I see it’s been years since this post. shopify still isn’t helpful.
Topic summary
Main issue: Stores in Spain need to exempt VAT (IVA) for Canary Islands, Ceuta, and Melilla (outside EU VAT area) and apply correct local taxes (e.g., 7% IGIC within the Canaries), but Shopify treats these as Spanish provinces with 21% VAT and standard Spain shipping.
Impact:
- Incorrect tax at checkout and quarterly accounting complications.
- Shipping rate calculators fail because couriers treat Canary Islands as a separate country (code “IC”), while Shopify treats them as Spain.
Workarounds shared:
- Manual/draft orders with 0% tax and legal notes; some simply avoid shipping there.
- Mark customers as “not collecting tax” (billing-based; breaks if they ship to mainland Spain; doesn’t help first order).
- ZIP-based scripts (35, 38, 51, 52) to refund/remove VAT—warning: risk double adjustments.
- One user claims success using an older Shopify tax setup allowing region-level rules (prices without IGIC, add IGIC only for Canaries).
Shopify status/timeline:
- 12 Nov 2021: Zero VAT reportedly implemented for Ceuta and Melilla; Santa Cruz de Tenerife and Las Palmas pending; no timeline.
- 2024–2025: Still a known limitation; regions locked since EU treated “as one”; support suggests feature requests/Plus.
Requested fix: Split Canary Islands into a separate country (IC) and remove those provinces from Spain to fix tax and shipping.
Resolution: None; issue remains open.