The Canary Islands and ecommerce, a tough combination
The People’s Party in Spain rejected an amendment in the Senate from the Canarian Coalition, who wanted better ecommerce support for the Canary Islands. The Canarian nationalist political party would like to end discrimination towards the islands with regards to ecommerce. Online retailers now have to pay a lot to ship orders to the mainland of Spain.
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The Canary Islands are a great holiday destination, but the sun over there does not only shine for tourists. The island group, 100 kilometers west of the border between Morocco and the Western Sahara, is a great destination for businesses, as the Canary Islands have their own economic and fiscal rules. They are politically within the European Union, but they are outside the EU customers territory and VAT area. So companies have to pay less taxes as when they are stationed in Spain or several other European countries. The local Sales Tax has a general rate of 7%, an increased tax rate of 13.5% a reduced tax rate of 3% and a 0% tax rate for certain basic needs.
But with regards to ecommerce, the Canary Islands aren’t quite paradise on earth, our Dutch contact in Spain, Sander van Zutphen from Ecommerce Managers, explains to us. “For a lot of companies, sending parcels to these islands is a pain in the ass. Sending something from the mainland of Spain to the Canary Islands will cost you about 25 euros worth of customs charges. And when a package arrives on the islands, it goes through customs again and you would have to pay local tax (IBI) and, depending on the product, you may also have to pay additional customs fees”, he says. “This fee may vary depending on what you are trying to ship. Is it a luxury product you are selling? Is it something which is already buyable on the islands itself?”
All these questions and barriers make it impossible for a lot of companies to calculate the precise costs, which leads to confused customers, who don’t know upfront what they have to pay exactly. It’s not uncommon the customer has to pay local taxes, which leaves a lot of customers unsatisfied, because they now have to pay more than they initially thought. En returning a package to the store is also almost impossible, as the shipping rates are very expensive.
And that’s not all, Van Zutphen tells us. For example, companies are obliged to include an invoice in a shipment. And sending parcels can take place by plane or by boat. The latter is the most common option, but this also means for a package it takes some time to arrive at the customer’s door. And if customs would like inspect a package more closely, shipment may delay even more.
So, you understand why a lot of companies don’t like to ship to the Canary Islands. The Canarian Coalition took it upon themselves to call all this discrimination towards the islands’ inhabitants, as a Spanish consumer living on one of the islands can’t order a thing at some Spanish online stores, will a Spanish consumer living on the Spanish mainland can. All this goes against everything Europe would like to achieve by pursuing a digital single market throughout the EU. But the People’s Party rejected the amendment.