Invoicing clients in the Canary Islands, Ceuta, or Melilla from mainland Spain is a common operation for many freelancers and SMEs, but it often raises questions. Unlike a domestic sale, these transactions are considered exports for VAT purposes, which implies a specific tax treatment. Understanding this is key to avoiding mistakes with the Spanish Tax Agency (AEAT).
Why is invoicing these territories different?
Although they are part of Spain, the Canary Islands, Ceuta, and Melilla do not belong to the VAT Application Territory (TAI). They have their own indirect taxes:
* Canary Islands: The General Indirect Canary Islands Tax (IGIC) applies.
* Ceuta and Melilla: The Tax on Production, Services, and Imports (IPSI) applies.
For this reason, when you sell a product or provide a service from the mainland to a client in these territories, the transaction is VAT-exempt.
Steps to issue your invoice correctly
To ensure your invoice complies with regulations, follow these steps:
1. Issue the invoice without VAT: The most common mistake is to apply the mainland VAT rate. The invoice must have a 0% VAT rate. Your client will pay the corresponding local tax (IGIC or IPSI) upon receiving the goods or service.
2. Add the mandatory legal note: To justify the exemption, you must include a note on the invoice. The most common one is: *"VAT-exempt operation under Article 21 of VAT Law 37/1992."*
3. Distinguish between goods and services:
* Sale of goods: As this is an export, the goods must go through customs. You will need to manage the Single Administrative Document (SAD) for export. Usually, the transport company or a customs agent handles this process, but it is your responsibility to ensure it is done.
* Provision of services: The general rule states that the service is considered to be supplied at the recipient's location. If your client is a business or professional, the invoice is issued without VAT.
How do the new VeriFactu regulations affect this?
The tax treatment of these operations does not change, but the way you will have to issue and record your invoices will. With the entry into force of the VeriFactu systems, all invoices, including those to the Canary Islands, Ceuta, and Melilla, must be generated with invoicing software certified by the AEAT.
This system will ensure the integrity and traceability of each invoice, sending a record to the Tax Agency almost in real-time. The adaptation deadlines are:
* January 1, 2027: Mandatory for companies.
* July 1, 2027: Mandatory for freelancers and micro-SMEs.
It is crucial to start preparing. To do so, you can consult our complete guide on [VeriFactu 2027: Deadlines for Freelancers in Spain](/en/verifactu-2027-deadline). Using compliant invoicing software will not only help you comply with the law but will also simplify the management of special cases like export invoices.
In summary, invoicing these territories is straightforward if you remember the three key points: invoice without VAT, legal exemption note, and managing the SAD for goods. Get ahead of the changes and make sure your invoicing system is ready for the future.