La Palma aid in 2026: loan moratorium, income-tax deduction and self-employed rules

In short

• Moratorium: if you have loans, make your living from farming in El Paso, Los Llanos de Aridane or Tazacorte, are on the register of people affected by the volcano and asked for the moratorium or its extension in 2022, you can ask for another six months.
• Deadline: 15 October 2026. You ask your bank — not the tax office and not the town hall.
• Income tax: if you live on La Palma as your usual home and file Spanish income tax (IRPF) as a resident, the 60% deduction also applies in 2026. It is not a payment: it lowers withholding and is settled in your tax return.
• Self-employed: two calculation rules of the extraordinary cessation benefit change, but no new window to apply opens.
• Still pending: the Spanish Parliament (Congreso) has yet to confirm the decree.

What was approved and since when it applies

• The Council of Ministers approved Royal Decree-law 23/2026 on 8 September 2026. It was published in the Official State Gazette (BOE) on 9 September and has been in force since 10 September.
• A royal decree-law applies at once, but the Congreso must vote to confirm it (convalidación) within 30 days of its promulgation. If it does not, the decree is repealed.
• None of these measures depends on nationality. What counts is the municipality, being on the register of affected people, being registered as a resident at the town hall (empadronamiento) and, for income tax, where your usual residence is.

Loan moratorium: who can ask for it

It is a new six-month suspension of the instalments of loans and credit lines, with or without a mortgage. It is not for everyone on the island: you must meet all four of these conditions at the same time.

• You are a borrower from one of three municipalities: El Paso, Los Llanos de Aridane or Tazacorte.
• You are on the Register of people affected by the volcanic eruptions on the island of La Palma (Registro de personas afectadas), created by the Government of the Canary Islands in 2021.
• Your main income comes from farming.
• In 2022 you asked for the moratorium or its extension within the special window that stayed open until 24 October 2022. That window let people apply who had not applied before, and let those who already had it ask for three more months.

I already have my request to the bank: check it before sending

What the moratorium suspends and what it does not

• Period covered: 1 October 2026 to 31 March 2027.
• During that time the bank cannot charge you the instalment — neither capital nor interest — and no interest of any kind accrues, ordinary or late-payment.
• While it lasts, no early-termination clause in your contract can be applied.
• The bank does not need to agree and you do not sign a contract amendment: once you apply, the bank must apply the suspension.
• For loans without a mortgage, the end date is pushed back by the length of the suspension, with all other terms unchanged. For mortgages, the bank must record the suspension in a public deed (escritura pública) so it can be entered in the Land Registry.
• What it does not cover: the July, August and September 2026 instalments. The previous moratorium ended on 30 June 2026 and the new one starts on 1 October, so those three months are not suspended by any rule.

What to bring to the bank

• Loan or credit line with a mortgage: the application alone is enough.
• Loan without a mortgage, if you live in the affected area: your town-hall registration certificate (certificado de empadronamiento).
• Loan without a mortgage linked to a farm or business in the area: any document that proves it or, if you have none, a signed statement of truth (declaración responsable).
• In the application you must say whether you are an employee or self-employed and what your economic activity is.
• For the new conditions — being on the register and earning your main income from farming — the decree does not say which document proves them. Bring your registration receipt and whatever you have on your farming activity, and ask the bank in writing to tell you if anything is missing.
• If you still have a copy of your 2022 application, bring it too: it is the quickest way to prove the fourth condition.

How to ask for the moratorium, step by step

1. Check the four conditions: municipality, register of affected people, main income from farming and an application in the 2022 window.
2. Gather the documents from the list above for each loan.
3. Submit the application to every bank where you have loans or credit lines, before 15 October 2026. Do it in writing or through a channel that records the date.
4. Keep the stamped copy or the proof of sending.
5. From October, check that no instalments are charged. If you have a mortgage, ask when the bank will sign the deed.

The 2026 income-tax deduction for people living on La Palma

• The deduction is extended to tax year 2026, backdated to 1 January 2026.
• It is the same deduction that applies in Ceuta and Melilla: you deduct 60% of the part of your total state and regional income-tax charge (cuota íntegra) that corresponds, proportionally, to the income you earn on La Palma.
• Only Spanish income-tax (IRPF) payers whose usual and actual residence is on the island can apply it. Non-residents, who pay non-resident income tax (IRNR) with Form 210 (Modelo 210), cannot — and neither can someone who only owns a home on La Palma without living there.
• It is not a payment or a grant that arrives by itself: it is settled in your 2026 tax return (declaración de la Renta), filed in 2027. Check that the draft return (borrador) includes it.
• The deduction also counts before the return. Your employer or payer takes it into account when calculating withholding on what it pays you from 10 September 2026. For salaries and pensions it may choose to make that adjustment in the first payments of October 2026; September payments are then withheld without the deduction. If you are self-employed, you apply it from the quarterly advance payment (pago fraccionado) for the third quarter of 2026. If you do not see the change, ask your payer.

Self-employed: what changes in the extraordinary cessation benefit

The decree does not create a new benefit or open a new window to apply. It changes two rules for working out whether you met the conditions of the La Palma extraordinary benefit for self-employed people who stopped working (prestación extraordinaria por cese de actividad), the one regulated in successive decrees from 2021 to Royal Decree-law 1/2025.

• Grants from the POSEI programme (the EU scheme supporting Canary Islands farm production) no longer count when calculating your net earnings or your business income.
• If you started your activity in 2020, the drop in income is compared with the same quarter of 2020, not of 2019.
• The decree does not say whether these rules allow already-refused applications or repayment demands to be reviewed. We cannot tell you yes or no. If your benefit was refused, or you are asked to pay it back, and the reason was the POSEI grants or the 2019 comparison, it is worth having a professional review your file.

Cessation benefit refused or reclaimed: prepare the challenge

Common mistakes

• Thinking the moratorium is for everyone on La Palma. It is only for people who meet all four conditions.
• Waiting for the bank to apply it on its own. You have to ask, and before 15 October 2026.
• Stopping the July to September 2026 instalments in expectation of the moratorium: those months are not covered.
• Assuming the income-tax deduction will appear in your return by itself.
• Claiming the deduction as a non-resident or just for owning a second home on the island.
• Believing self-employed people can now apply again for the cessation benefit: the decree opens no window.

If the bank does not apply the moratorium

• Ask for a written answer and keep your dated application.
• File a complaint with the bank’s customer service department. If it does not reply or you disagree with the answer, you can complain to the Banco de España.
• These are banking conduct and discipline rules: the Banco de España supervises that banks comply with them.

Related guides

Frequently asked questions

Official sources