Canary Islands Launch IGIC Exemption for Small Businesses
SANTA CRUZ DE TENERIFE, 3 July (EUROPA PRESS) – Self-employed individuals and professionals in the Canary Islands can now apply for an exemption from the IGIC tax if their annual turnover is up to £50,000. This regional initiative is expected to benefit around 11,000 workers across the archipelago.
The measure came into effect on 1 July, allowing eligible taxpayers to avoid charging and declaring IGIC, thereby simplifying their tax obligations and enhancing cash flow, according to the regional government.
Manuel Domínguez, the Vice President of the Canary Islands, emphasised that this initiative demonstrates the government’s commitment to supporting the local economy, particularly small businesses and freelancers, with an increase of nearly 9,000 self-employed workers since the start of 2023—approximately 240 new entrepreneurs each month.
“This increase in the exemption threshold to £50,000 represents a significant advance in administrative simplification and economic stimulation,” Domínguez added.
A Pioneering Measure
This initiative positions the Canary Islands as the only autonomous community in Spain applying the exemption for small businesses in line with EU regulations, raising the threshold to £50,000, which surpasses the EU average of around £40,000.
“While Brussels takes legal action against Spain for not granting this exemption to self-employed workers, and the Spanish government ignores their calls, the Canary government is moving forward with a unique fiscal simplification model for entrepreneurs,” Domínguez argued.
Simplifying the Process
Under the special regime for small businesses (REPEP), those earning under £50,000 annually will be able to opt not to charge IGIC on their invoices, in exchange for not being able to deduct the tax on purchases. This change will reduce their annual tax filings from five to one, simplifying interactions with the Canary Islands Tax Agency.
The regional government aims for self-employed individuals under this regime to present a single annual IGIC declaration by 1 January 2027, eliminating quarterly filings and decreasing the likelihood of formal errors.
Interested small businesses must submit their declaration (model 400) by 31 July to opt into the REPEP.
Additionally, the regional government has activated the Respaldo Autónomo Plan, which provides support for work-life balance, hiring, sick leave, and investment through loan interest subsidies, assisting self-employed individuals in their professional growth.
