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Spain · Southern Europe
Almost every summary of Spanish indirect tax gets this half-right, and half-right is worse than wrong because it sounds careful. Mainland Spain and the Balearics charge IVA at 21%. The Canary Islands do not charge a reduced IVA — they sit outside Spanish VAT territory altogether and levy IGIC, a different tax with its own rates, its own administration and its own legal basis. Ceuta and Melilla are a third case, levying IPSI set by each city. So the question a Spanish business asks a system is not what the rate should be. It is which tax it is under — and that is a question about a name, which is the one thing our country profile holds exactly one of.
Three systems, not three rates
Not three rates. Three separate taxes, each with its own name, its own administration and its own rules about what is charged and what can be recovered.
Mainland Spain and the Balearic Islands
IVA 21%
Spanish VAT, inside the EU VAT system, and what almost every published summary means when it says "Spain". This is the figure our country profile carries.
The Canary Islands
IGIC 7% general
A different tax. The islands sit outside Spanish VAT territory, so Spanish VAT rules do not apply there — this is not IVA charged at a lower percentage, and treating it as one produces a document describing a tax the business is not registered for. Reduced and increased bands exist and are deliberately not printed here.
Ceuta and Melilla
IPSI set locally
A third system again, levied by each city on production, services and imports. Two cities, two sets of rates, neither of them VAT. No figure is printed here because there is no single one to print.
So "the Spanish rate" is a coherent phrase for most of the country and an incoherent one for the rest. Our country profile carries a single instrument name and a single rate per country, and for Spain that name is Value Added Tax at 21% — correct for the mainland and the Balearics, and describing the wrong tax entirely for anybody in the islands or the cities.
Worth being fair to the profile: this is a limitation of holding one row per country, not a mistake in the row. The 21% is right, the name is right, and both are right about most of Spain. What the shape cannot express is that the answer changes by territory in a way that is not a number.
And the name we would need
An organization's tax in our system is one of a fixed set of types. There are ten of them, they are the same ten for everybody, and they are these.
Neither IGIC nor IPSI is among them, and the list is global rather than something an organization can extend. So the most accurate option available to a business in Las Palmas today is a tax type called "Custom Tax" — which is true, in the sense that it is not any of the other nine, and useless on a document that a customer or an inspector will read.
Notice what the list already proves, because it is the argument for why this is buildable rather than philosophical: Harmonized Sales Tax, Provincial Sales Tax and Quebec Sales Tax are on it. Somebody has already extended this list once, for Canada, when a market needed a name that VAT and Sales Tax could not carry. The mechanism is right and the list is short — which makes this a smaller piece of work than the page above it, and a more embarrassing gap.
What this costs you in practice
An invoice naming the wrong tax is not a cosmetic problem. It describes the business as registered for something it is not, and it is the kind of error that survives unnoticed because the total is right.
Provisioning writes one rate against the country. For an organization in the islands or the cities, that default is not merely too high — it belongs to a tax system the business is not in.
A business with a Madrid office and a Tenerife branch is under two different indirect taxes simultaneously. Any system holding one tax per organization forces that into a single answer, and one of the two locations gets the wrong one.
Spanish public holidays come from three levels of government, so two branches genuinely work different days. A single national holiday list is wrong for at least one of them, quietly, inside leave balances and availability.
Running the operation, not filing for it
Everything above is about a tax name. Most of what an operations system does in Spain has nothing to do with one, and a geographically spread operation is where the ordinary things get harder.
Inventory
Stock across a mainland and two archipelagos
Replenishing an island is a different problem from replenishing a warehouse two hours away, and the difference is lead time rather than distance. Lead times are set per location and replenishment runs against consumption, so an island branch is planned on its own clock instead of on the mainland's.
Assets
Equipment that is somewhere, and stays somewhere
Assets carry their location and their movement history, which matters more than usual when the parts of an operation are separated by sea and an item is either there or is not. Inspection intervals sit on the asset itself with the record of what was last done.
HR
A working calendar per location, not per country
Spanish public holidays are national, regional and local at once, so two branches of the same business genuinely work different days. The working week and holiday list are the organization's to define — and if you run several locations, define them separately rather than nationally.
Procurement
Supplier records that survive the people who made them
Approvals, documents and correspondence held against the counterparty rather than in an individual's mailbox. Market-neutral, and said to be so — it is here because it is what buyers ask about once the tax conversation ends.
Four items rather than six. The Spanish operational story is mostly about distance and duplication rather than about anything exotic, and padding it to six would be inventing local colour.
Scope, in three parts rather than two
Three columns, because "no" means two entirely different things and one list hides which is which. The middle column is work that has not been done and has a price. The right-hand column is work we would decline from a paying customer — and it is the one worth demanding from every other vendor you talk to, because a page without it has not told you where its edges are.
Running in the product today
Not built yet — and commissionable
What we would decline, and would rather say now
The first two rows of the middle column are one small piece of work and they are the ones worth doing first: let an organization name its own tax type instead of choosing from ten, and the IGIC and IPSI problem stops being a request we have to service and becomes something you configure. The territory-aware default and the two-regimes-one-organization row are larger and independent. All of it is commissionable now with a written specification, a timeline and a price — Kenya's eTIMS transmission and our payroll engine are the evidence that we build rather than describe.
If you are on the mainland or in the Balearics, almost none of the above affects you and we would rather say so than let a page about territories imply a problem you do not have. This page exists because the businesses it does affect are the ones least well served by every summary of Spanish tax they will read.
