Relocation

Are the Canary Islands Tax Free? What Changes When You Move There

The Canary Islands are cheaper at the till, not tax free for residents. What IGIC, duty free and Spanish income tax mean for visitors and for people who move.

October 22, 2026 · 7 min read

Also available in: العربية বাংলা Deutsch español français ગુજરાતી हिन्दी Indonesia italiano 日本語 ಕನ್ನಡ 한국어 मराठी polski português русский Kiswahili தமிழ்తెలుగు ไทย Türkçe українська اردو Tiếng Việt 中文

No, the Canary Islands are not tax free. They are outside the European Union VAT area, so shops charge a local sales tax called IGIC instead of Spanish VAT, and it is lower on many goods. That is why people call the islands "tax free". But if you live there, you pay Spanish income tax like anyone else resident in Spain.

The phrase mixes two different things: what a visitor pays at the till, and what a resident pays on income. This article explains both, with the official sources, so you know which one applies to you. It ends with a short checklist for people who are thinking of moving to the islands.

This is general information, not tax advice. Rules and rates change. Check the current rules with the Spanish tax agency (Agencia Tributaria), the Canary Islands tax agency (Agencia Tributaria Canaria) or a tax adviser before you decide anything.

Why the Canary Islands are called tax free

The European Union VAT directive lists territories where it does not apply. Article 6 says the directive does not apply to some territories "forming part of the customs territory of the Community", and the Canary Islands are on that list (VAT Directive 2006/112/EC). Article 5 then excludes those territories from the definition of a Member State for VAT purposes.

So there are two facts at the same time:

The Canary Islands are part of Spain and part of the European Union.
For VAT, they are treated as outside the European Union.

Instead of VAT, goods and services in the islands carry IGIC (Impuesto General Indirecto Canario), the Canary general indirect tax. It is still a tax. It is simply a different one, with different rates.

What IGIC means at the till

The Canary Islands tax agency publishes a table of the IGIC rates for the goods that people most often bring into the islands. In the version last updated on twenty-one August 2026, the rates include (Agencia Tributaria Canaria):

mobile phones, computers and smart watches: 7 percent;
shoes, clothing and bags: 3 percent;
bicycles, including electric-assisted bicycles: 0 percent;
perfume: 15 percent;
jewellery plated with gold or silver, and watches with a precious metal case: 15 percent.

The same table has a second column for AIEM, another Canary tax that applies to some imported goods. For many items in the table it is empty, but for some, such as soft drinks, it is not.

Compare this with the VAT you know from home, and you see why many products cost less. But the table also shows that "tax free" is the wrong word. A phone still carries tax. Perfume carries a higher IGIC rate than a phone.

Duty free for visitors: what it means and its limits

When people say they bought something "duty free" in the islands, they usually mean the price was lower because it included IGIC instead of VAT, or because they bought it in an airport shop.

This does not mean you can bring an unlimited amount home. Your home country's customs rules still apply when you arrive. The UK government, for example, explains that personal allowance rules apply to goods you bought overseas, "regardless of where you bought them", and that this includes duty-free or tax-free shops (GOV.UK). If you go over an allowance, you pay tax and duty on all the goods in that category.

For a visitor, the islands are cheaper for some shopping. That is the whole of the "tax free" story for a visitor.

If you move there: income tax works as in the rest of Spain

This is the part that matters if you are planning to live in the islands.

The Spanish income tax law (Ley 35/2006, known as IRPF) says in article 4 that the tax applies "in all Spanish territory". The only exceptions named are the special regimes of the Basque Country and Navarre. For the Canary Islands, Ceuta and Melilla, the law says that their specific rules are taken into account, but they are not outside the tax (Ley IRPF, BOE).

When you become a tax resident

Article 9 of the same law says you are resident in Spain for tax purposes if any of these is true:

You stay in Spain for more than 183 days in a calendar year. Short absences count as days in Spain, unless you prove that you are tax resident in another country.
The main base of your activities or economic interests is in Spain, directly or indirectly.

The law also presumes, unless you prove otherwise, that you are resident in Spain if your spouse (not legally separated) and your dependent minor children live in Spain. The Spanish tax agency's practical manual explains the same rules in plain language (Agencia Tributaria).

