IGIC Exemption: Canaries Scrap Tax for Freelancers Under €50,000

The Canary Islands government has announced a sweeping tax reform for the self-employed: from 1 July 2026, freelancers with annual turnover below €50,000 will no longer need to charge IGIC on their invoices. Up to 11,000 freelancers across the islands could benefit. CITA News, Your News Portal for Gran Canaria, explains what this means for expats, digital nomads and small business owners in the island's south.

What Changes in Practice?

The so-called REPEP (Special Regime for Small Entrepreneurs and Professionals) is being expanded. Self-employed individuals who voluntarily opt into this regime and stay below €50,000 annual turnover will no longer have to apply IGIC — the Canary Islands' equivalent of VAT — on their invoices. In return, they cannot deduct IGIC paid on their own purchases.

The biggest practical benefit: instead of five tax returns per year (four quarterly filings plus an annual summary), from January 2027 a single annual return will suffice. This dramatically reduces paperwork — and the risk of formal errors and tax authority queries.

Canaries Overtake Madrid and Brussels

Vice-President Manuel Domínguez emphasised that the Canary Islands are now the only Spanish region actually implementing the EU directive on VAT exemption for small businesses. Spain is currently being sued by the European Commission before the European Court of Justice for being the only EU member state that has not transposed the directive — which provides for exemption on turnover up to €85,000 — into national law.

The Canaries are charting their own course with the IGIC threshold, a move likely to attract attention across Europe. For freelancers on Gran Canaria, the signal is clear: the islands want to be an attractive base for small business owners and professionals.

What This Means for Expats and Nomads on Gran Canaria

For the growing community of European expats, digital nomads and freelancers in southern Gran Canaria — particularly in Maspalomas, Playa del Inglés and Las Palmas — the reform delivers a direct advantage. Anyone registered as self-employed in the Canaries who stays below the €50,000 threshold saves not just the IGIC charges on invoices, but above all the quarterly paperwork.

Combined with the existing "Plan Respaldo Autónomo", which offers start-up grants, subsidised loans and sickness support, the Canary Islands are increasingly positioning themselves as Spain's most entrepreneur-friendly region.

Who Can Participate?

REPEP is open to all natural persons registered as autónomos whose annual business volume does not exceed €50,000. Participation is voluntary — those who prefer to continue deducting input tax can remain in the standard IGIC system. Registration is through the Canary Islands Tax Agency (Agencia Tributaria Canaria).

Timeline

The new threshold takes effect on 1 July 2026. From 1 January 2027, the simplified annual return applies. Freelancers who register from summer 2026 benefit immediately.

Further information on registration will be published on the Canary Islands Government website.