Key differences between IGIC and VAT

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What is Model 420 and IGIC?
How to fill out Form 420 IGIC
Deadlines and submission of Form 420
Deductions and refunds in Form 420 IGIC
Recent changes in IGIC regulations affecting Form 420
Importance of correctly filing Form 420 to avoid tax problems
Conclusion
Frequently Asked Questions
What is Model 420 and IGIC?
Form 420 is a self-assessment document for IGIC, that is, the Canary Islands General Indirect Tax. In this document, taxpayers from the Canary Islands must register with the Canary Islands Treasury all economic activities that involve the payment of a product or service according to Law 20/1991 .

Essentially, when a transaction involving the payment of this tax is carried out, self-employed workers or companies act as intermediaries with the Canary Islands Tax Agency. For this reason, every three months they must declare how much they collected through Form 420 IGIC.

Both taxes are applied equally, since both tax the consumption of goods and services. However, since the Canary Islands are so far from the peninsula, some differences have been established for tax management.

While VAT is applied throughout Spain, IGIC is only used in the Canary Islands. It should also be noted that in this case the tax rate is reduced from 21% to 7% (with some exceptions).

Who is required to file Form 420?
Anyone who carries out economic activities taxed by IGIC must submit this form. This includes companies, self-employed persons and taxpayers registered in the IGIC operations census.

It should be noted that, even if the company is not carrying out its list of romania phone number activity, it must submit Form 420 to comply with current regulations.

On the other hand, there are some exemptions to consider:

New self-employed workers who do not reach €30,000 in annual earnings.
Transactions between individuals that do not have a commercial objective.
When the transaction is directly with a company on the peninsula.
How to fill out Form 420 IGIC
We already know what Form 420 is, but how do we fill it out? This process is simple, although you need to do it very carefully to avoid mistakes. Let's look at the steps to follow:

Gather all invoices and deductible expenses that apply according to the quarter to be declared. From each invoice, the taxable base , the IGIC percentage and the final amount that was collected or paid must be extracted.
Obtain Form 420 IGIC. To do this, you must go directly to the Electronic Office of the Canary Islands Tax Administration and search for the document.
Specify the fiscal year and the corresponding quarter. All the data that identifies the company must also be included.
Within the Self-Assessment section, the accrued IGIC (that which has been paid by the company's clients) is entered, followed by the deductible IGIC (the invoices that have been paid to continue the company's economic activity). There are specific boxes for the different types of transactions.