Thousands of self-employed workers in the Canary Islands can now apply for a new tax exemption that removes the need to charge IGIC on their invoices, in a move designed to improve cash flow for the region's smallest businesses.

The measure came into force on Wednesday (1st July) and is available to self-employed professionals and small businesses with an annual turnover of up to €50,000. The Canary Islands Government estimates that as many as 11,000 self-employed workers across the islands could benefit.

Under the new Special Scheme for Small Businesses and Professionals (REPEP), those who choose to join will no longer have to charge IGIC (Canary Islands General Indirect Tax) to their customers or submit the usual quarterly IGIC returns.

For consumers, this could mean lower prices, as participating businesses will not add IGIC to their invoices. However, businesses opting into the scheme will no longer be able to reclaim the IGIC they pay on purchases, equipment or supplies.

The scheme is voluntary, allowing eligible self-employed workers to decide whether the savings and reduced paperwork outweigh the loss of tax deductions.

Less paperwork from 2027

One of the biggest changes will come from 1st January 2027, when businesses enrolled in REPEP are expected to move to a single annual IGIC declaration, replacing the current requirement to submit four quarterly tax returns.

The regional government says the reform is aimed at simplifying administration while providing an immediate financial boost to small businesses.

Canary Islands ahead of the rest of Spain

According to the Canary Islands Government, the archipelago has become the only region of Spain to introduce this type of indirect tax exemption, made possible under European Union rules.

Regional Vice President Manuel Domínguez said the move puts the Canary Islands ahead of the Spanish Government, noting that EU legislation allows countries to exempt businesses with annual turnover of up to €85,000 from indirect tax.

While many European countries apply VAT exemption thresholds averaging around €40,000, the Canary Islands has set its limit at €50,000.

How to apply

Eligible self-employed workers wishing to benefit from the exemption must submit Model 400 to the Canary Islands Tax Agency by 31st July 2026.

The regional government has also reminded entrepreneurs that other support remains available through its Plan Respaldo Autónomo, which includes financial assistance for medical leave, work-life balance and business investment.