| The Canary Islands is part of Spain, which is part of the EU, so the Canary Islands like any other part of Spain is entitled to receive EU funding, elect members of the European Parliament and is subject to European Laws. (EG: immigration, human rights, etc.)
So yes the Canary Islands are part of the EU, though Spain's membership. However Spain negotiated a VAT exemption for the Canary Islands and the city of Ceuta (a Spanish North African enclave). Consequently the Canary Islands do levy VAT on purchases, even though the rest of Europe, including Spain does. Instead we have our own local tax called I.G.I.C. which is levied by the Canarian Goverment and the money stays in the Canaries. I.G.I.C. rates tend to be much lower than corresponding VAT rates.
The rationale behind the exception is that the Canary Islands remote location within Europe means shipping goods to the islands makes them naturally more expensive than on mainland Europe and to levy VAT rates at the same rate as the rest of the EU would make most products prohibitively expensive.
However, its the absence of VAT on Canarian Purchases which means that Duty Free restrictions still apply. So you still have to go through the red or green channel at customs on return to the UK.
NB: VAT (Value Added Tax) is known as IVA (Impuesto sobre el Valor Aņadido) in Mainland Spain. |