Paying Google, Meta or a foreign software licence from the Canaries: the IGIC you self-assess

The invoice for last month's online advertising arrives with nothing added to the price: €1,000, no VAT, no IGIC. The software subscription billed from Dublin looks the same, and so does the fee of the designer in Madrid. Nothing has been left out. The tax on those services exists, it is the IGIC, and the business that owes it to the Canary Tax Agency is the one that received the invoice. For most island businesses the entry costs nothing, because the tax declared is deducted in the same return. For a sole trader in the small-business regime, a retailer or a medical practice it is a real 7 %. And for anyone who leaves the line out, the IGIC Act has a fine of 75 per cent of the tax not declared. This note reads the rule as it stands in October 2026: the IGIC Act, the Canary management regulation, the Tax Agency's own instructions for its forms 420, 412 and 425, and Google's own help page on the tax it applies to advertisers in the islands.

Why the invoice arrives without tax

Two sets of rules meet on that invoice, and both point to the islands.

For VAT, the Canary Islands are outside the tax's territory: the Spanish VAT Act lists them among the territories excluded from the harmonised turnover taxes (Ley 37/1992, article 3), and a service supplied to a business is taxed where that business is established, not where the supplier is (article 69.One.1.º). A supplier in Madrid therefore invoices an island business without Spanish VAT, and a supplier in another Member State, applying the same rule of the VAT Directive, invoices without its own. The mirror case, the island business that invoices a client on the mainland or in Germany, is in our note on invoicing EU clients from the Canaries.

For IGIC the same service is located in the islands. The Act treats a service as supplied in the Canaries when the customer is a business or professional established here, con independencia de dónde se encuentre establecido el prestador de los servicios y del lugar desde el que los preste, regardless of where the supplier of the services is established and of the place from which it supplies them (Ley 20/1991, article 17.One.1). The advertising is taxed here, at the island rate, although the supplier files no Canary return for it. How that rate compares with the mainland's is in our note on IGIC and VAT.

Who owes it: the customer

Normally the taxable person is whoever makes the supply. The Act reverses that when the supplier is not here: the customer becomes the taxable person Cuando las citadas operaciones se efectúen por personas o entidades no establecidas en Canarias, when the operations are carried out by persons or entities not established in the Canaries (article 19.1.2.º.a). In Spanish this is the «inversión del sujeto pasivo», the reverse charge. Three points of the article decide most cases:

• «Not established» means not established in the islands. A supplier is established here when it has in the islands la sede de su actividad económica, su domicilio fiscal o un establecimiento permanente que intervenga en la realización de las entregas de bienes y prestaciones de servicios, the seat of its economic activity, its tax domicile or a permanent establishment that takes part in the supply of the goods and services (article 19.3). A consultancy in Madrid or Barcelona is, for this rule, exactly as foreign as one in Dublin or San Francisco.
• The customer need not be a company. The reverse charge falls on businesses and professionals, sole traders included, and in every case en los entes públicos y personas jurídicas que no actúen como empresarios o profesionales, on public bodies and legal persons that do not act as businesses or professionals, which the Act also treats as businesses when it decides where the services they receive are taxed (article 5.7). An association, a foundation or a town council that buys advertising from outside the islands owes the tax as well.
• Two services are left out. Since 1 January 2023 the rule does not apply to the letting of property that is subject to the tax and not exempt, nor to prestaciones de servicios de intermediación en el arrendamiento de bienes inmuebles, services of intermediation in the letting of property. For those two the supplier from outside is the taxable person itself, so the owner of a holiday let should not assume that the commission of a letting intermediary follows the routine described here.

Goods are a different matter. What enters the islands is an import, taxed at customs with its own declaration whoever the seller is. The reverse charge of this note is, in practice, about services.

What it catches, and what it does not

The arithmetic of a €1,000 month

Take an island company that files quarterly and spends €1,000 a month on online advertising, invoiced by a supplier outside the islands.

