Selling to the Canary Islands, Ceuta and Melilla from an online store

The Canary Islands, Ceuta and Melilla are part of Spain, but they are outside the VAT (IVA) area. For an online store based on the mainland or the Balearic Islands, selling there is closer to selling outside the European Union than to selling in Madrid. Here is why, what VAT the order carries, how you back it up and which tax applies on the other side.

This article is about selling goods shipped from the mainland or the Balearic Islands. Services follow other rules and are not covered here.

1. Outside the VAT area

Article 3 of the Spanish VAT Act defines what counts as «interior del país» (the domestic territory) for VAT purposes and expressly leaves out:

• Ceuta and Melilla, because they are not part of the EU customs union.
• The Canary Islands, because they are excluded from the harmonisation of turnover taxes.

The Tax Agency (Agencia Tributaria) puts it plainly: «a efectos del impuesto, Canarias, Ceuta o Melilla no se consideran territorio de la Comunidad» (for VAT purposes, the Canary Islands, Ceuta and Melilla are not considered Community territory).

2. The shipment is a VAT-exempt export

Article 21 of the VAT Act exempts «las entregas de bienes expedidos o transportados fuera de la Comunidad por el transmitente o por un tercero que actúe en nombre y por cuenta de éste» (supplies of goods dispatched or transported outside the Community by the seller or by a third party acting on the seller's behalf). If you ship the order, yourself or through your carrier, to a customer in the Canary Islands, Ceuta or Melilla, it is an export and carries no Spanish VAT.

Two important consequences:

• You can still deduct the VAT on your purchases and expenses. The Tax Agency explains that exports are exempt «atribuyendo el derecho a deducir el IVA soportado» (while granting the right to deduct input VAT) on what you use for that activity. This is known as a full exemption.
• It does not count towards the €10,000 One Stop Shop threshold. That threshold is for intra-Community distance sales, which the law defines as shipments from one Member State to another (article 8.Tres). The Canary Islands, Ceuta and Melilla are not Community territory for VAT purposes.

A worked example

These amounts are only an example. You sell a standard-rated product with a base price of €50.00:

Destination	Base	Spanish VAT	Invoice total
Mainland or Balearic Islands	€50.00	€10.50 (21%)	€60.50
Canary Islands, Ceuta or Melilla	€50.00	€0.00 (exempt)	€50.00

Your income is the same in both cases, €50.00. The difference is that in the second one you charge no Spanish VAT, and the customer may have to pay their territory's tax when the parcel arrives.

3. You must be able to prove the exemption

The exemption does not apply just because the order has a Canary Islands address. Article 9 of the VAT Regulation makes it conditional on the goods actually leaving, which is deemed to happen «cuando así resulte de la legislación aduanera» (when customs law shows it). You also have to keep, for the whole limitation period:

• copies of the invoices;
• contracts or order notes;
• transport documents;
• documents proving that the goods left.

The exit is proved by the customs declaration. The Tax Agency explains that the export procedure applies to goods that «circulen hacia o desde territorios fiscales especiales» (move to or from special tax territories), giving as an example the «salida de mercancías desde Península con destino las Islas Canarias» (goods leaving the mainland for the Canary Islands). For low-value shipments entering the Canary Islands with the simplified H7 declaration, the Tax Agency states that an exit certificate is generated on its website «como justificante de la exención del artículo 21 de la Ley 37/1992» (as proof of the article 21 exemption).

4. What the invoice says

The invoice carries no VAT, but it has to say why. Article 6.1.j of the Invoicing Regulation requires, when a transaction is exempt, a reference to the article of the law or of the EU directive that exempts it, or a statement that it is exempt. For example: «Operación exenta de IVA, artículo 21.1.º de la Ley 37/1992».

5. On the other side: IGIC in the Canary Islands, IPSI in Ceuta and Melilla

An order without VAT is not an order without tax.

• The Canary Islands have IGIC (Impuesto General Indirecto Canario), governed by Ley 20/1991. Its article 4 makes imports of goods taxable, defined as «la entrada de los mismos en las Islas Canarias, cualquiera que sea el fin a que se destinen o la condición del importador» (their entry into the Canary Islands, whatever their purpose or the importer's status). The standard rate is 7% (article 51 of Canary Islands Ley 4/2012); other rates apply to certain goods.
• Ceuta and Melilla have IPSI (Impuesto sobre la Producción, los Servicios y la Importación), governed by Ley 8/1991. It is a municipal tax that applies, among other things, to imports of movable goods into the two cities.

The import formalities and who pays depend on how the shipment is made. We do not explain those procedures here: ask your carrier and, if in doubt, the Canary Islands Tax Agency (Agencia Tributaria Canaria) or the cities of Ceuta and Melilla.

6. What to check in your store

1. That the store does not charge Spanish VAT to addresses in the Canary Islands, Ceuta and Melilla. Check your tax settings by shipping zone.
2. That the price the customer sees is clear. If you show prices including VAT, a Canary Islands customer should see the price without Spanish VAT and know they may have to pay taxes and charges on delivery.
3. That each order keeps its proof of exit. Without it you cannot prove the sale was exempt.
4. That your accountant (gestor) knows you sell there. These sales are reported separately on Form 303: the 2026 instructions put them in box 60, «Exportaciones y operaciones asimiladas», which expressly mentions «los envíos con carácter definitivo a Canarias, Ceuta y Melilla» (permanent shipments to the Canary Islands, Ceuta and Melilla). There is more detail in the article on Form 303 for online stores.

If you want to see how orders to different destinations look in one dashboard, have a look at the Plentia demo.

Sources

• BOE · Ley 37/1992, Spanish VAT Act (arts. 3, 8 and 21, in Spanish) · checked on 26/09/2026
• BOE · VAT Regulation, Real Decreto 1624/1992 (art. 9, in Spanish) · checked on 26/09/2026
• BOE · Real Decreto 1619/2012, Invoicing Regulation (art. 6.1.j, in Spanish) · checked on 26/09/2026
• BOE · Ley 20/1991, Canary Islands Economic and Tax Regime (art. 4, in Spanish) · checked on 26/09/2026
• BOE · Canary Islands Ley 4/2012 on administrative and tax measures (art. 51, in Spanish) · checked on 26/09/2026
• BOE · Ley 8/1991, IPSI tax in Ceuta and Melilla (art. 1, in Spanish) · checked on 26/09/2026
• Agencia Tributaria · Form 303 instructions, 2026 (box 60, in Spanish) · checked on 26/09/2026
• Agencia Tributaria · VAT: imports and exports (in Spanish) · checked on 26/09/2026
• Agencia Tributaria · Customs: exports (in Spanish) · checked on 26/09/2026
• Agencia Tributaria · Declarations for low-value shipments to the Canary Islands (in Spanish) · checked on 26/09/2026