The Canary Islands' unique fiscal regime — IGIC, ZEC, reduced ITP and the Spain-Israel Double Taxation Treaty — explained for Israeli buyers, entrepreneurs and relocators.
Las Palmas de Gran Canaria sits within a Spanish special economic zone that dates to the Régimen Económico y Fiscal de Canarias (REF Canarias). Unlike any mainland Spanish region, the Canary Islands are outside the EU VAT area — so instead of 21% IVA on services and purchases, residents and businesses pay IGIC (Impuesto General Indirecto Canario) at 7% on most transactions, and 0% on basic foodstuffs and essential services. For Israeli buyers used to Israeli VAT of 17%, this represents a significant saving in the cost of goods, construction and services.
Property purchase taxes also differ: resale homes attract ITP at just 6.5% compared to 10% in Catalonia or up to 11% in the Balearics. New builds pay IGIC at 0.75% plus AJD stamp duty, dramatically below the mainland's 10% IVA plus AJD. For Israeli entrepreneurs, the Zona Especial Canaria (ZEC) offers a 4% corporate tax rate on qualifying international activities — potentially making Las Palmas one of Europe's most tax-efficient bases for an Israeli tech or services company.
Spanish residency rules apply in full: 183+ days in Spain triggers IRPF on worldwide income, Modelo 720 for Israeli assets, and access to the Beckham Law for qualifying new arrivals.
The 1999 bilateral treaty governs double-taxation relief on rental income, dividends, interest and capital gains from Spanish or Israeli sources.
ITP at 6.5% on resale (vs 10% in Catalonia). New-build IGIC at 0.75% plus AJD. Annual IBI and, on sale, plusvalía municipal and 3% non-resident withholding.
Qualifying companies in the Zona Especial Canaria pay 4% corporate tax on international income — one of the lowest rates available within EU territory.
For Israeli non-residents who own a holiday apartment in Las Palmas, quarterly IRNR returns (Modelo 210) are due on rental income at 19%, and imputed income (1.1% of cadastral value) must be declared for months the property sits vacant. When selling, the buyer withholds 3% of the purchase price. The Spain-Israel DTT then determines whether the capital gain is also taxable in Israel — typically it is, with a credit for Spanish tax paid.
Israelis considering relocating to Las Palmas should also be aware that while Spanish income tax applies in full, the lower cost of living compared to Tel Aviv or Jerusalem — combined with IGIC at 7% rather than IVA at 21% — effectively increases purchasing power significantly. The Canary Islands' wealth tax, while not as generous as Madrid's 100% bonificación, is applied at moderate rates and only triggers above approximately €700,000 in net assets.
Yes. Instead of 21% IVA, purchases attract IGIC at 7%, and new residential property pays 0.75% IGIC. The ZEC offers reduced corporate tax of 4% for qualifying international businesses including Israeli-owned entities.
Resale property in the Canary Islands attracts ITP at 6.5% — lower than most mainland regions and significantly below Catalonia (10%) or the Balearics (up to 11%). This reduces upfront acquisition costs for Israeli buyers considerably.
The Canary Islands apply moderate wealth tax rates — typically 0.24% to 2.5% on net assets above approximately €700,000. There is no full bonificación like Madrid or Andalusia, but rates are not as high as the Balearics. Israeli residents declare worldwide assets; non-residents declare only Spanish assets.
Yes. The ZEC allows qualifying companies to pay corporate tax at 4% on income from international activities including technology and e-commerce. The entity must have at least one director resident in the Canaries and meet minimum investment and employment thresholds.
Yes. Spanish tax residents anywhere in Spain — including the Canary Islands — must file Modelo 720 if they hold foreign assets exceeding €50,000 per category. Israeli pension funds, keren hishtalmut accounts, bank deposits and property all count toward the threshold.
A growing number of Israelis are choosing the Canary Islands as their retirement destination, drawn by the year-round spring climate, lower cost of living, and the distinct Canarian fiscal regime. However, relocating to Las Palmas de Gran Canaria with Israeli pension savings requires careful planning before you establish Spanish tax residency.