The rate is the general one, El tipo general en el impuesto general indirecto canario es el 7 %, the general rate of the Canary general indirect tax is 7 % (texto refundido approved by Decreto Legislativo 1/2025, article 32.1); advertising, software and hosting are not on the lists of the other rates. The base is the whole price, commissions and surcharges included (Ley 20/1991, article 22). Each invoice therefore produces a quota of €70, and the quarter €210 on a base of €3,000.

In the quarterly return, the Modelo 420, base and quota go into boxes 19 and 20, which the Tax Agency's instructions reserve for adquisiciones de bienes y servicios respecto a las que el declarante tenga la condición de sujeto pasivo, acquisitions of goods and services for which the filer is the taxable person. If the company's own sales carry IGIC, the same €210 is deductible and goes with the rest of the quarter's deductible tax on current purchases, in boxes 26 and 27. Tax due on the advertising, €210; tax deducted, €210. The return is filed in the first twenty days of April, July and October and during the whole of January, and the year's totals appear again in the annual summary, the Modelo 425 (boxes 75 and 76), also filed in January.

Three details of timing and amount:

• When the tax accrues. For a service, when it is performed; in contracts billed period by period, when each instalment falls due; and a payment made in advance brings the tax forward en el momento del cobro total o parcial del precio por los importes efectivamente percibidos, at the moment of total or partial collection of the price, for the amounts actually received (article 18). A prepaid advertising balance or an annual licence paid up front belongs to the return of the day it was paid.
• Invoices in dollars. The price is converted at el tipo de cambio vendedor fijado por el Banco de España correspondiente al día del devengo del Impuesto, the selling rate fixed by the Banco de España for the day the tax accrues (article 23.8), not at the rate the card issuer applied.
• When the deduction is born. El derecho a la deducción nace en el momento en que se devengan las cuotas deducibles, the right to deduct arises at the moment the deductible quotas accrue (article 32), so the charge and the deduction normally sit in the same return. A deduction not taken then can still be taken in later returns for four years (article 33.3).

No self-invoice: the supplier's invoice and one line in the register

Older manuals, and some accounting programs, still ask for an «autofactura», a document the customer issues to itself. Until the end of 2010 the Act named, as the paper supporting the deduction, the invoice issued in reverse-charge cases. Since 1 January 2011 it names the supplier's own original invoice, siempre que la cuota devengada por dicha entrega o prestación esté debidamente declarada, provided that the quota accrued on that supply is duly declared in the return (article 31.1.3.º). The condition matters more than the paper: a reverse charge that was never declared gives no right to deduct.

What the management regulation does ask for is a register entry. The supplier's invoice is numbered and entered in the register of invoices received, with a note that the reverse charge applies, and the quotas habrán de calcularse y consignarse en la anotación relativa a dichas facturas, must be calculated and stated in the entry for those invoices (Decreto 268/2011, article 51). The invoice itself may be in English and in dollars; the tax authority can ask for a translation (Ley 20/1991, article 59.5).

When the 7 % is a real cost

The entry nets to zero only for a business that can deduct. The Act allows the deduction to the extent that what was bought is used in operations that are subject to the tax and not exempt (article 29.4), and three large groups of island businesses fall outside it:

• The small-business regime (REPEP). A sole trader whose turnover in the previous year did not exceed €30,000 (€50,000 from 1 January 2027) charges no IGIC on sales and deducts none, as our note on the REPEP explains. The reverse charge survives the exemption: the texto refundido lists the occasional return among the obligations of the regime (article 91.a).
• Exempt activities. Medical and health professionals, teaching, insurance and finance, the letting of dwellings (texto refundido, articles 11, 15, 17, 18 and 21): no IGIC on what they sell, no deduction on what they buy.
• Retailers. Sales by a «comerciante minorista» are exempt (article 27) and the periodic return does not exist for that activity: En ningún caso esta obligación incumbirá a los sujetos pasivos acogidos al régimen especial de comerciantes minoristas, in no case shall this obligation fall on taxable persons in the special regime for retailers (Ley 20/1991, article 59.1.f). The shop that advertises on social media owes the 7 % and cannot deduct it.

