duty, allowing free movement of people but not goods.

  3. Proportional IRPEF: The Income Tax for Individuals (IRPEF) in the Canary Islands is levied at proportional rates. Here are the details:

    • 0% for basic consumer goods such as energy, water and telephony.
    • 2% for goods.
    • 5% for services.
    • 13.5 percent for luxury products.

Reliefs and Concessions

Tax breaks affect not only businesses but also families. Here are some highlights:

  1. Child relief: Families are eligible for relief based on the number of children:

    • €1700 if a child studies on another island in the archipelago.
    • Approximately €2000 for each child under the age of 13.
    • €1500 for each child over the age of 15.
    • Families with 3 or more children are considered large and are eligible for additional relief.

  2. Choice of declaration: Spouses can decide whether to file a declaration separately or jointly.

  3. Senior benefits: If you are over 65 and working, you can get reductions twice as much as if you were a regular worker.

In summary, the Canary Islands' tax regime offers a business- and family-friendly environment, making them one of the most attractive destinations for those seeking investment opportunities and quality living. 🌴💼🏡

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