Congress validates urgent aid for the reconstruction of La Palma

The Congress of Deputies validated in its session of September 23, 2026, the Royal Decree-Law 23/2026, of September 8, which articulates urgent fiscal and financial measures for the economic and social reconstruction of the island of La Palma, along with measures to promote the execution of investments by autonomous communities with surpluses and excess funding pending application. The agreement is published in the Official State Gazette number 237, of September 25, 2026, by means of the Resolution of September 23, 2026, of the Presidency of the Congress (BOE-A-2026-19845).

The regulation was approved by the Council of Ministers on September 8, 2026, at the proposal of the Ministry of Finance and the Ministry of Territorial Policy and Democratic Memory, and published in the BOE number 223, of September 9, 2026 (BOE-A-2026-18828), entering into force the day following its publication. The Congress validated it under article 86.2 of the Constitution, and the resolution bears the signature of the president of the Chamber, Francina Armengol Socias.

The text responds to the persistence of situations of economic and social vulnerability derived from the volcanic eruption of Cumbre Vieja, which occurred between September and December 2021, and to the need to enable financial measures to boost regional investment.

Tax relief for residents on the island

Article 1 modifies the fifty-seventh additional provision of Law 35/2006, of November 28, on Personal Income Tax, with effect from January 1, 2026, to extend the deduction analogous to that provided for Ceuta and Melilla to taxpayers with habitual and effective residence in La Palma for the 2026 tax period.

The measure is applied under the same terms and conditions as the deduction for obtaining income in Ceuta and Melilla and also affects the calculation of the withholding rate and payment on account for employment income.

One hundred million for aid and regional surpluses

Article 2 exempts autonomous communities whose public debt as a percentage of regional GDP was lower than 12.4% at the close of 2025 from reducing their net debt, provided that they allocate those excess funds or surpluses to finance investments executable in 2026, 2027, and 2028.

Furthermore, it enables the Autonomous Community of the Canary Islands to allocate 100 million euros from its excess funding or surpluses at the close of 2025 to aid for individuals and entities affected by the eruption, with preferential destination to:

• Compensation per unproductive kilogram for 2024, 2025, and 2026.
• Reconstruction of destroyed agricultural infrastructure: tool sheds, stables, water tanks, farms, banana packing plants, agricultural warehouses, or hydraulic works.
• Compensation for reconstruction costs of agricultural estates and for the CO2 evacuation system.

Article 3 allows communities with a surplus in 2025 to allocate that balance to financially sustainable investments in 2026 and 2027, provided they have not incurred a deficit and their average payment period to suppliers has remained within the legal limits of delinquency.

Debt Moratoriums and Benefits for the Self-Employed

Article 4 opens a new period until October 15, 2026, for debtors from El Paso, Los Llanos de Aridane, and Tazacorte registered in the Registry of persons affected by volcanic eruptions, whose primary income comes from agriculture, to request a six-month suspension—from October 1, 2026, to March 31, 2027—of their payment obligations for interest and principal on loans and credits, both with and without mortgage guarantees.

Article 5 regulates the access of self-employed workers to the extraordinary benefit for cessation of activity: it excludes subsidies from the Community Support Program for Canary Islands Agricultural Productions (POSEI) from the calculation and allows those who started their activity in 2020 to apply.

Extraordinary Credit and State Aid

The first additional provision grants an extraordinary credit of 16,840,943.24 euros in section 29, Ministry of Social Rights, Consumption and 2030 Agenda, to execute the Agreement of the Joint Committee of the Economic Concert of July 9, 2026, with 32,381,095.67 euros planned for 2027. The second additional provision establishes that aid destined for economic activities shall be granted in accordance with European Union regulations regarding State aid.

The validation closes the urgent parliamentary procedure and provides definitive coverage for the residents, farmers, and self-employed of La Palma who still face the damages from the eruption, while opening the possibility for the most financially sound autonomous communities to execute investments with their pending balances.

Source: Official State Gazette, no. 237, of September 25, 2026, Sec. I. General Provisions, page 125839 (official reference: BOE-A-2026-19845).