What a resident pays tax on

Article 2 of the law says the tax covers all of your income, gains and losses, "regardless of where they were produced and whatever the residence of the payer". In simple words: if you live in the islands and work online for a client or an employer in another country, that income is still inside Spanish income tax. Moving to an island with lower sales tax does not make online income tax free.

Tax treaties between Spain and other countries can affect how income is taxed and how double taxation is avoided (article 5 of the same law). How a treaty applies depends on your situation, so this is a question for a tax adviser, not for an article.

Everyday tax differences that residents notice

Living outside the VAT area has practical effects that visitors rarely see.

Shopping on the Spanish mainland. A resident of the Canary Islands who buys goods on the mainland pays Spanish VAT in the shop, but can ask for it back. The shop issues an electronic refund document (DER). On arrival in the islands, the traveller goes to the customs office at the airport or port to have it stamped. The VAT refund depends on first paying the IGIC due on the goods. For purchases after twenty-three September 2025, the traveller does not need to file a form, but must give a valid email address and phone number at the time of purchase (Agencia Tributaria Canaria).

Goods that arrive from outside the islands. The Canary tax agency publishes its IGIC table for exactly this reason: goods brought into the islands are imports for IGIC purposes. The table explains how goods are declared: many can go through the simplified declaration (model 040), while some, such as perfume, need a full customs declaration (DUA) (Agencia Tributaria Canaria). If you plan to have furniture, electronics or online orders sent from the mainland or from abroad, expect this step.

Before you move: put tax inside a full plan

Lower IGIC makes some shopping cheaper. It does not pay the rent, and it does not reduce your income tax. For most people who move, the larger questions are housing, income and savings.

If you are considering Fuerteventura in particular, Fuerteventura Check is a partner project of Pacix Labs that helps with exactly this. Its page says plainly that IGIC replaces VAT but does not make residents or online workers tax free. It offers a practical guide (PDF, €14.99) and a personal report (€59.99), built from a questionnaire of about eight minutes. The report shows the monthly balance, the months you can last on your savings, and four difficult scenarios, including three months without income. The page also says it does not replace an accountant: it lists the questions to take to one. You can do the same work yourself with a spreadsheet, the official tax agency pages linked above and a local tax adviser.

Summary checklist

The Canary Islands are part of Spain and of the European Union, but outside the EU VAT area.
Shops charge IGIC instead of VAT. Many goods carry 7 percent or less; some, such as perfume, carry 15 percent.
Duty-free shopping does not remove your home country's customs allowances.
If you live in Spain more than 183 days in a calendar year, or your main economic interests are there, you are likely a Spanish tax resident.
A Spanish tax resident pays income tax on all income, including online work for foreign clients or employers.
Residents who shop on the mainland can ask for VAT back, after paying IGIC.
Ask a tax adviser about treaties, pensions and self-employed income before you move.

Frequently asked questions

Are the Canary Islands tax free?

No. The islands are outside the EU VAT area and use their own sales tax, IGIC, which is lower than Spanish VAT on many goods. Residents still pay Spanish income tax (IRPF) on their income.

Why are things cheaper in the Canary Islands?

Because IGIC replaces VAT. On the Canary tax agency's own table, phones and computers carry 7 percent IGIC and shoes 3 percent, while some items such as perfume carry 15 percent.

If I move to the Canary Islands and work online, do I pay income tax?

If you become a Spanish tax resident, Spanish income tax covers all your income, wherever it is earned and wherever the payer is. Living in the Canary Islands does not change that. Ask a tax adviser how a tax treaty applies to your case.

When do I become a tax resident in Spain?

Under article 9 of the Spanish income tax law, mainly when you spend more than 183 days in Spain in a calendar year, or when the main base of your activities or economic interests is in Spain. There is also a presumption linked to a spouse and minor children living in Spain.

Can I buy duty free in the Canary Islands and bring it home without limits?

No. Your home country's personal allowance still applies. For example, the UK government says its allowance rules apply to goods bought overseas, including in duty-free or tax-free shops.