Executive summary · TL;DR
In the Canary Islands, the Kit Digital service is taxed with IGIC at the 7% general rate, not 21% IVA. Under article 31.8 of Ley 38/2003, the indirect tax is never an eligible expense: the voucher covers the base of the service and the company pays the tax. On a €2,000 base, that means €140 of IGIC versus €420 of IVA on the mainland. IGIC is managed by the Agencia Tributaria Canaria through forms 420 and 425, not by the Agencia Tributaria.
What IGIC is and why it replaces IVA in the Canary Islands
IGIC, the Canary Islands General Indirect Tax, is the tax that applies to consumption in the islands. It performs the same function as IVA on the mainland and the Balearic Islands, but it is a tax of the archipelago's own, with lower rates and regional management. It is governed by Ley 20/1991, of 7 June, amending the tax aspects of the Canary Islands Economic and Tax Regime.
The Canary Islands fell outside the territory where the EU's IVA applies because of their status as an outermost region. Instead, the archipelago keeps its own indirect taxation within the Economic and Tax Regime (REF), of which IGIC is the most visible piece for any company or self-employed professional operating there. That is why, when a digitalization agent invoices you for a Kit Digital service, you will not see 21% IVA on the invoice: you will see IGIC.
An important practical difference is who keeps the books. IGIC is not managed by the national Agencia Tributaria, but by the Agencia Tributaria Canaria (ATC). That means the self-assessments, the deadlines and the reference information come from the regional administration, not from the AEAT. For a Canary Islands company this is already routine, but it is worth being clear about it if your accountant also operates outside the archipelago.
IGIC rates in force in 2026 and which one applies to Kit Digital
IGIC has several rates depending on the type of good or service. As of 2026, the rates in force are:
- Zero rate (0%): basic products such as bread, milk, books or medicines.
- Reduced rate (3%): certain industrial products and other specific goods.
- General rate (7%): the default rate, the one that applies to most professional and digital services.
- Increased rate (9.5%): some premium goods and certain services.
- Special increased rate (15%): items such as jewellery, perfumery or certain vehicles.
- 20% rate: reserved for tobacco products.
For Kit Digital, what matters is the general rate of 7%. The programme's usual digitalization services (website design and development, management software deployment, e-commerce, cybersecurity, online presence or digital consultancy) do not have a specific lower rate, so they are taxed at the general rate. That 7% is the functional equivalent of the 21% general IVA that would apply to the same invoice on the mainland.
For context, it is worth knowing that the Canary Islands Budget Law 9/2025 introduced some adjustments for 2026, such as a new 1% rate for petroleum and its derivatives or the rise to 15% for energy drinks. These are new measures that do not affect Kit Digital's digital services, but I mention them so you have the full picture and are not caught off guard by reading about changes to IGIC.
The key point almost nobody explains: the tax is not part of the grant
This is the heart of the article and the reason it is worth understanding the tax side properly before signing anything. Ley 38/2003, the General Subsidies Law, states in its article 31.8 that indirect taxes are not considered an eligible expense when they can be recovered or offset.
Applied to Kit Digital, this means one very concrete thing: the voucher covers the base of the service, not the tax. Neither IVA on the mainland, nor IGIC in the Canary Islands, nor IPSI in Ceuta and Melilla forms part of the grant. The indirect tax is separate and is always borne by the beneficiary company.
Many people discover this late, when the invoice arrives and they see that the voucher has covered the service but the corresponding tax has to be paid out of their own pocket. It is not a mistake or an improper charge by the agent: it is exactly how the grant works throughout Spain.
And this is where the Canary Islands come out ahead. On the part of the indirect tax you have to pay, a Canary Islands company bears IGIC at 7%, while a mainland one would bear IVA at 21% on that same invoice. That is about 14 points of difference in the indirect rate, a real advantage in the initial outlay.
IGIC versus IVA in Kit Digital: a comparison with figures
Let's look at it with numbers so the effect is clear. Imagine a Kit Digital service with a base of €2,000 (for example, a Segment III solution, which goes up to €3,000). The voucher covers the base; the tax is on you. Here is how the comparison between a mainland company and a Canary Islands one looks:
| Item | Mainland (IVA 21%) | Canary Islands (IGIC 7%) |
|---|---|---|
| Base of the service | €2,000 | €2,000 |
| Covered by the Kit Digital voucher | €2,000 | €2,000 |
| Indirect tax (on you) | €420 | €140 |
| Company's initial outlay | €420 | €140 |
| Tax management | AEAT (forms 303/390) | ATC (forms 420/425) |
In this example, the Canary Islands company advances €280 less than the mainland one for the same service. Multiply that by the larger amounts of the higher segments (up to €12,000, €25,000 or €29,000 of base) and the difference in cash flow really shows.
