Invoicing EU clients from a Canary business: no IGIC, no VAT number, no Modelo 349 — and what applies instead

A web studio in Corralejo signs its first German agency. A consultant in Caleta de Fuste invoices a Dutch client for the first time. A small aloe workshop in Antigua ships a parcel to Munich. The first question is always the same — IGIC or VAT? — and the second one arrives a week later from the client's accountant: what is your VAT number? The honest answer to that second question surprises most people, including some accountants on the mainland, and it is the reason this piece exists.

The short version: a business established in the Canary Islands does not charge IGIC on a service it provides to a business in another EU country or on the Spanish mainland, does not get an intra-community VAT number, does not appear in VIES and does not file a Modelo 349 — because for VAT purposes the islands are not part of the European Union. Below, what applies instead, service by service and goods by goods, with the invoices worked out. The general map of the two taxes is in our piece on IGIC versus VAT; this one is about crossing the water with an invoice.

The islands are in the EU, but outside its VAT

Spain's VAT Act draws the line in its third article. The "interior of the country" — the territory where VAT applies — excludes the Canary Islands, listed among the territories left out of the harmonisation of turnover taxes; the "Community" is the sum of those interiors; and everything else is a third territory (Law 37/1992, article 3.Two). The Directorate-General for Taxation put it in one sentence in a binding ruling on precisely this question: the islands, while forming part of the Community customs territory, are excluded from the application of the VAT Act (consultation V2338-10 of 27 October 2010).

In their place the islands have the IGIC, the Canary general indirect tax, which taxes supplies of goods and services made in the islands and imports into them (Law 20/1991, article 3), at a general rate of 7 %. Two consequences follow from the geography, and everything in this article hangs on them. First, the EU's intra-community machinery — the VAT identification number, the VIES database, the recapitulative return, the exemption for intra-community supplies — was built for the VAT territory and does not include the islands. Second, the islands are nevertheless inside the EU customs territory, so goods move between Fuerteventura and Frankfurt with a customs declaration but without customs duties. Keep the two territories apart and the rest is arithmetic.

A service for a business in the EU or on the mainland: no IGIC

The IGIC's place-of-supply rule for business customers is the same one the whole EU uses. A service is located in the islands when the customer is a business established there; when the customer is a business established anywhere else, the service is located where the customer is, regardless of where the provider is established or from where it provides the service (Law 20/1991, article 17.One.1). A design project for a company in Berlin, a consultancy for a firm in Amsterdam, a translation for an agency in Madrid — none of them is subject to IGIC. The invoice carries no tax.

What happens on the other side is the customer's affair, but you should know it to answer their questions. In every Member State the business that receives a service from a provider not established in its territory accounts for the VAT itself, the reverse charge: in Germany the GmbH self-assesses 19 % and, if it has full deduction rights, deducts the same amount in the same return; in Spain the mainland company does the same under article 84.One.2.º.a of the VAT Act, which makes the customer the taxable person when the provider is not established in the VAT territory. For a customer with full deduction the operation is neutral; for one without — a bank, a doctor, a landlord of exempt housing — the reverse charge is a real cost, and it is worth saying so before quoting.

The invoice must still be issued, and issued properly. The invoicing regulation obliges a business to issue an invoice for every supply, including those not subject to the tax (Royal Decree 1619/2012, article 2.1), and it applies to IGIC operations with its references to VAT read as references to IGIC, the Canary management rules adding the specific mentions (additional provision 2). So the invoice states the customer's tax identification number, which is mandatory when the customer is the taxable person (article 6.1.d.2.º), shows no IGIC, and carries two mentions: that the operation is not subject to IGIC under article 17.One.1 of Law 20/1991, and the reverse-charge mention — inversión del sujeto pasivo in Spanish, "reverse charge" in the customer's language (article 6.1.m). A one-line footer solves most of the phone calls.

Some services do not follow the customer. Article 17.Three keeps in the islands, whoever the customer is, the services connected with property located here — an architect's plan for a German company's villa in Corralejo, the management of a rental, a security contract — together with admission to events held here, restaurant and catering served here, the short-term hire of a car handed over here and passenger transport for the Canary stretch. Those carry IGIC even when the invoice goes to Düsseldorf.

The VAT number nobody can give you

Now the accountant's question. The intra-community VAT number — the NIF-IVA, the Spanish tax number with the ES prefix that appears in VIES — is granted to businesses in the VAT territory that make intra-community operations, and the tax agency's own page on the register of intra-community operators describes it for businesses established in the territory where Spanish VAT applies, the mainland and the Balearics. The binding ruling of 2010 answered the Canary case directly: the operations of a Canary company with the mainland or with another Member State, deliveries, acquisitions and services alike, are not intra-community operations because the Canary Islands are a third territory, so the company is not obliged to apply for inclusion in the register of intra-community operators nor to request the corresponding NIF-IVA, and its operations must not be included in the recapitulative return of intra-community operations, Modelo 349.

