Developments in the Canary Islands tax system: Legislative Decree 1/2025 comes into force, consolidating a large part of the IGIC and AIEM regulations

On 20 October 2025, Legislative Decree 1/2025 of 13 October was published in the Official Gazette of the Canary Islands (Boletin Oficial de Canarias), approving the consolidated text of the legal regulations approved by the Autonomous Community of the Canary Islands in relation to the Canary Islands General Indirect Tax (IGIC, its Spanish acronym) and the Tax on Imports and Deliveries of Goods in the Canary Islands (AIEM, its Spanish acronym). This regulation came into force on 21 October 2025.

The approval of this regulation seeks to integrate into a single body of law the legal provisions approved by the Autonomous Community of the Canary Islands that affect the taxes. In relation to IGIC, the provisions regulating internal exemptions, tax rates and special regimes are integrated into this text. Thus, the reference that, in accordance with invoicing regulations, must be made to the provisions underlying the IGIC exemptions must now refer to the corresponding article of the aforementioned consolidated text. With regard to the AIEM, the regulations relating to its scope of application, exemptions and tax rates are incorporated.

In particular, the regulations relating to IGIC and AIEM contained in the following regulations are consolidated in the aforementioned regulatory text.

• Law 4/2012, of 25 June, on administrative and tax measures.
• Law 4/2014, of 26 June, amending the regulation of the tax on imports and deliveries of goods in the Canary Islands.
• Law 6/2008, of 23 December, on tax measures to encourage economic activity.
• Law 11/2011, of 28 December, on tax measures to promote the sale and renovation of housing and other tax measures.
• Decree Law 12/2021, of 30 September, adopting tax, organisational and management measures as a result of the volcanic eruption on the island of La Palma.
• Decree Law 2/2022, of 10 February, adapting the exceptional tax measures on the island of La Palma to Decree Law 1/2022, of 20 January, adopting urgent urban planning and economic measures for the construction or reconstruction of primary residences affected by the volcanic eruption on the island of La Palma and amending the aforementioned Decree Law.
• Law 7/2022, of 28 December, on the General Budget of the Autonomous Community of the Canary Islands for 2023.
• Law 5/2024, of 26 December, on the General Budget of the Autonomous Community of the Canary Islands for 2025.
• Decree Law 1/2025, of 3 February, amending certain regional measures in relation to personal income tax and the extraordinary and temporary rebate on the final price of certain fuels derived from oil refining for the period from 1 February 2025 to 31 December 2025, and determines the application of a zero rate in the Canary Islands General Indirect Tax for the recovery of various activities on the island of La Palma.

Likewise, minor modifications are introduced in relation to the consolidated texts in order to provide legal certainty, without implying a different interpretation. In particular, the following clarifications with regard to IGIC are worth pointing out:

1. Given the existence of two reduced tax rates in the IGIC, the 5 per cent tax rate will now be called the “reduced rate” (“tipo reducido”) and the 3 per cent rate will be called the “super-reduced rate” (“tipo superreducido”).
2. The application of the IGIC exemption relating to the provision of services to persons in a situation of dependency requires not only that these persons have their situation of dependency recognised, but also that the right to the corresponding benefits derived from that situation is recognised.
3. The IGIC exemption applicable to the provision of services and the delivery of ancillary goods made directly to their members by legally recognised non-profit organisations or entities shall not cover visa services provided to members of professional associations.
4. The IGIC exemption for sports services does not apply to sporting events, including amateur events.
5. The previously dispersed regulations on the zero per cent IGIC tax rate applicable to certain transactions relating to the volcanic eruption on the island of La Palma are now integrated into a single provision.