We continue working on the Spanish localization, in this case, the tax localization packages for the Canary Islands are now available: the complete one, for SMEs and for non-profit organizations.
The tax localization in the Canary Islands is available in Odoo Enterprise from version 18 onwards. To have access to it, if you are already working with Odoo, you will need to create a new database, select the correct fiscal package and migrate the information.
What is the fiscal localization?
The fiscal localization of the company refers to where the company is located, i.e. where a person or entity invoices from.
Odoo's fiscal localization packages are prepared to manage any type of company located in the Canary Islands. We have the following charts of accounts: PGCE PYMES (2008), PGCE Completo and PGCE Entidades sin ánimo de lucro (2008).
When selecting the chart of accounts, the accounts will be configured as well as the taxes and the IRPF brackets to be able to include them in the invoices. In the same way, the tax forms to present to the Tax Agency are loaded, in the case of the Canary Islands, apart from the common forms with the autonomous communities of the peninsula, the exclusive form 420 of the Islands is also available.
What is the tax form 420?
Form 420 is a tax return used in the Canary Islands for the quarterly settlement of the Canary Islands General Indirect Tax (IGIC). This tax is equivalent to the VAT in the rest of Spain and the form is presented by companies and self-employed to declare and pay the IGIC accrued and deductible in their operations.
In the form, both self-employed and companies must present the subject and non-exempt domestic operations, whether they are 0%, 3%, 7%, 9.5%, 15%, 20%, etc. Also the intracommunity transactions and exports in case they apply, the equivalence surcharge and the self-consumption (investments of the taxpayer).
For the presentation, all the self-employed and all the companies that are subject to the IGIC are obliged. The presentation is made, in general, every quarter, although in some cases it must be made monthly, depending on the volume of the operations or if they are registered in the REDEME (Monthly Return Register).
Form 420 is filed quarterly:
- 1 to April 20 - first quarter
- 1 to July 20 - second quarter
- 1 to October 20 - third quarter
- 1 to January 30 of the following year - fourth quarter
In addition, by filing form 420 quarterly, companies and self-employed persons in the Canary Islands do not have to file form 303, which must be filed for companies in the rest of Spain. The same happens with the form 390, as it is directly related to the VAT declaration, in the Canary Islands it is replaced by the IGIC.
In spite of not having to present the models 303 and 390 presented in the rest of Spain, the companies and self-employed in the Canary Islands will have to present other models such as 111, 115 and 130, being these fiscally common in all Spain.
Veri*Factu and SII in the Canary Islands
Despite the differences in terms of the presentation of tax forms, due to the existence of the IGIC replacing VAT, electronic invoicing will be mandatory in the Canary Islands as well.
With the approval of Royal Decree 1007/2023, it is established that companies and freelancers must have an invoicing software that guarantees the integrity and traceability of the invoices issued, in short, what is established in the Anti-Fraud law.
Therefore, as of the entry into force of the Anti-Fraud Law, both companies and freelancers must present their invoices in compliance with Veri*Factu. This is foreseen for companies as of January 1, 2026 and for the self-employed as of July 1, 2026. However, these presentations will have to take into account the particularity of the IGIC.
While Verifactu is mandatory for companies and self-employed with a turnover of less than 6 million euros, the SII is mandatory for companies and self-employed with an annual turnover of more than 6 million euros. In addition, companies registered in the REDEME must also submit the SII to the Canary Islands Tax Agency.
Odoo is going to be a Veri*Factu guarantor software and already has the SII integrated in the databases, so if you want to comply with all tax requirements without worrying, Odoo's invoicing application is ready for it.