The honest caveat: that figure is the initial outlay, not necessarily the final cost. If your company can deduct or recover the tax it has borne in its self-assessment (because it carries out a taxable activity with the right to deduction), the net effect of IVA or IGIC fades over time. For a company that deducts 100%, the tax is a temporary financial cost, not a definitive one. The real and permanent advantage of IGIC over IVA appears mainly when the tax is not fully recoverable, or as a liquidity advantage (you advance far less money). Do not overstate the saving: it depends on your specific situation, and that is for your accountant to confirm.
How IGIC is managed: forms 420, 425 and the franchise scheme
If you are the one who has to declare IGIC (because your activity is taxable and not under the franchise scheme), it is worth knowing the basic forms managed by the Agencia Tributaria Canaria:
- Form 420: periodic self-assessment, normally quarterly. It is the Canary Islands equivalent of IVA's form 303. In it you declare the IGIC charged to your clients and the IGIC borne on your purchases, and you settle the difference.
- Form 425: the annual summary return for IGIC, similar to IVA's form 390. It summarizes all the year's operations.
In addition, there is the special scheme for small businesses and professionals, known as the franchise. Those who do not exceed a certain annual turnover can be exempt from charging IGIC and from filing the periodic self-assessments. If you are under this scheme, your situation with regard to the tax changes: that is why it is so important to know which scheme you are in before doing the maths on the real cost of Kit Digital.
In practice, your digitalization agent's invoice will carry the IGIC that applies, and you treat it in your accounts like any other tax borne: you deduct it if you have the right to, or you take it on as an added cost if you do not. Your accountant will know exactly how to apply it in your case.
IGIC in the context of the REF: beyond Kit Digital
IGIC is not the only tax advantage of the archipelago. It is part of the Canary Islands Economic and Tax Regime, a set of incentives designed to offset remoteness and insularity. I will not develop them in depth here (you have that in the general guide to the Canary Islands), but it is worth knowing the context, because the digitalization that Kit Digital funds fits very well with several of them:
- ZEC (Canary Islands Special Zone): allows entities that meet the activity, employment and investment requirements to be taxed at 4% in Corporate Income Tax.
- RIC (Reserve for Investments in the Canary Islands): allows up to 90% of the undistributed taxable base to be reduced, provided it is reinvested in the archipelago.
- DIC (Deduction for Investments in the Canary Islands): a 25% deduction for investment in new fixed assets.
The underlying idea is that a Canary Islands SME that invests in digitalization can combine the direct Kit Digital grant with REF incentives that reward precisely investment in the territory. You can consult the official information on the Economic and Tax Regime on the Gobierno de Canarias website. That said, each incentive has its own requirements and they are not automatic: this is where a good adviser makes the difference.
The state of Kit Digital in 2026: what changes and what does not
So you have the up-to-date picture, Kit Digital has entered a new phase. The original general calls closed on 31 October 2025, with more than 860,000 grants awarded across Spain. From then on, Orden TDF/39/2026, of 26 January (published in the BOE of 28 January 2026), reorganized the programme with several relevant changes:
- It removes the fixed closing date and moves to the criterion of awards until funds are exhausted.
- It redistributes the unspent remainders from previous calls.
- It relaxes the seniority requirement for the self-employed, who can prove 6 months of registration with the RETA.
What does not change in the Canary Islands compared with the rest of Spain are the segments and the voucher amounts. They remain the same:
- Segment I (10 to fewer than 50 employees): up to €12,000.
- Segment II (3 to fewer than 10 employees): up to €6,000.
- Segment III (0 to fewer than 3 employees, including the self-employed): up to €3,000.
- Segment IV (50 to fewer than 100 employees): up to €25,000.
- Segment V (100 to fewer than 250 employees): up to €29,000.
In other words, a Canary Islands SME receives exactly the same voucher amount as a mainland one of the same size. The difference, as we have seen, lies in the indirect tax added outside the voucher. You have the full mechanics of the programme in my complete guide to Kit Digital 2026.
What to watch when justifying and choosing an agent in the Canary Islands
Two practical recommendations that have a direct impact on your wallet and on avoiding nasty surprises later.
