The Government approves tax and financial aid for La Palma

The Government has approved Royal Decree-Law 23/2026, of September 8, which adopts urgent fiscal and financial measures for the economic and social reconstruction of the island of La Palma, as well as to boost investment from autonomous communities with surpluses. The regulation, signed by the Head of State, is published in the Official State Gazette (BOE) no. 223, of September 9, 2026, in section I of general provisions (page 120410), with official reference BOE-A-2026-18828.

The regulation responds to the persistence of adverse situations derived from the volcanic eruption of Cumbre Vieja, which occurred between September and December 2021, and to the expiration of the extended validity of previous measures. It is part of the series of royal decree-laws supporting the island, such as Royal Decree-Law 20/2021, of October 5, and Royal Decree-Law 13/2025, of November 25.

Fiscal measures for taxpayers in La Palma

In the area of Personal Income Tax, Article 1 rewrites the fifty-seventh additional provision of Law 35/2006, effective from January 1, 2026. Thus, the deduction for obtaining income in Ceuta and Melilla is equally applicable, under the same terms and conditions, to taxpayers with habitual and effective residence on the island of La Palma during the 2026 tax period.

The deduction applies to the periods from 2022 to 2026.
The withholding and payment on account rate is adjusted from the entry into force of the regulation.
The installment payments for economic activities entitled to the deduction are also adapted.

Flexibility of the regional financial framework

Article 2 establishes special rules for the allocation of excess funding and pending surpluses to be applied by autonomous communities with debt relative to regional GDP lower than 12.4 percent at the close of 2025, so that they may finance investments between 2026 and 2028. Article 3 allows the 2025 budget surplus to be allocated to financially sustainable investments in 2026 and 2027.

The Autonomous Community of the Canary Islands is authorized to allocate 100 million euros to aid for individuals and entities affected by the September 2021 eruption.
Article 32 of Organic Law 2/2012, of April 27, on Budgetary Stability and Financial Sustainability, shall not apply for these purposes.

Relief for affected debtors and the self-employed

Article 4 opens a new period to request the suspension of payment obligations for interest and principal on loans and credits, with and without mortgage guarantees, for debtors from the municipalities of El Paso, Los Llanos de Aridane, and Tazacorte registered in the Registry of persons affected by the volcanic eruptions of the island, whose primary income is derived from agriculture. Article 5 regulates a new regime for the extraordinary benefit for cessation of activity for affected self-employed workers.

Subsidies from the Community Support Program for Canary Islands Agricultural Productions (POSEI) are excluded from the calculation of net earnings.
Self-employed workers who started their activity in 2020 may access the benefit.

The first additional provision authorizes the Ministry competent in social affairs for the payments derived from the Agreement of the Joint Commission of the Economic Agreement of July 9, 2026, and the second provides that aid for economic activities will be granted in accordance with European Union regulations regarding State aid.

The regulation, issued under Article 86 of the Spanish Constitution for reasons of extraordinary and urgent necessity, directly affects taxpayers and families in La Palma who are still unable to work their estates, and opens a way for autonomous communities with surpluses to accelerate public investment in the coming fiscal years.

Source: Official State Gazette, no. 223, September 9, 2026, Sec. I, page 120410 (official reference: BOE-A-2026-18828).