Living in the Canary Islands and choosing an island

Terms used

• IGIC — The IGIC is the Canary Islands' general consumption tax, which replaces mainland IVA on most purchases.
• IVA — The IVA is Spain's mainland sales tax, with a standard rate of 21%.
• IRPF — The IRPF is Spain's personal income tax, charged at the same rates in the Canaries as on the mainland.
• ZEC — The ZEC is a low-tax regime for approved companies in the Canary Islands, not for ordinary individuals.

Key rules

• IGIC: The standard consumption tax in the Canary Islands (IGIC) is 7%.
• Income tax: Your income tax is the same as on the mainland.
• ZEC: The low-tax company regime is for approved companies, not for you as an individual.
• Housing: Long-term rentals are scarce and expensive, especially in Tenerife, Gran Canaria and Lanzarote.
• Travel: You rely on flights or ferries to leave your island, so check routes before choosing.

The short version

The Canary Islands have a mild climate and a special economic and tax regime. But the islands are very different from each other. Two things affect almost everyone: you depend on flights (or ferries) to leave, and tourism pushes up housing costs. Choose your island with those in mind.

What the special tax regime means for you

Everyday purchases carry IGIC instead of mainland IVA. The standard rate is 7%. Basics are taxed at lower rates (3% or 0%), and some goods at higher ones (9.5%, 15% or 20%). Mainland IVA is 21%, so your shopping is taxed less.

Income tax (IRPF) is the same as on the mainland. Do not expect to pay less on your salary just because you live on the islands.

The REF is the umbrella regime behind these advantages. Most of it, such as the investment reserve, is aimed at companies, not individuals. The ZEC is a low-tax regime for approved companies, with a 4% corporate tax. It is not for individuals as such. You could benefit only if you set up or work for an approved ZEC company, which must create jobs, invest a minimum amount and keep a local office. Confirm current IGIC rates and ZEC conditions with the Canary tax agency.

How the islands compare

Figures below are approximate.

• Tenerife (about 950,000 people): the most populous. Two airports, several hospitals, a varied climate, a tourist south and a greener north.
• Gran Canaria (about 855,000): home to Las Palmas, the biggest city. Major airport, large hospitals, big-city amenities and good beaches. A good fit if you want services.
• Lanzarote (about 160,000): volcanic and dry, with a busy airport and a main hospital.
• Fuerteventura (about 120,000): flat and windy with long beaches. Small airport and one general hospital.
• La Palma (about 85,000): green and quiet, with a small airport and one main hospital.
• La Gomera and El Hierro (about 22,000 and 11,000): small and remote, with small airports, health centres and limited services.

In general, the smaller the island, the fewer the services and the more you rely on travelling for specialist care.

Getting on and off the islands

Between islands, Binter Canarias runs most flights, with many daily connections. Ferries also run, for example frequent sailings from Tenerife to La Gomera and from Gran Canaria to Tenerife, Fuerteventura and Lanzarote. To the mainland, flights go mostly from Tenerife, Gran Canaria, Lanzarote and Fuerteventura to Madrid, Barcelona, Seville and other cities. A ferry from Cádiz to Las Palmas, Santa Cruz de Tenerife or Arrecife takes about 2 days. Routes and frequencies change by season, so check them for the months you will travel.

Housing is tight

Rents have risen sharply since about 2020, with double-digit yearly rises in several years, notably in Tenerife, Gran Canaria and Lanzarote. Long-term lets are scarce because many owners prefer holiday rentals, and demand from remote workers and migrants has grown. Expect roughly €12-17 per m² per month in main areas, and more in tourist zones.

New rules restrict holiday lets: they need suitable zoning and municipal authorisation, and are banned in many residential buildings. This may free up some homes over time, but rules and prices differ by town and are changing fast. Landlords often ask for one month's deposit plus another month as a guarantee.

Before you decide

Use the checklist below to test your choice against your real travel, healthcare and shopping needs. The rules differ by municipality, so ask your town hall about housing rules where you plan to live.

Timeline and deadlines

• Pay the rental deposit and guarantee: When you sign the lease: usually one month's deposit plus another month as a guarantee

Reality check before you choose an island

• List the trips you will really make each year, then check which flights or ferries serve them from your island, both to other islands and to the mainland.

• Check the winter timetable for your routes, since flights and ferries run less often and strong wind or storms can cancel ferries, especially between the western Canaries.

• Price your trips with the resident discount: residents get a 75% discount on the base fare for flights to the mainland, and you need to be on the padrón (municipal register) to use it.

• Find the nearest general hospital to where you would live, and ask the regional health service which specialist care would mean a transfer to another island or the mainland.

• Ask the health service what travel and accommodation support it gives when a transfer is authorised, as the rules differ by region.

• Price your usual weekly shop on the island. Groceries often cost 5-15% more in the Balearics, and 0-10% more in the Canaries, where the 7% IGIC tax is lower than mainland VAT.

• Check whether the online retailers you rely on ship to the islands and what delivery costs.

• Visit in winter before you move, to see which shops, restaurants and bus or ferry services close or slow down. The Canaries stay mild and open, while the Balearics can be cold, damp and quiet.

• Ask where the year-round social life is, such as local clubs and expat groups in the main towns like Palma, Las Palmas, Santa Cruz, Mahón or Ibiza town.

• Compare rents for the exact area you want: roughly €12-17 per m² per month in the main Canary areas, around €14-17 in Menorca, around €16-20 in Mallorca, and €20 or more in Ibiza.

• Ask every landlord whether the let is year-round, since many Balearic landlords offer winter-only lets from September to June and then switch to holiday rentals.

• Budget for a deposit of one month plus an extra month's guarantee, and ask about heating and insulation, since many island homes are built for summer.

Frequently asked questions

Will I pay less tax on the islands?

Yes, on everyday purchases, because the Canaries use IGIC instead of IVA. The standard IGIC rate is 7%, against 21% IVA on the mainland. Your salary is not taxed any lower, as the page explains elsewhere.

Can I use the special low-tax company regime as a newcomer?

Only in particular cases, such as setting up or working for an approved company. The ZEC regime, with 4% corporate tax, is for approved companies that create jobs and invest a minimum amount locally.

Which islands have the most services?

Gran Canaria and Tenerife, with about 855,000 and 950,000 people. Gran Canaria has Las Palmas, the biggest city. Tenerife has two airports and several hospitals. La Gomera and El Hierro are small and remote, with small airports and health centres.

How hard is it to find a long-term rental?

It is hard, especially in Tenerife, Gran Canaria and Lanzarote, where rents have risen sharply since about 2020. Many owners prefer holiday lets, though new rules restrict those. Expect to pay roughly €12-17 per m² per month in main areas, and landlords often ask for one month's deposit plus another month as a guarantee.