These businesses do not file the quarterly 420 for those activities. They declare the reverse charge on the occasional return, the Modelo 412, which covers one calendar month and is filed durante el mes natural siguiente a la finalización del periodo de liquidación mensual, during the calendar month following the end of the monthly period. The 412 has boxes for deductible tax, but the Agency's instructions close them to an island business: Esta casilla únicamente será cumplimentada en el supuesto de que se trate de empresarios o profesionales no establecidos en Canarias, this box is to be completed only in the case of businesses or professionals not established in the Canaries. For the €1,000 advertiser that means a 412 for every month with an invoice, €70 each time, €840 a year.

For a business that cannot deduct, the invoice without tax is not 7 % cheaper than a local one. It is the same price, with the tax paid a month later and by a different hand.

The same form serves the associations, foundations and public bodies of the earlier section (management regulation, article 58.1.d). A business that deducts only in part, because it mixes taxed and exempt activities, applies its pro-rata percentage to this quota as to any other.

The fine for leaving out a line that nets to zero

Because the entry so often changes nothing in the result, it is the one most often skipped. The IGIC Act treats the omission as an infringement of its own: la no consignación en la autoliquidación a presentar por el período correspondiente de las cuotas de las que sea sujeto pasivo el destinatario de las operaciones, failing to state, in the return to be filed for the period, the quotas of which the recipient of the operations is the taxable person (article 63.5). It is a serious infringement and the penalty is a multa pecuniaria proporcional del 75 por ciento de la cuota tributaria correspondiente a las operaciones no consignadas en la autoliquidación, a proportional fine of 75 per cent of the tax on the operations left out of the return. The article makes no exception for the business that could have deducted every euro.

For the €1,000 advertiser, one forgotten year is €840 of quota and a fine of €630. The reductions of the General Tax Act apply, 30 per cent for accepting the assessment and a further 40 per cent for paying on time without appealing (Ley 58/2003, article 188), which leaves €264.60. An accountant trained on the mainland should note the difference: the VAT Act punishes the same omission with 10 per cent (Ley 37/1992, article 171.One.4.º).

The way to avoid the fine is to correct before the Agency asks. Taxpayers who put their returns right of their own accord no incurrirán en responsabilidad por las infracciones tributarias cometidas con ocasión de la presentación de aquéllas, shall incur no liability for the tax infringements committed when those returns were filed (Ley 58/2003, article 179.3). The correction is made return by return, each period in its own (article 27.4), not by slipping the old invoices into the current quarter. For a business with full deduction the corrected return usually produces nothing to pay; for one that cannot deduct, the tax arrives late, with the surcharges described in our note on late filing.

If the platform charges you 7 % anyway

The reverse charge presupposes that the supplier knows it is dealing with a business, and platforms decide that from what the customer declared when the account was opened. Google's help page for Spain says that since 1 May 2022 it applies indirect tax of 7 % to customers with an individual account who reside in Las Palmas and Santa Cruz de Tenerife, and it warns that the account type, the purpose of use and the tax status chosen at sign-up son permanentes y no se pueden cambiar después de completar el registro de facturación, are permanent and cannot be changed after billing registration is completed.

A business billed as a consumer should not count on deducting that 7 %. The Act refuses the deduction of tax that was not due in the way it was charged: En ningún caso procederá la deducción de las cuotas que no se hayan devengado con arreglo a derecho, in no case may quotas that have not accrued in accordance with the law be deducted (article 29.2), and when the customer is a business the law puts the tax on the customer, not on the supplier. So look at the first invoice of every new platform. If it shows a tax line, check how the account is registered, give the supplier your tax number and your business status, and ask for corrected invoices before the amounts build up.