How this starts
In any system you are evaluating, find where the tax type is set and read the list. If your regime is not on it, you have learned something structural in thirty seconds — and you have learned it before an implementation rather than during one.
See what rate and what tax name it is given, and on what basis. If the answer came from the country alone, the system has assumed a territory, and the assumption is right for most of Spain and wrong for the parts this page is about.
If you have branches under two regimes, ask concretely how the system holds both — one organization or two — and what that does to consolidated reporting. It is a five-minute question with an architectural answer, and it is the one most likely to be discovered late.
Read before you shortlist
The Canary Islands are not on a lower rate of Spanish VAT. They are outside Spanish VAT entirely, paying a different tax called IGIC — and a wrong tax name produces documents that are perfectly correct about the total.
Our tax types are a fixed list of ten, the same ten for everybody. Three exist because Canada needed them — which proves both that the list can grow and that it only grows when a market is loud enough.
Ask what your tax is called, not what it costs — then ask who can add a name that is missing. Five questions, four checkable in a trial account, and the first one tells most readers to skip ahead.
A rule about receipts can be an integration, an architecture or an accreditation, and only the first is something you can shortlist for. The third is answered by a public register in about two minutes and almost nobody evaluating from outside the country knows to look. Our own audit against one European regime, including the six days this site contradicted itself.
A court has told member states to require a system that measures each worker's daily hours. Ours stored a 22:00 to 06:00 shift perfectly and reported its duration as empty — because clock-out is a time with no date, and six separate copies of the same arithmetic each decided an end before a start has no answer. Fixed the day this was published.
European food law asks who supplied a batch and who received it. Our schema answers both and has for months — with two caveats that decide whether the answer arrives in an hour or not at all: the tracking is off by default per item, and deleting a batch leaves its movements pointing at nothing.
What a Spanish finance team asks once the rate question is settled
Almost none of it, and we would rather say that plainly than let a page about territories imply a problem you do not have. On the mainland and in the Balearics the profile is simply correct: IVA at 21%, the right name and the right figure. Read the operational sections instead — the calendar and the multi-location material are the parts relevant to you, and the honesty ledger tells you where we stop regardless of where you are.
You can set it to the rate you actually charge, and you cannot give it the right name. Our tax types are a fixed list of ten — VAT, GST, sales tax and its Canadian variants, excise, service, withholding, and a catch-all called "Custom Tax" — and IGIC is not among them. So the arithmetic will be right and the label on it will not. On the roadmap and commissionable now: letting an organization define its own tax type rather than choose from a central list, which is the same change that fixes IPSI and every future market with a name we have not anticipated. A written specification, a timeline and a price, with Kenya's eTIMS transmission as the evidence we build this way. No date on a public page.
No, and this is the most consequential misunderstanding in Spanish indirect tax for anybody buying software. The Canary Islands sit outside Spanish VAT territory, so Spanish VAT rules do not apply there at all — IGIC is a separate tax with its own rates, its own administration and its own legal basis. Treating it as a reduced IVA produces documents that describe a business as registered for a tax it is not registered for, and the totals will look fine the whole time. Ceuta and Melilla are a third case again with IPSI, set by each city.
Today: as two organizations, each configured for its own regime, with reporting available per entity or consolidated across both. That is a real architecture rather than a workaround and plenty of businesses run it deliberately. It is also not free — the two are separate for every purpose, so a question you would rather ask once gets asked twice, and consolidation is a report rather than a ledger. On the roadmap and commissionable now: two regimes inside one organization, which is the larger of the changes on this page and the one we would sequence second, behind the tax-type work that makes the names available at all.
No, and this is a boundary rather than a backlog. It depends on where you are established and what you supply, it has real consequences if it is wrong, and it belongs to your adviser rather than to a software vendor with an opinion. What protects you here is the division of labour: they determine it, you record it, and the system holds the record along with when it was decided. A vendor that answered this question for you would be taking on a liability it cannot carry and you would not find out until it mattered.
No, and it is a deliberate design rather than a gap. This one is a boundary rather than a backlog: we will not ship a Spanish holiday list, because holidays here come from national, regional and local government at once, so two branches of the same business genuinely work different days and any national list we shipped would be confidently wrong for at least one of your locations. A wrong holiday does not fail — it marks a working day closed inside leave balances and availability, silently. Keeping the list yours protects you from our data being stale in a way you cannot see. Define them per organization; if you run locations under different regional calendars, that is another argument for the two-organization shape described above.
Not today. Two halves, and they have different answers. A boundary rather than a backlog: we will not fold a translation into a standard implementation, because a half-translated operational system is worse than an English one — it teaches people to distrust the screens they can read. On the roadmap and commissionable now: as a project with its own specification and price, scoped to the screens your people actually work in. If a Spanish interface is non-negotiable on day one, choosing a system that already ships in Spanish is a perfectly good answer and we would rather you reached it here.
The operation rather than the fiscal document, and the multi-location half of it in particular. Stock and lead times per location so an island branch is planned on its own clock, assets that carry where they are and what was last done to them, supplier records that survive staff turnover, and organizations that run side by side with their own rates and calendars. In a market where the fiscal software question is genuinely well served locally, buying the operations layer separately is a legitimate architecture rather than a compromise.
Not what it costs — what it is called, and whether the system can print the right name on a document. It takes thirty seconds in any product and it is the question this market punishes people for skipping. If our answer disqualifies us for your territory, that is a fair conclusion and better reached now than in month two.