IPSI Melilla 2026: rates, returns, and compliance for local businesses

Regulatory framework in Melilla

This page summarises the applicable regulatory context and the services BMC provides from the local office. For specific situations, we recommend individual analysis: each case depends on tax residence, the nature of the assets, cross-border ties, and the applicable administrative deadlines.

BMC services in Melilla

The following services are available from the local office by appointment or coordinated from Madrid:

• Compliance fiscal
• Iva empresas
• Asesoria fiscal madrid
• Asesoria fiscal las palmas

Typical cases in Melilla

• Melilla IPSI rates (general, reduced, super-reduced, imports)
• Taxable events: production, services, and imports in Melilla
• Periodic returns and annual summaries for the IPSI
• IPSI-VAT coordination in intragroup cross-border transactions
• Imports from Morocco to Melilla: free-port customs plus IPSI
• Review and inspection procedures by the Melilla tax authority

Standard documentation

To open a file we typically request: identity document, tax residence certificate (where applicable), documentation of the assets or transaction, relevant administrative certificates, and, in cross-border transactions, equivalent certificates from the foreign jurisdiction. The exact requirements depend on the type of file.

Languages of service

• Spanish
• English
• Arabic (specialist paralegal)

How to book a meeting

In-person meetings at the BMC Melilla office by appointment, Monday to Friday. Remote coordination is available by video conference. To open a file, contact us through the office form or the general consultation form.

IPSI in Melilla: the substitute for VAT for every business active in the Autonomous City

The Impuesto sobre la Producción, los Servicios y la Importación (IPSI) was created by Ley Orgánica 1/1995 and applies in the Autonomous Cities of Ceuta and Melilla. The reason is that both cities are excluded from the Community Customs Territory (TAC) and, consequently, the harmonised European VAT system cannot apply. The IPSI is not identical to VAT: it has its own rates, specific return forms, and is managed before the tax authority of the Autonomous City of Melilla, not the state AEAT.

For any business producing goods in Melilla, rendering services in its territory, or importing goods from third countries, especially from Morocco, the IPSI is the dominant indirect tax obligation. Ignoring it or confusing it with VAT generates penalties, supplementary assessments, and double taxation.

Rate structure of the Melilla IPSI

The IPSI applies differentiated rates by transaction category. Unlike mainland VAT (21%/10%/4%), the IPSI has generally lower rates:

• General production rate: varies by product category (tobacco, alcoholic beverages, petroleum derivatives carry specific rates)
• General services rate: 10% for most services rendered by businesses and professionals in Melilla
• Import rate: on the customs value, with differentiation by goods category
• Reduced and super-reduced rates: for certain categories (basic foodstuffs, medicines, housing) analogous to the VAT structure but with their own amounts

The full tariff is published in the text of Ley Orgánica 1/1995 and its subsequent amendments. Applying the correct rate requires classifying the transaction under the IPSI nomenclature for Melilla.

Taxable persons for IPSI in Melilla

The following are subject to IPSI:

• Businesses with a permanent establishment in Melilla that produce goods, render services, or import goods in the territory
• Traders who import goods from Morocco for distribution or processing in Melilla
• Mainland or foreign businesses with a branch in Melilla, for transactions carried out from that establishment
• Self-employed individuals and professionals providing services in Melilla to local clients

Transactions without a permanent establishment in Melilla, exports to third countries, and deliveries destined for the mainland do not generate IPSI at the Melilla branch.

IPSI compliance process in Melilla: four operational steps

Step 1: Classification of transactions and applicable rates

The first step for a business active in Melilla is to map its activity against the IPSI taxable events:

• Identify whether the activity is production of goods, rendering of services, or importation
• Determine the rate applicable to each transaction category under the Melilla IPSI tariff
• Separate transactions subject to IPSI from those that may be subject to mainland VAT (typically in intragroup flows to the mainland)

BMC prepares the transaction classification matrix at the start of the file to eliminate ambiguities from the first period.

Step 2: Registration with the Melilla tax authority

Businesses obliged to pay IPSI must register with the tax authority of the Autonomous City of Melilla. This registration is separate and independent from registration in the AEAT census (Modelo 036/037). Formal non-compliance, operating without registration, generates autonomous penalties.

Step 3: Periodic returns and annual summary

IPSI returns are filed periodically (monthly for large companies, quarterly for others) before the Melilla tax authority, using forms specific to the IPSI and different from state VAT forms. The annual summary is filed in January of the following tax year.

Deadlines are analogous to those for VAT: the quarterly period is declared within the 20 days following the close. BMC manages the preparation and filing of all periodic IPSI returns, coordinating the settlement of liabilities and the deduction system within the Melilla regime.

Step 4: IPSI-VAT coordination in cross-border transactions

This is the most complex aspect for businesses with activity both in Melilla and on the mainland:

Mainland business with a branch in Melilla: The parent’s transactions remain subject to VAT. Those of the Melilla branch are subject to IPSI. Sales by the branch to mainland clients are treated as exports (no IPSI at source, VAT at the mainland destination). Internal group invoices must correctly reflect the applicable regime for each party.

Melilla business providing digital services: It may have clients on the mainland or abroad. IPSI liability depends on the place of actual service provision. Services rendered by a Melilla establishment to foreign clients are generally outside the scope of the IPSI, but require case-by-case analysis.

Imports from Morocco: the import IPSI at the Melilla border

Melilla shares a land border with Morocco and its economic activity is closely linked to cross-border trade. Goods entering Melilla from Morocco do not pay Community tariffs (as Melilla is outside the TAC), but they are subject to the import IPSI where they correspond to categories of goods taxable under the IPSI.

Customs clearance in Melilla follows specific procedures. The customs agent calculates the applicable IPSI on the customs value of the imported goods. Regular importers (textiles, footwear, food products, agricultural produce, construction materials) must know the IPSI tariff to correctly estimate the tax cost of their imports before negotiating prices with Moroccan suppliers.

The import IPSI paid at customs is deductible in the importer’s IPSI return, within the deduction system of the Melilla regime.

Common errors in IPSI management and how to avoid them

Applying the VAT rate instead of the IPSI rate. The most common error when first opening activity in Melilla: the business continues using mainland VAT forms and rates. Invoices issued with VAT instead of IPSI are technically incorrect for transactions subject to Melilla IPSI and can generate obligations before the state AEAT as well as non-compliance before the Melilla authority.

Omitting registration and periodic returns. Some businesses with a presence in Melilla are only registered with the AEAT and never register with the Melilla tax authority. If there is a permanent establishment with activity subject to IPSI, the omission is a formal non-compliance that can result in penalties for failure to file.

Confusing the IPSI deduction system with that of VAT. The IPSI borne on business-related purchases is deductible, but exclusively within the Melilla IPSI regime. Attempting to deduct IPSI in the state Modelo 303, or vice versa, generates errors that lead to parallel assessments in both authorities.