In practice this means three things. Your Spanish tax number exists — the NIF your company has always had — but it will not validate in VIES, and a German accounting system that insists on a VIES-validated number is asking for something the law does not give you. The right explanation for the customer's accountant is that you are a supplier established in a territory outside the EU VAT area, exactly as a Swiss or Norwegian provider would be, and that their company accounts for the VAT under the reverse charge — article 196 of the VAT Directive in every Member State's law. And the recapitulative return is not yours to file: the 349 lists intra-community supplies and acquisitions of goods and intra-community services, defined in the VAT regulation as services not located in the Spanish VAT territory and taxed in another Member State (Royal Decree 1624/1992, article 79.1.3.º); a Canary provider is outside that definition, and the mainland customer who receives your service does not list it in its own 349 either — the tax agency's guidance says operations with the Canary Islands, Ceuta and Melilla are not declared there.

If your business also has a permanent establishment on the mainland — an office in Madrid that contracts and invoices — that establishment lives inside the VAT territory and follows VAT's rules, NIF-IVA included. The choice between operating from the islands and opening there is the subject of our piece on the branch, the subsidiary and the permanent establishment.

A service for a private customer in the EU: IGIC — with two exceptions

When the customer is not a business, the rule flips: the service is located where the provider is established (article 17.One.2). A Canary consultant advising a private individual in Berlin, a Fuerteventura photographer shooting a Belgian couple's wedding, a tutor teaching a French student by video call: IGIC at 7 %, paid to the Canary tax agency with the quarterly Modelo 420.

The first exception is for customers outside the European Union. A closed list of services — advisory, legal, accounting and consulting services, advertising, translation, data processing, the licensing of copyright and other rights, the hire of movable goods other than vehicles, among others — is not subject to IGIC when the customer is a private individual established outside the EU (article 17.One.3). The same consultancy for a private client in London or Zurich carries no IGIC; for one in Berlin it does.

The second exception is the one that catches online businesses. Electronic services — software and apps, downloads, streaming, online courses delivered without human intervention, web hosting — together with telecommunications and broadcasting, are taxed where the private customer lives. The IGIC law locates them in the islands only when the customer is here (article 17.Three.One.4), so a subscription sold to a consumer in Lyon carries no IGIC; and the VAT Act, for its part, locates every such service in the VAT territory when the consumer is there and the provider is not established in a single Member State (Law 37/1992, article 70.One.4.º), which is the Canary case. The €10,000 micro-business threshold that lets a small mainland seller keep taxing at home does not exist for you, because it is written for providers established in one Member State: French VAT is due on the first euro.

The tool for that is the one-stop shop, and here the law names the islands expressly. The non-Union scheme is open to businesses not established in the Community — those with their seat outside it and no permanent establishment in it (article 163 octiesdecies) — and the article on its formalities provides that businesses established in the Canary Islands, Ceuta or Melilla register with the identification data listed and the tax number assigned by the Spanish tax administration (article 163 noniesdecies). The registration is made on Modelo 035; the return is Modelo 369, quarterly, one return for every Member State of consumption, paid in Spain and distributed from there. A Corralejo developer with subscribers in five countries files one form a quarter with five VAT rates on it, and no IGIC on any of those sales.

Goods: an export that leaves the islands, an import that enters the mainland

For goods the picture is simpler and more physical. A supply of goods dispatched or transported to a third territory is exempt from IGIC (Law 20/1991, article 11.1), and from the islands every destination is a third territory — Madrid as much as Munich. The parcel leaves with an export declaration, the DUA, and arrives in the VAT territory as an import: the buyer's country charges its import VAT — 21 % in Spain, 19 % in Germany — and, because the islands sit inside the EU customs territory, no customs duty. A business customer imports and deducts; a private customer pays the carrier at the door, usually with a handling fee on top, which is the surprise that generates the second phone call.

For small consignments there is a way to remove that surprise. The import scheme of the one-stop shop covers distance sales of goods imported from third countries or territories in consignments of an intrinsic value of no more than €150, and the VAT Act opens it expressly to businesses established in the Community, the Canary Islands, Ceuta or Melilla; a Canary seller that appoints no intermediary has Spain as its Member State of identification (article 163 quinvicies). The seller charges the customer's national VAT at the checkout, declares it on a monthly Modelo 369 and the parcel clears without a bill at the door. Above €150 per consignment, or without the scheme, the buyer pays at import.

The mirror: what you buy from the mainland or the EU

The same rules run the other way, and they generate the entries most first-year Canary businesses get wrong. A service you buy from a provider in Madrid, Berlin or Dublin — software licences, a designer, a consultant, online advertising — is located in the islands because you are the business customer here, and the IGIC on it is yours to account for: when the provider is not established in the Canary Islands, the taxable person is the customer (article 19.1.2.º.a). The mainland provider invoices you without VAT — for it the service is located outside the VAT territory — and you self-assess the IGIC in your Modelo 420, deducting it in the same return if your activity gives you the right. It nets to zero for most businesses, but the line has to be there; an inspection of a Canary company that has bought two years of foreign software and never self-assessed a cent is a routine finding.

