Canary Islands Raise IGIC Exemption Threshold to €50,000 – What It Means for Self-Employed Workers
Thousands of self-employed workers across the Canary Islands could benefit from a significant tax change that came into effect on 1 July 2026, making it easier for many small businesses to reduce paperwork and simplify the way they manage their taxes.
The Canary Islands Government has increased the turnover limit for the Special Scheme for Small Businesses and Professionals (REPEP) from €30,000 to €50,000 per year. This means many freelancers, sole traders and small business owners can now choose to operate without charging IGIC (Impuesto General Indirecto Canario) on their invoices, provided they meet the eligibility requirements.
What is IGIC?
Visitors to the Canary Islands may already know that the islands do not use Spain’s standard IVA (VAT) system. Instead, businesses charge IGIC, a regional indirect tax, with the standard rate currently set at 7%.
Who could benefit?
The updated threshold means self-employed workers whose annual turnover is below €50,000 may be able to join the optional scheme.
For many smaller businesses, this could mean:
- Not having to add IGIC to invoices.
- Simpler tax administration.
- Fewer IGIC filing obligations.
- Less time spent dealing with tax paperwork.
However, businesses that choose this scheme generally cannot reclaim the IGIC paid on their own business purchases, so joining may not be the best option for everyone. It is advisable to seek professional tax advice before making a decision.
Around 11,000 businesses expected to benefit
The Canary Islands Government estimates that approximately 11,000 self-employed workers across the archipelago could qualify under the expanded rules.
The measure has been introduced to help reduce bureaucracy for smaller businesses while supporting entrepreneurship and easing some of the financial pressures faced by freelancers and sole traders.
Good news for Lanzarote’s small business community
Lanzarote has a thriving community of independent businesses, including cafés, restaurants, tour companies, tradespeople, artists, holiday rental managers and other service providers.
For many of these businesses, the higher threshold could make day-to-day administration simpler, allowing owners to spend more time focusing on growing their business rather than completing tax paperwork.
As with any tax change, eligibility depends on individual circumstances, and professional advice should always be sought before opting into the scheme.
What should self-employed workers do?
If you believe your business may qualify:
- Check your annual turnover.
- Speak with your accountant or tax adviser.
- Find out whether joining the REPEP scheme is financially beneficial for your business.
- Make sure you understand both the advantages and the limitations before applying.
While the scheme won’t be suitable for every business, it represents another step towards simplifying tax obligations for many of the Canary Islands’ smallest enterprises.
