This information applies to for commercial imports NOT personal ones which are exempt up to 150 euros in value
Goods leaving the Mainland or another EU country and coming to the Canary Islands
The Canary Islands does not apply IVA (VAT) sales tax but its own version which is called IGIC (El Impuesto General Indirecto Canario). This has different rates from IVA. To know if a Spanish company liable under the IVA regime has to apply IVA or not , we have to ask which applies scenario 1 or 2:
- If products (physical goods) are brought into the Canary Islands, from the mainland this is considered export, and therefore it is exempt from IVA, as long as the supplier declares these goods on their 303 form and in their IVA summary form 390 as exports. The buyer will then pay at customs the IGIC tax rate that corresponds to the imported product. However, even if the latter has a lower tax rate than IVA, we must still add the costs of shipping the goods and the import duty (A.I.E.M) and the costs of processing the DUA (Single Administrative Customs Document). The final result is often an increase in the price of products, compared to what would be paid in mainland Spain for the same item.
- If services are provided but NO physical products are brought into the Islands, the invoice is also issued without VAT. It will be recorded as exempt VAT type. Invoices for this type of operation must show that it is an “operation exempt from VAT by application of article 84.Uno.2.c of the LIVA”. Form 303 will show this operation in box . In the VAT registration book it will appear as an exempt transaction, not as an export. If the person in the islands acquiring the service is a business, this operation will then be subject to IGIC. If the recipient of the service is not a Canarian entrepreneur, but a private individual, the mainland VAT will be applied by the service provider.
If IVA has been paid on an invoice in error and you are entitled to its return a refund of VAT can be requested on modelo 360. This is an attempt at simplifying a VERY complicated subject and most ordinary people in business will probably need an import agent or their Gestor to deal with this.
A DUA (Single Administrative Customs Document) will also be required for personal imports over 150 euros in value including the most common type – a vehicle. The import duty ranges between 5 and 15% generally depending on the type of item imported.