Israel's three main pension vehicles — the Keren Pensia (קרן פנסיה), the Kupat Gemel (קופת גמל), and the Bituach Menahalim (ביטוח מנהלים) — are all treated as private occupational pension arrangements under Spanish law. Article 17 of the 1999 Spain-Israel Double Taxation Treaty allocates taxing rights over pensions to the country of residence: once you are a Spanish tax resident in Las Palmas, pension drawdowns from these funds are subject to Spanish IRPF at progressive rates reaching 47% at the highest band. There is no special Canarian exemption for pension income. Pre-retirement restructuring — for example, timing large lump-sum withdrawals from a Kupat Gemel before establishing Spanish residency — can produce significant tax savings and should be discussed with an adviser before you make the move.
The Beckham Law (Art. 93 LIRPF), substantially expanded by the 2023 Startup Law, is available to Israelis who relocate to Las Palmas for employment or to run an entrepreneurial activity. Qualifying individuals — who must not have been Spanish tax residents in the five years before arrival — can elect a flat 24% IRPF rate on Spanish-source employment income up to €600,000 per year, for a period of six tax years. This is particularly attractive for Israeli tech professionals joining a Canarian company or setting up under the ZEC regime, where a 4% corporate tax rate on the entity can be combined with the personal Beckham Law rate. Foreign-source income is generally exempt from Spanish taxation during the Beckham period, which means Israeli investment income, dividends, and capital gains from Israeli assets may fall outside the Spanish tax net — subject to careful analysis of the DTT provisions.
Israel joined the Common Reporting Standard (CRS) in 2018. Since then, Israeli banks — including Bank Hapoalim, Bank Leumi, and Mizrahi Tefahot — automatically report account balances and income of Spanish tax residents to the Israeli Tax Authority, which in turn shares this data with Spain's Agencia Tributaria (AEAT). If you are a tax resident in Las Palmas and hold Israeli bank accounts, investment portfolios, or pension funds, AEAT may already have information about these assets before you file your Spanish return.
Separately, Modelo 720 — Spain's foreign asset declaration — must be filed by all Spanish tax residents holding overseas assets above €50,000 per category (bank accounts, securities/pensions, real estate). For Israeli residents of Las Palmas, this means declaring Israeli bank accounts, Keren Pensia and Kupat Gemel balances, Israeli securities portfolios, and Israeli real estate. The initial filing deadline is 31 March following the first year of residency; updates are only required when asset values increase by more than €20,000 or when assets are disposed of. Penalties for non-filing or late filing are severe — historically up to 150% of the undisclosed tax, though recent constitutional court decisions have moderated some sanctions.
Israelis purchasing property in Las Palmas as non-residents benefit from the Canarian ITP rate of 6.5% on resale homes — materially lower than the 11% applicable in the Balearics. Ongoing obligations include annual IBI (Impuesto sobre Bienes Inmuebles) council tax and, if the property is left vacant, quarterly IRNR imputed income filings at 19% on 1.1% of the cadastral value. If the property is rented — a common strategy given the island's tourism market — quarterly Modelo 210 returns must be filed at 19% on net rental income. On eventual sale, the buyer withholds 3% of the purchase price; the seller then files a final IRNR return on the capital gain, with the DTT's Article 13 determining whether Israel also taxes the same gain (credit mechanism applies). Plusvalía municipal — the local land value increment tax — is payable to the Las Palmas ayuntamiento based on the increase in the cadastral land value over the ownership period.
Scenario: Noa, an Israeli software engineer, relocates to Las Palmas under the Beckham Law to work for a ZEC-registered company. Her annual salary is €70,000. She also holds Israeli bonds and receives approximately ₪30,000 (roughly €7,500) in interest income from a bank account at Bank Leumi.
This example is illustrative only and does not constitute tax advice. Individual circumstances vary — contact Jacob Salama for a personalised analysis.
Jacob Salama advises Israeli nationals on the Canary Islands fiscal regime, ZEC applications, property acquisitions and cross-border tax planning under the Spain-Israel DTT.