What is IGIC and how it affects digital services in the Canary Islands

If you hire digital services from a professional or studio based in the Canary Islands, your invoice won’t carry VAT. It carries IGIC. And that can have implications worth knowing about.

This article explains clearly what IGIC is, how it differs from VAT, and what it means for you if you’re thinking of hiring web design, SEO, or other digital services.

What is IGIC

IGIC (Impuesto General Indirecto Canario, or Canary Islands General Indirect Tax) is the indirect tax applied in the Canary Islands instead of IVA (the Spanish VAT). The Canary Islands, along with Ceuta and Melilla, fall outside the EU’s VAT territory.

The standard IGIC rate is 7%, compared to the 21% standard VAT rate in mainland Spain and the Balearic Islands. This difference exists because the Canary Islands have their own fiscal regime recognised by the European Union, the Canary Islands Economic and Fiscal Regime (REF).

IGIC rates in 2026

Rate	Percentage	Examples
Zero rate	0%	Basic products (water, bread, milk, books, medication)
Reduced rate	3%	Transport, hospitality, housing
Standard rate	7%	Professional services, web design, SEO, consulting
Increased rate	9.5%	Certain vehicles
Special rate	15% / 20%	Tobacco, alcohol

Digital services such as web design, SEO, website maintenance and digital consulting are taxed at the standard rate of 7%.

What happens when a mainland Spanish business hires services in the Canary Islands

This is where the most common questions arise. It depends on whether you’re a business/self-employed or a final consumer:

If you’re a business or self-employed (B2B)

When a company or self-employed professional from mainland Spain hires services from a professional in the Canary Islands, the reverse charge mechanism applies. In practice:

1. The Canary Islands professional issues the invoice without IGIC (exempt as an export of services).
2. The mainland client self-assesses VAT at 21% in their tax return.
3. That same self-assessed VAT is fully deducted in the same return.
4. Net result: zero tax cost for the client.

It’s important to understand that this doesn’t represent a “14% saving” as it’s sometimes oversimplified. For a business or self-employed person who can deduct VAT, the tax is neutral in both cases. The real advantage is operational: the invoice arrives without added tax, which can improve short-term cash flow.

If you’re a final consumer (B2C)

If you hire as a private individual (without economic activity), the invoice carries IGIC at 7%. In this case there is a real difference compared to VAT: you pay 7% instead of 21%. However, this scenario is uncommon for professional web design services.

What you should check with your accountant

Every tax situation is different. Before making decisions based on the fiscal regime, we recommend consulting your advisor about:

• Your VAT regime: if you’re on a simplified regime, equivalence surcharge, or the standard regime, the implications change.
• Deductibility: if you can deduct 100% of the VAT charged, the fiscal advantage of IGIC is neutral for you.
• Formal requirements: the reverse charge mechanism has specific reporting requirements (form 303 in Spain).

Practical summary

Your situation	What happens with the invoice	Real advantage
Business/self-employed in mainland Spain	Invoice without tax -> self-assess VAT -> deduct it	Cash flow improvement, not a tax saving
Business/self-employed in the Canary Islands	Invoice with IGIC at 7%	You pay 7% instead of 21% VAT
Final consumer in mainland Spain	Invoice with IGIC at 7%	You pay 7% instead of 21% VAT

The bottom line

IGIC is neither better nor worse than VAT — it’s a different fiscal regime. Its real impact depends on your specific situation. Before making decisions based on taxation, talk to your accountant. They’re the only person who can give you a reliable answer for your case.

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Have any questions about working with a studio in the Canary Islands? Get in touch and we’ll help with whatever we can.