The Economic and Fiscal Regime (REF) is the set of special tax measures that the Spanish Constitution and the European Union grant to the Canary Islands on account of their remoteness, island nature and limited market size. In practice, it means that, from a fiscal standpoint, living in or shipping goods to the Canary Islands works very differently from doing so on the Spanish mainland, with concrete benefits for individuals and businesses. This guide explains the key aspects of the REF and how they apply to your removal.
Origin and rationale of the Canary Islands REF
The current REF is governed by Law 19/1994 on the Amendment of the Economic and Fiscal Regime of the Canary Islands, supplemented by Law 20/1991, which introduced the IGIC and the AIEM. Its legal basis lies in Article 138.1 of the Spanish Constitution and in Article 349 of the Treaty on the Functioning of the European Union, which recognises the Canary Islands as an Outermost Region (RUP).
The objective is to compensate for the structural additional costs borne by the archipelago due to its distance from the continent (expensive transport, small markets, external dependency), through a more favourable dedicated tax system.
The three fiscal pillars of the REF
1. IGIC: the Canary Islands tax in place of VAT
The Canary Islands General Indirect Tax (IGIC) replaces VAT for all transactions carried out in the Canary Islands. The current rates (2026) are:
- 0% (zero rate): bread, flour, milk, eggs, fruit, vegetables, books, press, social housing
- 3% (reduced rate): food, water, transport, hospitality, domestic electricity
- 7% (standard rate): most goods and services
- 9.5% (increased rate): vehicles, perfumery, jewellery
- 15% (special rate): blond tobacco, high-strength alcoholic beverages
Compared with mainland VAT (4%, 10%, 21%), the saving is significant, especially for everyday consumption. A purchase of €1,000 that would attract €210 in VAT on the mainland incurs only €70 in IGIC in the Canary Islands.
2. AIEM: the levy on incoming goods
The Levy on Imports and Deliveries of Goods in the Canary Islands (AIEM) applies to goods entering the Canary Islands territory that are also manufactured locally. Its purpose is to protect Canary Islands industry from unfair foreign competition in strategic sectors (tobacco, beverages, footwear, furniture, etc.).
Rates range from 5% to 25% depending on the product category and are applied AT ENTRY, not at subsequent sale. In other words: when your removal arrives at the Canary Islands port, the goods must be valued and, technically, the AIEM could apply.
The good news: used personal effects brought as part of a change of residence are EXEMPT if you claim the waiver (see below).
3. DUA: the customs document
The Single Administrative Document (DUA) is the document that declares to the Tax Agency the entry or exit of goods from the Canary Islands. It is submitted by the customs agent (for removals, we handle this) and includes:
- Detailed inventory of the goods
- Declared value of the effects
- Type of operation (definitive import, temporary import, return, etc.)
- Where applicable, application for the AIEM waiver
Without an approved DUA, your removal will be held at the Canary Islands port. It is therefore critical to process it correctly with all supporting documents.
The AIEM waiver for change of residence
This is the most important REF benefit for private individuals: if you are moving to live in the Canary Islands and bringing your used personal effects, you can apply for the AIEM waiver and pay NO Canary Islands levy on them.
Requirements for the waiver
- Having resided outside the Canary Islands for at least 12 months before the move (evidenced by a certificate of registration at your place of origin)
- Establishing effective residence in the Canary Islands (registering in the destination municipality)
- The effects must be used and for personal or domestic use, not for resale
- Importing them within the 12 months following the change of residence
- Not disposing of them during the 12 months following their import
Documents you must provide
- Certificate of registration at your PLACE OF ORIGIN (with the full history of the past 12+ months)
- Certificate of registration at your DESTINATION (after the move)
- Valid national identity document / NIE
- Rental agreement or title deed for the property in the Canary Islands
- Valued inventory of the effects (prepared by Horizont Atlantic)
- If relocating for work: employment contract or employer's transfer document
Other REF advantages for individuals
Regional income tax (IRPF) reliefs
If you register as resident in the Canary Islands, your income tax (IRPF) is calculated using the Canary Islands regional deductions, which include:
- Higher personal and family allowance
- Deduction for the birth or adoption of children
- Deduction for renting your main home (up to €600/year)
- Deduction for university study expenses outside the Canary Islands
Resident discount
Residents registered in the Canary Islands receive a 75% discount on flights and ferry crossings to and from the Spanish mainland (and between the islands). For a family of four, this represents savings of €1,500–3,000 per year.
Canary Islands health card (SCS)
After registering as a resident, you are enrolled in the Canary Islands Health Service, with full access to primary care, specialist care and emergency services at any public health centre in the Canary Islands.
REF advantages for businesses
Canary Islands Special Zone (ZEC)
Companies that set up in the Canary Islands and meet certain requirements (job creation, minimum investment) may pay Corporation Tax at 4% instead of the standard 25%. This is the lowest rate in the European Union and has attracted more than 500 companies since 2000 (audiovisual, technology, international trade).
Canary Islands Investment Reserve (RIC)
Companies and self-employed individuals can allocate up to 90% of their profits to a RIC, proportionally reducing their tax base if they reinvest in the Canary Islands within defined timeframes. It is a powerful tool for fiscal planning.
Deduction for investment in audiovisual productions
Up to 54% deduction for audiovisual productions filmed in the Canary Islands. This is why many international series and films (Fast & Furious, Star Wars, Allied) have been shot in Lanzarote and Tenerife.
How we apply the REF to your removal
At Horizont Atlantic we manage the entire REF process for your removal:
- Before the removal: we review your residence documentation and tell you what you need to obtain
- At collection: our team prepares the valued inventory in accordance with the criteria of the Canary Islands Tax Agency
- At embarkation: our customs agent submits the DUA applying for the AIEM waiver
- On arrival: we release the goods at the port and deliver them to your Canary Islands home
The cost of customs management is included in the removal quote, with no extras. You do not need to hire an external agent or worry about the forms.
Frequently asked questions about the REF in removals
Do I have to pay IGIC when bringing my furniture to the Canary Islands?
No. The import of personal effects for change of residence is exempt from both IGIC and AIEM. You would only pay IGIC if you BUY new things in the Canary Islands after you have settled in.
What about my car?
The vehicle is subject to the IEDMT (Special Tax on Certain Means of Transport), calculated on the Canary Islands assessed value, at rates from 0% to 12% depending on CO₂ emissions and age. If you are relocating as a change of residence with a personally used vehicle, specific exemptions apply.
What if I go back to the mainland with my belongings?
The reverse movement is an "exit" from the Canary Islands customs territory. For used effects that have been in the Canary Islands for more than 12 months, entry into mainland Spain is exempt from VAT under the return regime. We also handle the exit DUA.
What if I never register as resident in the Canary Islands?
Without registration as a resident, you CANNOT claim the AIEM waiver, meaning you would have to pay the Canary Islands levy on the value of your effects. The difference for an average removal can be €200–600.
Further information
For more detail on specific aspects of the REF as they apply to your situation, consult our related guides:
- How to change your residence registration when moving to the Canary Islands
- Differences between a national, international and inter-island removal
- How to register utilities after moving to the Canary Islands
And if you are planning your removal, request a quote stating your target date and origin: we will include full REF management at no additional cost.