Goods you buy from the mainland or the EU arrive as imports: the seller's invoice is exempt as an export from its side, and the IGIC is paid at import with the customs declaration, then deducted in the 420 like any other input tax.

Six invoices, worked out

• A €10,000 design project for a GmbH in Berlin: invoice €10,000, no IGIC, the customer's German tax number and the two mentions. The GmbH self-assesses €1,900 of German VAT and deducts it. No VIES, no 349, on either side.
• The same project for an SL in Madrid: €10,000, no IGIC. The SL self-assesses 21 % in its VAT return and deducts it; it does not report you in its 349.
• The same project for a private individual in Berlin: €10,000 plus 7 % IGIC, €10,700, declared in your 420.
• The same project for a private individual in London: €10,000, not subject to IGIC — outside the EU.
• A €30-a-month app subscription for consumers in France: no IGIC; French VAT at 20 % — €36 charged — declared through the non-Union scheme on the quarterly 369.
• A €120 parcel of cosmetics for a consumer in Munich: exempt export from the islands; through the import scheme you charge €22.80 of German VAT at the checkout and the parcel clears without a bill; without it, the buyer pays the €22.80 to the courier, usually plus the courier's fee.

Before the first invoice crosses the water

1. Decide who the customer is — a business acting as such, or a private individual — and where it is established; the whole tax result follows from those two facts.
2. Ask a business customer for its tax identification number and keep the proof; the number goes on the invoice even though it will not be "validated" against yours.
3. Write the two mentions into your invoice template: not subject to IGIC under article 17.One.1 of Law 20/1991, and inversión del sujeto pasivo / reverse charge.
4. Check the exceptions before you drop the IGIC: property in the islands, events, catering, short-term car hire and transport stay here.
5. Selling electronic services or small parcels to EU consumers: register for the one-stop shop on Modelo 035 — the non-Union scheme for services, the import scheme for goods up to €150 — and diarise the 369.
6. Set up the mirror entry for what you buy abroad: self-assessed IGIC on every foreign service invoice, in the 420, with the deduction alongside it.
7. Remember that all of this is invoicing under Spanish rules: VeriFactu and the B2B e-invoicing calendar apply to these invoices exactly as to the local ones, and the quarterly dates are in our autumn tax calendar.

Our tax advisory team sets up the invoice template, the one-stop-shop registration and the self-assessment routine for Canary businesses working with mainland and European clients, and our accounting advisory keeps the 420 and the 369 in step — book a consultation before the first invoice goes out.

Common questions

Do I charge IGIC on an invoice to a company in Germany or on the Spanish mainland?

No. A service for a business customer is located where that customer is established, so it is outside the IGIC; you invoice without tax, with the customer's tax number and the mentions "not subject to IGIC, article 17.One.1 of Law 20/1991" and "reverse charge". The customer self-assesses its own country's VAT. Services connected with property in the islands, events, catering, short-term car hire and Canary transport are the exceptions and carry IGIC.

My German client's accountant asks for my intra-community VAT number. What do I answer?

That you do not have one and cannot get one: a business established in the Canary Islands does not make intra-community operations, is not entered in the register of intra-community operators and does not appear in VIES, as the Directorate-General for Taxation confirmed in a binding ruling. Your ordinary Spanish tax number goes on the invoice, and the customer accounts for the VAT under the reverse charge as it would for a Swiss supplier.

Do I have to file the Modelo 349?

No. The recapitulative return lists intra-community operations, and a Canary business's supplies and services to the mainland or to another Member State are not intra-community operations. Your mainland customers do not report you in their 349 either. What you do file is the quarterly IGIC return, Modelo 420, where your not-subject and self-assessed operations are recorded.

I sell an app subscription to private customers in France and Italy. Who gets the VAT?

France and Italy. Electronic services to private customers are taxed in the customer's country from the first euro when the provider is established in the Canary Islands, and the islands charge no IGIC on them. You register in the one-stop shop's non-Union scheme with Modelo 035 and pay the French and Italian VAT through one quarterly Modelo 369 filed in Spain.

Facts verified in September 2026 (VAT Act, Law 37/1992, articles 3, 69, 70, 84, 163 octiesdecies, 163 noniesdecies and 163 quinvicies; IGIC Act, Law 20/1991, articles 3, 11, 17 and 19; VAT regulation, Royal Decree 1624/1992, article 79; invoicing regulation, Royal Decree 1619/2012, articles 2 and 6; Directorate-General for Taxation, binding ruling V2338-10 of 27 October 2010; the tax agency's pages on the register of intra-community operators and the one-stop shop; the European Commission's territorial-status table for customs and VAT). Figures are worked examples at the 2026 rates; check your own numbers before invoicing.