The IGIC small-business regime (REPEP): €50,000 from 2027, who can stop charging IGIC and when it is a bad idea

A leatherworker in Lajares sells €28,000 of bags a year at the markets of Fuerteventura. On every sale she could add 7 % IGIC, €1,960 over the year, and file four quarterly returns with the Canary tax agency. She does neither, and legally: she is in the REPEP, the régimen especial del pequeño empresario o profesional, which exempts everything a small self-employed business sells and, in exchange, takes its input tax away. Until 31 December 2026 the regime stops at a turnover of €30,000. From 1 January 2027 the line moves to €50,000, and a good many businesses on the island that charge IGIC today will be inside it in January unless they say no. This piece reads the regime in October 2026 in the Canary consolidated text of 2025, in the decree-law of April 2026 that raised the threshold, in the IGIC law and in the management regulation: who is in, what the exemption gives and takes, the paperwork that survives, the calendar from now to April 2027 and the cases in which the right answer is to renounce.

Who is in, and the €50,000 line

Article 89 of the consolidated text puts in the regime, salvo renuncia, unless they renounce, the taxable persons who are personas físicas establecidos en el territorio de aplicación del impuesto, individuals established in the territory where the tax applies, and whose volumen total de operaciones realizadas durante el año natural anterior, total volume of operations in the previous calendar year, has not exceeded the threshold. Three things follow from those words.

The regime is for individuals. A company, however small, is never in it and invoices with IGIC from its first euro, which is one more factor in the choice we describe in autónomo or SL.

It is automatic. Nobody applies for it: a business within the threshold is inside unless it renounces.

And the yardstick is last year, never this one. Turnover is counted without IGIC and includes every sale and service, con independencia del régimen tributario o territorio donde se entiendan realizadas, whatever the tax regime or the territory in which they are deemed to be made, so sales to the Peninsula or abroad count too, and a business that started during that year raises its figure to a full year. Crossing the line in the middle of a year changes nothing until the next one: Se entiende que la fecha de efectos de la exclusión es el día 1 de enero del año natural siguiente, the exclusion takes effect on 1 January of the following calendar year (article 89.3.a).

The €50,000 comes from Decreto-ley 3/2026, of 6 April, validated by the Canary Parliament in May, and it arrived in two steps. The decree rewrites article 89.1 Con efectos desde el día 1 de enero de 2027, with effect from 1 January 2027. And it opened a door six months earlier for individuals who were outside the regime, whether excluded by their turnover or after renouncing, and whose 2025 turnover had not exceeded €50,000: they could opt in from 1 July 2026, but only with a census return filed durante el mes de julio de 2026, during the month of July 2026, and the text closed the door behind it: La presentación extemporánea de dicha declaración censal no surtirá efecto alguno, a census return filed late has no effect at all. Whoever missed July waits for January.

What the exemption gives, and what it takes

What it gives is in article 90: Las entregas de bienes y prestaciones de servicios realizadas por los sujetos pasivos acogidos al régimen especial del pequeño empresario o profesional estarán exentas del Impuesto General Indirecto Canario, the goods and services supplied by those in the regime are exempt from IGIC. No tax on the invoice, which carries instead the words exención franquicia fiscal (article 91.d).

What it takes is the deduction. The IGIC law lets a business deduct its input tax only to the extent that its purchases are used in entregas de bienes y prestaciones de servicios sujetas y no exentas, supplies that are taxed and not exempt (Ley 20/1991, article 29.4). A business in the REPEP makes exempt supplies, so the IGIC on its materials, its rent, its tools, its software and its accountant's invoice stays with it as a cost.

Two charges survive the exemption, and neither can be deducted. Imports: the IGIC on goods brought into the islands is declared and paid as before (article 91.b). And the reverse charge: when a supplier that is not established in the Canaries invoices a service, it is the island business that owes the IGIC (Ley 20/1991, article 19.1.2.º) and declares it on the occasional return, the Modelo 412.

The regime also has edges of its own (article 90). It never covers the goods a retailer sells in the shop, because those are already exempt under the retailers' regime, which is compulsory for whoever sells goods they have not made and makes more than 70 % of those sales to private customers (article 27); the same shopkeeper can be in the REPEP for the repairs or the courses. It does not cover the exempt sales of land and buildings. It cannot be combined with the cash-accounting regime or with the regime for farming, livestock and fishing. And it is not the simplified regime: that one is IGIC by modules, for activities taxed by objective estimation in income tax, and an individual only reaches it after renouncing the REPEP (management regulation, article 13).

