The regional Executive will raise the IGIC franchise threshold for small business owners and professionals to 50,000 euros in volume of annual operations, with the aim of “alleviating tax and bureaucratic burdens and supporting self-employed individuals with smaller economic dimension”.
This has been announced by the vice president and Minister of Economy, Industry, Commerce and Self-Employed, Manuel Domínguez, who foresees that up to 11,000 self-employed workers in the Canary Islands could come to benefit.
The special regime for small entrepreneurs or professionals (REPEP) will allow self-employed individuals and natural persons who do not exceed 50,000 euros annually and who wish to voluntarily opt for this optional regime, not to pass on IGIC in their invoices, in exchange for not deducting the quotas borne on purchases. This measure reduces their annual declarations from five to one, simplifying their relationship with the Canary Islands Tax Agency.
The Vice President of the Government considers that, in the current context of inflation and rising of costs, "it is absolutely a priority to reinforce this regime for a particularly vulnerable group such as self-employed workers and micro-enterprises, where simplification measures such as the franchised IGIC are a relief in administrative burdens."
The measure will place the Canary Islands as the only autonomous community that applies the franchise provided for in the European VAT regulations for small businesses, raising the threshold to 50,000 euros, above the average of the countries of the European Union, which is around 40,000 euros.
“While Brussels denounces Spain before the European Court of Justice for denying self-employed workers the exemption from VAT and while the Government of Spain disregards the demands of self-employed workers, being the only country that has not transposed the European directive that exempts those earning less than 85,000 euros annually from passing on the tax, the Government of the Canary Islands takes a step forward and consolidates its own model of tax simplification for entrepreneurs and self-employed workers,” Domínguez pointed out.
The regional Executive's intention is to apply the new threshold from July 1, 2026 and from January 1, 2027 self-employed individuals under this regime will start submitting a single annual declaration of IGIC, eliminating the four quarterly self-assessments and reducing the possibility of formal errors and management requirements.
The Vice President of the Government, Manuel Domínguez, stressed that the increase in the franchised IGIC “not only responds to compliance with community regulations, but also constitutes a measure of fiscal justice and support for an essential group for the Canarian economy”.
“This Government”, he continued, “does support self-employed workers, and actions like this one, together with the Self-Employed Support Plan, which includes support measures for work-life balance, for hiring, for sick leave due to work incapacity and for investment through the subsidization of loan interests, allow accompanying the self-employed from beginning to end, from when they start their activity until its consolidation, reinforcing protection against situations of vulnerability and ensuring that no one has to give up entrepreneurship because of bureaucracy”.