Buying all the products a homeowner needs to keep their vacation home in southern Gran Canaria up to date or buying clothes from May 21st will gradually become an ordeal with suppliers, as both Canarians and long-stay tourists experience. The reason is that these platforms now have to collect the IGIC (Income Tax), a real ordeal for each of the thousands of suppliers. Ultimately, the most practical option as the weeks go by will be restrictions on sales to the Canary Islands market unless the user agrees to be charged VAT in a territory exempt from this tax mechanism. This is what comes with an Economic and Fiscal Regime (EFR) that's out of touch with reality.
On May 21, 2024, the Economic and Financial Affairs Council of the European Union (ECOFIN) approved a new Directive that radically transforms the tax treatment of e-commerce imports. This regulation requires digital platforms to collect VAT at source on sales of products from third countries. This directly affects e-commerce giants such as Temu, AliExpress, Amazon, and Shein, and represents a profound change in tax procedures for thousands of businesses that sell to consumers within the European Union.
This measure is part of the VAT in the Digital Age legislative package, which seeks to level the playing field between European and non-EU suppliers, ensure tax collection, and reduce fraud in low-value imports. It also strengthens the use of the IOSS (Import One-Stop Shop) system, which facilitates VAT reporting from a single point in Europe for all cross-border sales.
In the Canary Islands, and particularly in the south of Gran Canaria, this tax reform could become a real ordeal for consumers and businesses trying to purchase products on international platforms such as Temu or AliExpress. Although the Directive does not directly apply VAT in the Canary Islands—as the archipelago pays taxes through the IGIC (Integral Tax) and is considered a third territory for tax purposes—it does introduce significant operational complexity. Platforms could restrict shipments to the Canary Islands or include European VAT in their prices, which could make products more expensive or complicate the management of returns and claims.
For individual buyers, this means that products that were previously relatively easy to purchase without hidden costs may now arrive with unexpected additional costs or delays resulting from more complex customs and tax procedures. Furthermore, the early inclusion of VAT in the final price can create confusion and discourage online purchases from the Canary Islands, especially in areas like southern Gran Canaria where connectivity and the digital shopping culture are growing.
For their part, Canarian companies that sell to customers within the European Union must adapt to a dual tax situation: manage the local IGIC (Integral Tax) and comply with the new European VAT obligations if they use digital platforms or warehouses in EU territory. This involves registering in systems such as OSS/IOSS, adapting invoicing, and thoroughly coordinating logistics to avoid incurring penalties or issues with the Treasury.
In short, this European tax reform not only modernizes and strengthens the tax system for global digital commerce, but also highlights the disconnection and challenges faced by the Canary Islands. The Canary Islands' special status as a third country, far from being an advantage, can hinder smooth access to international platforms, hampering both imports for consumers and exports for local businesses.
This new scenario requires specialized tax consulting and strategic planning so that digital commerce in the Canary Islands—and specifically in the south of Gran Canaria—can overcome the complex bureaucratic framework and maintain its competitiveness. Without this adaptation, the Canary Islands risk being isolated in an increasingly regulated and competitive market, penalizing consumers and businesses alike.
