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Home Essentials

Here’s How Taxes in Tenerife Work (Without the Headache)

July 3, 2025
in Essentials
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Here’s How Taxes in Tenerife Work (Without the Headache)
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Whether you’ve moved to Tenerife full time, own a holiday home here, or just rent out your place when you’re away, Spain wants a slice of the pie and yes, that includes the Canary Islands. Don’t worry though, this isn’t a lecture. Here’s what you actually need to know about taxes in Tenerife, written like a real person (not a robot).


👤 Are You a Resident or Not? (It Changes Everything)

Before anything else, Spain needs to know if you’re a resident or non-resident for tax purposes. This matters a lot.

  • You’re a tax resident if you live in Spain more than 183 days in a calendar year, or if your main life (job, house, family) is based here.

  • Everyone else? You’re a non-resident; you’ll only be taxed on income or property from Spain, not worldwide stuff.


💰 Everyday Taxes That Might Affect You

🧾 Income Tax (IRPF – for Residents)

If you live in Tenerife most of the year and earn money (salary, pension, rental income, etc.), you’ll need to file a Spanish income tax return.

  • Rates go from around 19% up to 47%, depending on how much you make.

  • Returns are filed once a year, usually between April and June.

  • If you’re self-employed (an autónomo), expect quarterly payments too.

🏡 Income from Property (IRNR for Non-Residents)

Don’t live in Spain full time but rent out a place in Tenerife? That’s taxable.

  • If you live in the EU/EEA, you pay 19% on net income (what you earn minus allowed costs).

  • Everyone else pays 24% on gross rent (no deductions allowed).

  • File this using Modelo 210, usually before December 31.

💼 Wealth Tax (Only If You’re Pretty Wealthy)

If you’re sitting on assets worth over €700,000 (not including your main home), this may apply.

  • The Canary Islands have some of the best discounts in Spain, many people don’t end up paying.

  • Still, it’s worth checking yearly if your property value or savings go up.

💵 Capital Gains

Selling a home, shares, or anything valuable? If you made a profit, Spain wants a piece.

  • Rates start at 19% and go up to 28% depending on how big your gain is.

  • You might avoid some of this if you reinvest into another main home.

📝 Modelo 720 – Declaring Foreign Assets

Live in Tenerife but have money or property abroad worth over €50,000? Spain wants to know.

  • You must declare this with Modelo 720 by March 31 each year.

  • Fines for ignoring this form are serious, so don’t skip it.


🏘️ If You Own Property in Tenerife

🏠 IBI – Local Property Tax

If you own a home here, you’ll pay this yearly to the local town hall.

  • It’s based on the property’s official cadastral value, not market price.

  • Think of it like council tax in the UK, just less predictable.

📈 Plusvalía Tax

When you sell a property, this local tax hits you for the rise in land value since you bought it.

  • How much you pay depends on where the home is, how long you owned it, and other fun calculations the town hall uses.


👨‍🔧 Running a Business or Freelancing in Tenerife

If you’re self employed, you’re known here as an autónomo, and yes, taxes apply.

  • You’ll pay monthly social security (even if you make no money).

  • You also file quarterly income tax returns (Modelo 130).

  • If you sell goods or services, you’ll charge IGIC (the Canaries’ version of VAT).


💡 Wait… What’s IGIC?

Unlike mainland Spain, which uses VAT (IVA) at 21%, the Canary Islands use IGIC, a much lower tax on sales.

  • The standard rate is 7%, but it can be as low as 0% for basic stuff.

  • Businesses collect it from customers and send it to the tax office every 3 months.


📅 Key Deadlines at a Glance

Tax/FormDue Date
IRPF (Residents)April–June
Modelo 210 (Non-residents)By December 31
Modelo 720By March 31
IGIC + Autónomo TaxesQuarterly (Jan, Apr, July, Oct)

🧠 A Few Quick Tips

  • If you’re unsure, get a local gestor (tax adviser). It’s worth it.

  • Keep every receipt, rental contract, or invoice. Spanish tax inspectors love paper trails.

  • Double check what’s regional vs. national. The Canaries often have better deals.

  • Don’t ignore tax letters, even if they’re in Spanish and scary looking.

 

 

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