Mainland suppliers: the same rule, and an old trap that has closed

Nothing in the rule distinguishes Madrid from Dublin, and island businesses buy far more from the mainland than from abroad: the agency, the software house, the trainer, the engineer. Each of those invoices should arrive without VAT and without IGIC, and each is a reverse charge in the island return.

One friction is worth knowing, because it lasted for years. Until the end of 2020 the «effective use» clause of the VAT Act brought Spanish VAT back onto a list of services, advertising, consultancy and electronic services among them, when the business customer was outside the VAT territory but used the service on the mainland. Since 1 January 2021 the clause no longer reaches services located in the Canaries, and since May 2023 it survives for business customers only in the hire of vehicles (Ley 37/1992, article 70.Two). A mainland supplier that still adds 21 % to such a service for an island business is applying a rule that has gone. VAT remains correct on what the VAT Act ties to the place itself, a hotel or a restaurant on the mainland, work on a property there, the entry to a trade fair; those bills are a different question from the one in this note.

A routine for the bookkeeping

• Declare yourself a business to every supplier. Tax number and business status go into each billing profile at sign-up, not after the first invoice.
• Keep a list of the suppliers that are not established in the islands. Mainland ones included. Every invoice from them is a reverse charge unless it falls in one of the two letting exceptions.
• Enter each invoice with its quota. Base in euros at the rate of the day, 7 %, and the reverse-charge note in the register of invoices received.
• Carry the totals to the return. Boxes 19 and 20 of the 420, with the deduction if you have it; a 412 for the month if you file no periodic return.
• Reconcile the card statement. Subscriptions charged to a card are the invoices that never reach the books, and a charge with no invoice entered is a reverse charge not declared.
• Check the annual summary. Boxes 75 and 76 of the 425 should equal the total of the year's returns.

The tax team at our Caleta de Fuste and Costa Calma offices sets up this routine for island businesses (the supplier list, the register entries, the 420 or the monthly 412) and reviews earlier years before the Tax Agency does. The tax advisory page describes the service and a first meeting can be booked online.

Common questions

Google's invoice shows no tax. Do I owe anything?

Yes, if you are a business, a professional or a legal person in the Canaries. The service is located in the islands and, because the supplier is not established here, you are the taxable person: 7 % of the invoice, declared in your own return. If your activity gives you the right to deduct IGIC, you deduct the same amount in the same return.

I am in the small-business regime (REPEP). Does the reverse charge apply to me?

Yes. The regime exempts what you sell, not what you buy from outside the islands. You declare the 7 % on the occasional return, Modelo 412, during the month after the invoice, and you cannot deduct it: on €1,000 of advertising it is €70 of cost.

Do I have to issue a self-invoice?

No. Since 2011 the document that supports the deduction is the supplier's original invoice, provided the quota is declared in the return. What the regulation requires is the entry in the register of invoices received, with the reverse-charge note and the quota calculated in it.

My supplier is in Madrid, not abroad. Is it different?

No. For the IGIC a supplier on the mainland is not established in the Canaries, so its services to your business follow the same rule: an invoice without VAT and without IGIC, and the 7 % in your return.

What if I have never declared these invoices?

The Act fines the omission with 75 per cent of the tax left out, even when the tax would have been deductible. Correcting the returns before the Tax Agency requires it avoids the fine; a business without the right to deduct then pays the tax with the surcharge for late payment.

Facts verified in October 2026 (Ley 20/1991, articles 5, 17, 18, 19, 22, 23, 29, 31, 32, 33, 59 and 63; texto refundido approved by Decreto Legislativo 1/2025, articles 11, 15, 17, 18, 21, 27, 32 and 89 to 91; management regulation approved by Decreto 268/2011, articles 51, 57 and 58; Ley 37/1992, articles 3, 69, 70 and 171; Ley 58/2003, articles 27, 179 and 188; the Canary Tax Agency's pages and instructions for forms 412, 420 and 425; Google Ads' help page on taxes in Spain, as it read on 4 October 2026). The advertiser and its figures are illustrative; this is general information, not advice on your case.