Canary Islands Tax Rates and Regulations

Determination of Tax Liability in the Canary Islands

The determination of tax liability involves calculating the tax base for each taxable transaction, applying the relevant tax rate, determining the resulting tax liability, considering temporary entry criteria, and, for internal operations, applying tax rates and deductible temporary entry criteria deductions.

Determination of the Tax Base

The tax base consists of the sum of the consideration for the main operation and its ancillary benefits. However, for goods imported or manufactured on a different Canary Island, costs related to ports, airports, insurance, and freight required for transfer from the island to the delivery place are excluded from the taxable base.

Determination of the Tax Rate

0% Tax Rate (Simplified)

• Delivery of newspapers, books, and magazines.
• Deliveries of essential goods (e.g., eggs, bread, flour, fruits, vegetables).
• Transportation of passengers and goods between the Canary Islands.
• Deliveries of oil and refined products.
• Supply of houses designated for official protection under special arrangements, excluding garages and annexes.
• Delivery of drugs or formulas for medical or veterinary purposes.

2% Tax Rate (Simplified)

• Vehicles and chairs for the disabled.
• Vehicles adapted to transport wheelchairs.
• Sanitary and veterinary equipment.
• Equipment and accessories to address physical deficiencies in humans or animals.
• Supply of housing acquired by entities.

9% Tax Rate

Motor-driven vehicles with power exceeding 11 fiscal horsepower.

13% Tax Rate (Simplified)

• Motor-driven vehicles with power exceeding 11 fiscal horsepower.
• Cigarettes and cigars priced higher than 1.8 euros per unit.
• Beverages derived from natural alcohols.
• Caravans and trailers towed by passenger vehicles.
• Perfumes and extracts.
• Car leasing.

20% to 35% Tax Rate

• For black tobacco products: 20%.
• For blond tobacco substitute products: 35%.

Tax Accrual and Tax Period in the Canary Islands

The tax period is the calendar year. However, it's important to distinguish between the tax period and the liquidation period. The liquidation period is when the tax due on each transaction must be included in the declaration and payment made by the employer or professional. There are four liquidation periods, coinciding with the calendar quarters.

The accrual is considered complete when taxable transactions occur, referring to the delivery of goods and services.