IGIC 0%: What's Now Tax-Free in the Canaries

The Canary Islands already have one of Europe's lowest tax systems — no IVA (VAT), but IGIC with a standard rate of just 7 per cent (compared to 21% on the mainland). Now, some products are getting even cheaper.

What Is IGIC?

For newcomers: IGIC (Impuesto General Indirecto Canario) is the Canarian version of VAT. It has six tiers — from 0% to 20%. The standard rate is 7%, less than a third of mainland Spain's IVA (21%). This makes the Canaries more attractive for consumers and businesses than the peninsula.

What's New at 0%

The anti-crisis package of April 7, 2026 (Decreto ley 3/2026) expands the list of IGIC-exempt products:

New at 0%: Salt, butter, roasted coffee (including decaf)

Already at 0%: Bread, flour, milk, eggs, fruit, vegetables, pulses, cooking oil, water, medicine, books, newspapers, electricity (up to 10 kW), inter-island transport

Fuel: IGIC on petrol and diesel drops from 1% to 0%. This saves roughly €0.50–0.70 on a 50-litre tank — not much, but a signal. The measure costs the regional government €3.9 million for the first 100 days.

What This Means for Expats and Tourists

In the supermarket, you'll barely notice the difference on salt, butter and coffee — the IGIC saving is a few cents per product. The real advantage is the big picture: the Canaries already have the lowest food taxes in the EU. Bread, milk, fruit, vegetables, eggs, water — all at 0%. On mainland Spain, you pay 4–10% IVA on the same products.

For the self-employed (autónomos), the raised revenue threshold to €50,000 is relevant: those below this amount can opt out of IGIC entirely (régimen especial del pequeño empresario). This simplifies tax returns considerably and reduces bureaucracy.

Background: Iran Crisis and Energy Prices

The package responds to the impact of the Iran conflict on energy prices. As an island region, the Canaries are particularly dependent on fuel imports. Rising oil prices hit commuters, fishermen, farmers and the transport sector directly. The total package comprises €29.8 million in emergency aid — alongside the IGIC cut, it includes subsidies for the primary sector and fuel refund bonuses.

For a detailed explanation of IGIC, IRPF and Canarian special tax rules: see Part 9 of our Relocate series.