Government to allocate €15 million to Canary Islands for war‑impact measures

The Canary Government’s commitment is to achieve a 0 % IGIC rate on fuels.

The Spanish Government will provide a little over €15 million, until 30 June, to the Canary Islands so that the regional executive can adopt measures to mitigate the impact of the war in the Middle East.

The measures will focus mainly on the consumer basket, including:

• Reducing the IGIC on gasoline, diesel and bio‑fuels from 1 % to 0 %.
• Cutting the IGIC on natural gas from 3 % to 0 %.
• Granting up to a 99.9 % rebate on the tax on petroleum derivatives (the Canary equivalent of the national hydrocarbon tax).

These details were announced during a press conference by Territorial Policy Minister Ángel Víctor Torres together with Canary President Fernando Clavijo, following a meeting that set the agreement compensating the archipelago for the Royal Decree‑Law approved by the Council of Ministers on 20 March. The decree, adopted in an extraordinary session, contains 80 urgent measures aimed at responding to the conflict’s repercussions in the Middle East.

“The decree includes measures for all Spaniards, such as the ‘social bonus’ that prevents electricity cuts for the most vulnerable families,” Torres said, “but it also contains specific provisions for the Canary Islands, like maritime connectivity, aid for island‑based transporters, and adaptation of the Rural Development Fund for the primary sector and island energy sectors.”

Torres added that a particular issue needed resolution: the Canary Indirect General Tax (IGIC) and other island‑specific taxes. He explained that if these taxes were reduced to zero, a “discrepancy” would arise between the autonomous government’s intentions and the central government’s proposals concerning VAT.

“When VAT is lowered, the share of revenue it generates falls, yet the Spanish Government maintains overall collection. In the Canary Islands, however, the IGIC would drop to zero, eliminating that revenue source entirely,” he noted, emphasizing the need to determine the “precise compensation” for the measures the Canary executive intends to implement.

The €15 million compensation is earmarked until 30 June, the same deadline set for the national decree’s measures. Should the measures need to extend beyond that date, the plan is to “logically transfer those measures to the additional months that follow the three months stipulated in the decree, using the appropriate legislative formulas and mechanisms,” Torres explained.

If the measures must continue until the end of 2026, the central government would increase compensation to a total of roughly €60 million, covering the period from now until the end of the year to enable the execution of the war‑impact measures.

President Fernando Clavijo, who has not yet advanced any of the measures he intends to approve on Monday in the Government Council, highlighted the importance of the €15 million compensation:

“It is crucial for approving the action package, and I want to express my gratitude and, above all, my recognition for the well‑done work in favor of citizens,” he said.

Clavijo clarified the fiscal logic behind the central government’s approach:

“The aim is to maintain the fiscal differential with the mainland. The IGIC was set to drop to zero, which is not the same as moving from 11 % to 3 % and retaining a 3 % VAT base. In the Canary Islands, a zero IGIC would completely erase the collection capacity.”

Finally, the Canary president stressed that there was no specific request to the Spanish Government for a particular amount of money; the request was simply to compensate the fiscal gap created by the nationwide decree.

*(Further details to