Canary Islands IGIC and ITPAJD Tax Regulations

IGIC vs. ITPAJD: Taxing Capital Transfers

Acts subject to the onerous form of capital transfers are not taxed by the IGIC (Canary Islands General Indirect Tax) due to its commercial nature. Instead, transactions subject to or exempt from these acts are taxed by the ITPAJD (Transfer Tax and Stamp Duty). Furthermore, corporate transactions may be taxed by the ITPAJD and may also be subject to the IGIC when performing movements of business assets for the establishment of a company.

Subjective Elements of IGIC Taxation

The IGIC applies to the delivery of goods (including imports) and services supplied for consideration by employers and professionals on a regular basis. This applies to those developing their business or profession and importing property in the Canary Islands. However, no transactions are taxed without consideration or for own consumption.

Business and Professional Entities

• People who regularly conduct trade or business activities.
• Commercial companies.
• The State and other public entities, provided they conduct business or professional activities.

Objective Elements: Categories of Operations

The law distinguishes two categories of professional or business operations subject to tax: supplies of goods and services, and a third category regarding foreign trade operations, which are subject to tax regardless of the importer's condition.

Time Element and Liquidation Periods

The IGIC is an instant tax, meaning it is born with each taxable transaction. However, the liquidation period resulting from the sum of the tax rates is held quarterly.

Taxable Persons and Entrepreneurs

Taxable persons are entrepreneurs or professionals who:

• Conduct the supply of goods or services subject to tax.
• Are recipients of goods or services if the provider is not established in the Canary Islands (reverse charge).

Operations Not Subject to IGIC

The following five operations are not subject to IGIC:

• The supply of money by way of compensation or payment.
• Services provided by individuals derived from dependency structures and administrative relations (employment).
• The transfer of business assets or professional rights from a taxpayer's business to their personal wealth or personal consumption.
• The partial or total private use of the taxpayer's assets assigned to their business or professional activities.
• The provision of concessions and administrative authorizations.