The IPSI: selling, buying or invoicing in Ceuta and Melilla

Because both cities are excluded from the VAT application territory and are not part of the Union customs territory. Instead, the IPSI applies, the Tax on Production, Services and Importation, created by Ley 8/1991 and of a municipal nature.

The IPSI taxes 3 things: the regular production or manufacturing of tangible movable goods, the provision of services located in the city and the importation of goods. To those 3 are added the delivery of real estate located there and the consumption of electricity.

The practical consequence for your company is twofold. A mainland sale to Ceuta or Melilla is a VAT-exempt export, and the entry of that same merchandise into the city pays import IPSI. It is not an intra-community operation: it does not go on form 349 or Intrastat.

The entity that manages and collects the IPSI is not the Spanish Tax Agency (Hacienda or AEAT), but each city: the Tax Services of Ceuta and the Department of Finance of Melilla, each with its own ordinance, forms and calendar. State taxes (Corporate Tax, Personal Income Tax, withholdings) remain the responsibility of Hacienda, there as well.

Without VAT. It is an exempt export according to the VAT Law, under the same terms as a sale to a third country, and the amount is declared in box 60 of form 303, the one for exports and assimilated operations, which expressly includes definitive shipments to the Canary Islands, Ceuta and Melilla.

The exemption must be proven with the export customs declaration, not with the invoice or the delivery note. Keep the proof of dispatch together with the contract and the transport documents: it is the first thing requested in an inspection.

At the destination there is a 2nd declaration, the import one. Since 14 October 2025, Hacienda closed the PreCAU import declaration and all imports are submitted in the H1 system adapted to the Union Customs Code.

Before closing the order, it is advisable to establish who appears as the importer, because that determines who pays the IPSI and any applicable duties. If you sell with delivery at destination, you bear the cost; if the importer is the client, they bear it. It must be written on the invoice and the order.

The service is located using the same VAT rules. When your client is a company or a professional established in Ceuta or Melilla, the service is not subject to Spanish VAT, so the invoice is issued without VAT, and the operation falls within the scope of the IPSI of that city.

This is where the rule that most surprises financial departments appears: if the provider is not established in the city and the recipient is established there and is a businessperson or professional, the taxpayer for the IPSI is the recipient. It is a reverse charge mechanism just like the VAT one, but municipal, and the client declares it in their self-assessment.

That IPSI is not recovered like input VAT, so it is a real cost for your client and ends up being discussed in the price. It is advisable to state it in the offer: a telecommunications service invoiced to Ceuta bears a 10% that is not deducted, and an advertising one, a 0.5%.

If the recipient is a private individual the rule changes, because in that case the service is usually located where the provider is and may carry Spanish VAT, with exceptions for certain services. Managora reviews that classification operation by operation before issuing the invoice.

The state law only sets the range: the rates are set by the ordinances of each city and must range between 0.5% and 10%. Furthermore, no distinction can be made between the production rate and the import rate for the same good.

For the importation and production of goods, the rate comes from the tariff in the annex of the ordinance, ordered by the combined customs nomenclature, that is, by the heading of the merchandise. There is no single rate: you have to look at the heading, just as you look at the customs duty.

For services, real estate and electricity, each city publishes its list of rates, and they do not match. The general rate for services is 4% in both, but telecommunications are at 10% in Ceuta and 8% in Melilla, and the hospitality industry has different tiers in each one.

On top of the IPSI there are 2 complementary levies, on manufactured tobacco and on fuels and combustibles. Their rates and amounts are set by each city in its ordinance and are reviewed by plenary agreement, so they must be checked in the current text before budgeting an operation with tobacco or fuels. Neither of the 2 gives the right to deduct.

In Ceuta, domestic operations are self-assessed by calendar quarters on form 001: the first 3 quarters, during the first 20 calendar days of the following month, and the 4th, during the first 30 days of January. Electricity distribution companies settle every month, in the first 20 days, for the billing of the previous month.

Real estate transfers in Ceuta do not wait for the quarter: they are settled in 10 days counted from the public deed or from the availability to the buyer, whichever occurs first. And the services contracted with the City itself are declared on form 021, at the time of payment.

In Melilla the quarterly form is 420: the first 20 calendar days of April, July and October, and the first 31 days of January for the last quarter. If the volume of operations of the previous year exceeded €6,000,000, the settlement becomes monthly, within the first 20 days of each month.

Operations that do not fit into the quarter, such as the 1st transfer of a property, are declared in Melilla through an occasional settlement, during the month following the accrual. And when the recipient is the City itself or its bodies, the tax is settled and paid directly by the paying body at the time of payment.

On importation, it is paid before the merchandise leaves customs, just as happens with import VAT, where subsequent payment through the periodic declaration is only a voluntary option for certain businesspeople. In Ceuta, settlement and payment are prior to clearance, unless the Tax Services authorise a period of up to 60 calendar days from the introduction of the goods, which requires being up to date, registered and without recent penalties for the tax.

Almost never. Only producers or manufacturers deduct the input IPSI on acquisitions and imports of goods, and only to the extent that those goods are used for their production activity or are subsequently exported outside the city.

The ordinances of the 2 cities expressly exclude the right to deduct the input IPSI on the provision of services, on the delivery of real estate, on the consumption of electricity and on the complementary levies on tobacco and fuels.

Translated to the income statement: the IPSI is not a neutral tax like VAT, it is a higher cost of the purchase or service and a deductible expense in Corporate Tax. Budgeting a construction work or a contract in Ceuta or Melilla with the logic of VAT is the mistake that costs the most money.

The producer who accumulates more input IPSI than output IPSI can request the refund of the balance in their favour as of 31 December, through the general VAT procedure. It is not automatic: it must be requested and the export must be proven when the balance comes from sales to the rest of the national territory.

Since Real Decreto-ley 22/2026, the Corporate Tax bonus for income obtained in Ceuta or Melilla goes from 50% to 60% of the part of the full quota corresponding to that income. It applies to tax periods starting from 1 January 2026 that had not ended on 3 September 2026.

The bonus requires operating effectively and materially there, and covers both companies domiciled in the cities and mainland ones operating through an establishment or branch and foreign ones with a permanent establishment. With a fixed place of business, up to €60,000 per full-time employee are presumed to be obtained there, with a cap of €1,200,000; in the first 2 periods since that fixed place is opened, €120,000 per employee and a €2,400,000 cap. Above those figures, the closing of a commercial cycle with economic results must be proven.

The same decree raises to 75% the bonus on employer contributions to the Spanish social security system (Seguridad Social) for common contingencies, unemployment, vocational training and the Wage Guarantee Fund for permanent contracts in the included sectors, and to 75% the quota for common contingencies of the freelancers (autónomos) who reside and carry out their activity in the 2 cities.

In Personal Income Tax, individuals with income obtained in Ceuta or Melilla apply a 60% deduction of the part of the full quotas corresponding to that income, with different rules depending on whether they reside in the cities or not. And only for 2026 and only in Ceuta, autónomos in simplified direct estimation apply a 10% for expenses difficult to justify and a 10% reduction of the net yield in modules.

If you are considering opening there or already invoice clients in the cities, Managora prepares the census registration, the customs declaration and the IPSI and VAT self-assessments for you, and tells you beforehand how much tax each operation really bears. You can see the updated amount for each procedure on its file.