- Congress validated Royal Decree-Law 23/2026 on 23 September with 300 votes in favour, 38 against and 10 abstentions.
- Eight regions with debt below 12.4 % of GDP may use pending surpluses to invest, up to about €4 billion.
- For La Palma, it extends the Ceuta and Melilla income tax deduction to its residents and provides €100 million for those affected.
The Congress of Deputies validated on Wednesday 23 September 2026 Royal Decree-Law 23/2026 of 8 September, which adopts urgent fiscal and financial measures for the economic and social reconstruction of the island of La Palma and to boost investment by the regions with surpluses yet to be applied. The validation vote recorded 300 in favour, 38 against and 10 abstentions, and a later vote agreed to process it as a bill under the urgent procedure, with 345 in favour.
The decree-law, published in the gazette on 9 September, combines two distinct ideas: a reconstruction measure after the 2021 volcanic eruption and a change in the fiscal rules for the regions that lets them put into investment surpluses that until now had to go to reducing debt. It matters to companies and families because it shows where public investment may grow and what aid reaches La Palma.
Surpluses for investment
Regions whose public debt was below 12.4 % of their GDP at the end of 2025 are exempted from using pending surpluses from earlier years to reduce debt, provided they invest them in 2026, 2027 and 2028. The Government estimates that eight could qualify: Asturias, the Canary Islands, Navarre, the Basque Country, Andalusia, the Balearic Islands, Cantabria and Galicia, with up to €4 billion that could be mobilised. The Basque Country and Navarre remain subject to their economic agreements.
In addition, regions that closed 2025 with a surplus may use it in 2026 and 2027 on financially sustainable investments, provided they have no deficit in the relevant year and meet the legal deadlines for paying suppliers. To be eligible they must have positive long-term effects and meet at least one criterion: climate benefit, energy efficiency, avoiding future recurring costs or generating savings. Social and protected housing always qualifies, and the spending does not count towards the expenditure rule, subject to prior control and certification.
What changes for La Palma
The decree extends to 2026, for taxpayers habitually and effectively resident in La Palma, the income tax deduction for income earned in Ceuta and Melilla, which the Government presented as a 60 % cut in the tax, with effect from 1 January 2026 and adjusted withholdings. The Canary Islands may use €100 million of their surplus for aid to those affected by the eruption, with priority for compensating farm losses, rebuilding infrastructure and farms and the CO2 evacuation system.
Farmers in El Paso, Los Llanos de Aridane and Tazacorte registered as affected may request a new six-month suspension of loan payments, from 1 October 2026 to 31 March 2027, with an application deadline of 15 October. Affected self-employed people are also protected in the calculation of the cessation-of-activity benefit, which excludes POSEI aid.
A reading for companies
For companies, the practical reading is twofold. In the regions that can qualify, there will be more room to tender infrastructure, energy efficiency and housing, which opens opportunities for builders, engineering firms and suppliers, and the calls are worth following. In La Palma, aid to companies must respect European state aid rules.
Catalonia is not among the eight regions the Government expects could qualify. And because it is now being processed as a bill, the text may still be amended. Anyone with businesses or investments in the affected areas should consult their adviser on which aid applies and from when.
Public investment is announced in decrees, but it is measured in finished works.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