Justify properly so you don't have to repay the voucher. Kit Digital is granted as a subsidy, and that entails justification obligations. A badly issued invoice, a service not delivered as agreed or incomplete documentation can lead to a repayment. I go over the typical mistakes and how to protect yourself in my article on how to justify Kit Digital and avoid repayment. In the Canary Islands, on top of that, make sure the agent's invoice correctly reflects the IGIC: it is a detail your accountant will review, but it helps for you to be aware of it too.
Choose your digitalization agent well. Not all agents operate the same way in the Canary Islands or know the particularities of IGIC and local invoicing. It is worth choosing one that understands your tax reality and issues the invoice correctly from the start. I share my criteria in the guide on how to choose a digitalization agent.
If you want to see the process step by step in another location to compare methodology, you have my guide to Kit Digital in Valladolid step by step. And if your doubt is whether Kit Digital is what you need or another grant suits you better, I clarify the differences in Kit Digital vs Kit Consulting. For everything related to my work in the archipelago, you can see the services in the Canary Islands page.
Important notice: this is general information
This article gathers general information about the taxation of Kit Digital in the Canary Islands under the regulations in force on the date of publication. It does not constitute individualized tax or accounting advice. The specific application of IGIC, its deductibility, your scheme (general or franchise) and the treatment of the tax in your self-assessment depend on your particular situation and may change with regulatory amendments.
Before making decisions, always confirm the numbers and the obligations with your tax adviser or your accountant, who know your case. My role as a consultant is to help you understand the landscape and make good digitalization decisions, not to replace the work of your tax adviser.
Work with me
I am an independent consultant in strategy, quality and digitalization for SMEs, with offices in Castilla y León and the Canary Islands. If your company is in the archipelago and you want to make the most of Kit Digital without surprises on the invoice, I help you understand the real cost with IGIC, choose the solutions that genuinely move your business forward and coordinate the justification so you don't have to repay the voucher.
I don't sell closed solutions or tie you to a single provider: I order your digitalization priorities, explain each step in plain language and leave the tax side in the hands of your accountant with the information they need. If you like, let's go over it in a first session with no commitment.
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Book a session →Authorship: Ángel Ortega Castro · independent consultant in strategy, quality and digitalization for SMEs.
Authorship: Ángel Ortega Castro · independent consultant in strategy, quality and digitalization for SMEs.
Frequently asked questions
Does Kit Digital cover the IGIC on the agent's invoice?
No. Under article 31.8 of Ley 38/2003, the General Subsidies Law, indirect taxes are not an eligible expense when they can be recovered or offset. In Kit Digital, neither IVA nor IGIC is covered by the voucher: the grant covers the base of the service and the tax is paid by the beneficiary company.
Which IGIC rate applies to a Kit Digital service?
Usually the general rate of 7%. The programme's digital services (web, software, e-commerce, cybersecurity, consultancy) do not have a specific reduced rate, so they are taxed at the general rate, the functional equivalent of the 21% general IVA on the mainland.
How much tax do I save in the Canary Islands compared with the mainland?
On the part of the indirect tax you pay out of your own pocket, you bear 7% IGIC instead of 21% IVA: about 14 points less. On a service with a €2,000 base, that is €140 versus €420. That said, if your company deducts or recovers that tax, the net effect fades and the advantage concentrates mainly in liquidity. It is worth confirming with your accountant.
Who manages IGIC, the Agencia Tributaria or the Gobierno de Canarias?
IGIC is managed by the Agencia Tributaria Canaria (ATC), not the national Agencia Tributaria. The self-assessments are filed using form 420 (periodic, normally quarterly) and form 425 (annual summary).
What if I am under the IGIC franchise scheme?
The special scheme for small businesses and professionals (franchise) exempts those who do not exceed a certain turnover from charging IGIC and filing periodic self-assessments. If you are under it, your treatment of the tax changes, so it is important to know your scheme before working out the real cost of Kit Digital.
Are the voucher amounts different in the Canary Islands?
No. The segments and amounts are the same as in the rest of Spain: up to €3,000 in Segment III, €6,000 in II, €12,000 in I, €25,000 in IV and €29,000 in V. The only difference is the indirect tax added outside the voucher: IGIC in the Canary Islands instead of IVA.
What changed in Kit Digital for 2026?
Orden TDF/39/2026 (BOE of 28 January 2026) removed the fixed closing date and moved to the criterion of awards until funds are exhausted, redistributed remainders and relaxed the seniority required of the self-employed to 6 months of registration with the RETA. The segments and amounts did not change.
Brain marketing is more predictable than opinion marketing. — Ángel Ortega Castro