In this article we are going to share with you our experience with the VAT refund as residents in the Canary Islands, the famous TAX Free for Canary Islanders who buy in the Peninsula and Balearic Islands. In case you didn’t know, residents of the Canary Islands can deduct VAT on purchases made on the Peninsula and the Balearic Archipelago. This is, as a general rule, 21%. Therefore, if you are planning to buy high-value articles, it is worth applying for a VAT refund, as you only have to pay the IGIC as a Canary Islander or resident in the Canary Islands. In this practical case, we are going to tell you how, out of a purchase of €1,470 (VAT included), I was refunded €255.12 for VAT. Here we go!
IVA – VAT refund process for residents in the Canary Islands
First of all, we would like to point out that at present (June 2023) this process is VERY cumbersome and not at all agile. Therefore, we only recommend it if your purchases have been of a high amount (more than €1,000) to compensate you for the time spent. In other words, for €30 or €50 I wouldn’t do it. Having said that, here is the complete process for you to apply for a VAT refund as a Canary Islands resident for purchases you make on the Peninsula and Balearic Islands.
- When buying on the Peninsula and Balearic Islands, ask for the Electronic Refund Document or “TAX FULL VAT” or TAX FREE form together with the purchase receipt. Remember to bring your ID and a bank card so that they can complete the form.
- Once you land in the Canary Islands, we validate the TAX FREE form at the customs office of the island airport (they have to stamp it at the Guardia Civil). In the case of Las Palmas airport, you will find it next to the exit for domestic flights. Here you must present the TAX Free form, purchase tickets, boarding pass, your ID card, as well as show the merchandise purchased so that they can verify that it has entered the Canary Islands. You do not have to do anything at the mainland / Balearic Islands airport.
- Once we have the stamped document, we fill in form 040 on the website of the Canary Islands Tax Agency, attaching the stamped documentation and DNI in PDF format (we explain the complete process below).
- Then, when the Canary Islands Tax Agency validates all the documentation presented in form 040, they send you form 032 per email so that you can make the IGIC payment. It takes 1-2 days to send you this IGIC settlement form. This step is explained in more detail below.
- Once you have paid the IGIC corresponding to your purchases, all you have to do is send the invoice stamped by customs in the postage-paid envelope provided by the shop. In principle, it is not indicated that you have to enclose form 032, but I sent it as well. In principle, the two tax administrations (Canary Islands and state) are “connected” and can check that the IGIC has already been settled so that they can refund the VAT or IVA.
How do I fill in form 040 to pay IGIC and request a VAT refund (IVA)?
First of all, you must fill in your personal details: ID, name, etc… Then, in the shipping details section “Datos de Expedición”, in my case I put 1 in reference, national origin and number of packages 1. In the description, as it is a handbag and a wallet, I write “Bags, wallets and suitcases“. I am afraid the form 040 is only available in Spanish.
Next, in the “Liquidación” or Settlement section we have to click on “clasificación de mercancías frecuentes y tipos impositivos” or classification of frequent goods and tax rates to look for the item number that corresponds to the article you have purchased and thus be able to include the statistical item number. In this case, as it is a bag and a wallet, we include the number indicated in the table in the space “posición estadística” or statistical position. In this case it is 4202990090. The tax rate to which the articles are subject is also detailed there. In this case it is 3%. In the taxable base, we include the sale price excluding VAT, which will be detailed in the invoice given to us by the shop: €1,214.88 in my case. Then we mark the % of IGIC to which the article is subject (3% in this case) and the calculation is automatic: €36.45.
Then, in the “datos del representante” or representative’s details section, I did not fill in anything in my case. Then, in the next step, you can choose whether to submit the document electronically (Submit button) or in person (Generate form button). In my case, I chose telematically and it takes you to the next screen. You have to attach a PDF of the two-sided DNI or NIE and a pdf of the Tax Free invoice. If you don’t attach it in PDF, it won’t let you validate it. I also attached the simplified invoice/purchase receipt. Then, it will generate a receipt that the administration will have to check. It took 1-2 days as I mentioned in step 4.
How is form 032 managed and paid?
Below, we explain what to do when you receive the “letter of payment of form 032” by email in order to pay the IGIC tax on your purchases made on the Peninsula and the Balearic Islands as a resident in the Canary Islands. You can pay form 032 online on the vexcan.es website. We show you ours as an example and below we detail the steps to follow.
If you have an electronic certificate, you will be asked to validate access. Once inside, go to Pago de liquidaciones (Payment of settlements) > Pago y consultas de liquidaciones de comercio exterior (Payment and consultation of foreign trade settlements) > Consulta de agrupaciones (Consultation of groupings) > liquidaciones pendientes de pago (settlements pending payment). Next, you must include your bank account number so that you can be charged the IGIC on your purchases, which has already been calculated by means of form 040. Here you can see how I paid my 36,45€ of IGIC online. I can’t tell you how to do it in person (see below for contact details if you have any doubts). IMPORTANT: please note that you only have 10 days to pay the form 032 once you receive it from the Canary Islands Tax Agency by email.
Deadline for VAT refunds to Canary Islands residents
In my case, once the IGIC had been settled, I sent the letter with postage paid, which was delivered to me in the shop on 1 June by the post office (step 5). On 26 June I received an email from the Tax Agency and, at the same time, another from Global Blue (tax refund intermediary) stating that my form had been validated and that the tax refund would be credited to the card registered on the TAX FREE form. On 27 June I received the €255.12 in the bank account associated with my card. That’s about 26 days, not counting steps 1, 2, 3 and 4 which will take a couple of days. I hope that this article will help a little less.
More deadlines to be taken into account for the TAX Free for VAT exempt Canary Islanders
- The goods must leave mainland Spain or the Balearic Islands within a maximum period of three months from the date of purchase.
- The maximum period for claiming a VAT refund is 4 years.
- You have 10 days to pay the IGIC tax form 032 once you receive it by email from the Canary Islands Tax Agency.
Conclusions Refund of VAT to residents of the Canary Islands
In short, out of a purchase of 1,470€, I was refunded 255.12€ for VAT and paid 36.45€ for IGIC. That leaves me with a difference of €218.67. Bear in mind that if you don’t apply for this process, you will be overpaying, but as I said, given how complex it is, it only pays off for high-value purchases. Similarly, the amount of IGIC to be paid in my case was only 3% of the net amount, but there are items that are subject to 7% (sunglasses) and 15% (gold watches, silver, etc.). You can see the full table here.
Basic tax information telephone number in the Canary Islands
There is a basic tax information telephone number where you can ask questions. They helped me a lot, as I couldn’t find a full explanation of the whole process on the internet.
We also leave you the information leaflets from the Tax Agency sent to us by WhatsApp from Prada, the shop where we made our purchases, in case it is of any further help.
As you can see, this is a brief summary of the whole process that we have outlined in this article. We hope it has been helpful, if so, I’d love to read you in the comments. If you have any doubts, please contact the telephone numbers listed, as we are not experts and we only have experience with a single purchase, we do not know all the casuistry that may exist with other items that are associated with another IGIC, non-telematic processes, several purchases, etc.