Canary Islands to Raise Tax-Free Threshold for Self-Employed to €50,000

The new threshold for IGIC exemption on invoices issued by professionals and small businesses is expected to take effect in July 2026

The Canary Islands’ Ministry of Economy accompanied the announcement with criticism of the Spanish Government, noting that Spain is the only EU country that has not transposed the directive that exempts self‑employed workers earning less than €85,000 from charging the tax.

The Government of the Canary Islands will raise the annual turnover threshold to €50,000 for small entrepreneurs and professionals to qualify for the Special Regime for Small Businesses or Professionals (REPEP), commonly known as the fiscal franchise.

• The fiscal franchise allows self‑employed workers to avoid applying IGIC on their invoices (although they cannot deduct the tax paid on their purchases).
• According to the Ministry of Economy, Industry, Trade and Self‑Employment, the measure could benefit up to 11,000 self‑employed workers across the islands and is voluntary for individuals and professionals who choose to opt in.

The government stated in an official note that the aim is to reduce tax and administrative burdens for this group, with the new threshold slated to start on 1 July 2026. The practical reduction of formal obligations will apply from 1 January 2027, when beneficiaries will file a single annual IGIC return.

“The change will also bring a significant simplification of tax obligations, reducing the number of filings from five per year to just one by eliminating the four quarterly self‑assessments,” the note added.

The Canary Islands executive frames the measure within a context of inflation and rising costs, presenting it as a tool to ease bureaucracy and support the activity of self‑employed workers and micro‑enterprises. It is also linked to other support lines included in the Self‑Employment Support Plan.

In statements collected in the communiqué, Vice President of the Government and Minister of Economy, Industry, Trade and Self‑Employment Manuel Domínguez said the objective is to “relieve fiscal and bureaucratic burdens and support self‑employed workers with smaller economic scale.”

“It is absolutely a priority to strengthen this regime for a particularly vulnerable group such as self‑employed workers and micro‑companies, where simplification measures like the franchised IGIC provide relief from administrative burdens,” Domínguez added.

Domínguez also offered a political reading, noting that “While Brussels is suing Spain before the European Court for denying self‑employed workers the VAT exemption, and while the Spanish Government ignores the demands of self‑employed workers—being the only country that has not transposed the European directive exempting those earning less than €85,000 annually—the Canary Islands Government is taking a step forward and consolidating its own model of fiscal simplification for entrepreneurs and self‑employed,” said the president of the Canary Islands’ People’s Party.

In this sense, the Ministry of Economy emphasized that the expansion of the fiscal franchise will make the Canary Islands the only autonomous community that applies this measure foreseen in the EU VAT legislation for small businesses, raising the threshold to €50,000—well above the EU average of around €40,000.