The paperwork that survives

The quarterly return disappears because the regulation says so: those included in the regime are not obliged to file periodic returns (article 57.2.a). The annual summary stays as an information return in which only the turnover box of the regime is filled in (article 47 nonies). Nothing changes outside IGIC: the REPEP is an IGIC regime, and the income-tax instalments and the self-employed contribution go on exactly as before.

The calendar from here to April 2027

31 December 2026. The year whose turnover decides 2027 closes. Count it without IGIC and include what you sold outside the islands.

January 2027. A business that was outside the regime in 2026 and closes the year at or under €50,000 files the Modelo 400 to say that it is in, or that it renounces (regulation, article 47 septies). One that was inside and went over €50,000 communicates its exclusion in the same month (article 47 octies). One that was inside and stays under the line files nothing but the Modelo 425 for 2026. The decision has to be taken before the first invoice of the year, because it is on that invoice that the IGIC either appears or does not.

1 to 20 April 2027. The trap. Se entenderá realizada tácitamente la renuncia cuando se presente en plazo la autoliquidación periódica correspondiente al primer trimestre del año natural, the renunciation is deemed to be made tacitly when the periodic return for the first quarter of the calendar year is filed on time (article 89.2). A business that goes on filing its Modelo 420 in April out of habit has renounced, and La renuncia a este régimen tendrá efecto para un periodo mínimo de tres años, the renunciation binds for a minimum of three years.

When it is a bad idea

The regime is a good deal for a business that sells to private customers and buys little with IGIC: a teacher, a guide, a therapist, a hairdresser, a craftswoman. The 7 % it no longer charges becomes margin, or a lower price. Four situations turn it into a bad one.

Your customers are businesses that deduct. A hotel or a builder recovers in its own return the 7 % you charge. Your price without IGIC costs them the same, and you have lost your input tax for nothing.

You are investing. A van, a kiln, the fit-out of premises: the IGIC on them is deductible outside the regime and a cost inside it. On a fit-out of €20,000 at 7 %, that is €1,400. And the tax already deducted on equipment in use can come back: for the four calendar years after the one in which an asset came into use (nine for land and buildings), one fifth of the tax deducted (one tenth) is repaid for each year in which the right to deduct has fallen by more than ten points, and inside the REPEP it falls to zero (Ley 20/1991, articles 40 and 41). A machine put into use in 2025 with €840 of IGIC deducted costs €168 for each of 2027, 2028 and 2029 if its owner enters the regime in January 2027: €504, declared each December on the Modelo 412.

You sell outside the islands. Goods exported or sent to the Peninsula, and most services to business customers elsewhere, carry no IGIC in the general regime either, and there they keep the right to deduct (Ley 20/1991, article 29.4). Inside the REPEP the customer pays the same and the input tax is lost; how those invoices work is in our piece on invoicing EU clients from the Canaries.

You are about to outgrow it. A business heading past €50,000 will change regime the following January in any case: two changes of prices, invoices and software in two years.

The leatherworker's year, in both regimes. She sells €28,000 to private customers and buys €6,000 of leather, fittings and stall fees on which she pays €420 of IGIC:

If her prices to the public stay where they are, she keeps the €1,960 and loses the €420 of deductions: €1,540 a year better off, before income tax. If she lowers them by the 7 %, the gain goes to her customers and she is €420 worse off. If the same €28,000 were sold to two hotels, the regime would cost her the €420 and give nothing to anyone. And if 2026 closes at €41,000, the old line would have put her out on 1 January 2027; with the new one she stays in.

Common questions

My turnover in 2026 will be about €42,000. Do I have to do anything to be in the regime in 2027?

You are in by law if 2026 closes at or under €50,000, but the regulation asks you to say so: a Modelo 400 in January 2027 communicating the inclusion, or the renunciation if you prefer to go on charging IGIC. From 1 January your invoices carry no IGIC and the words exención franquicia fiscal. And do not file the Modelo 420 of the first quarter in April: filed on time, it is a renunciation for three years.

Can a limited company use the REPEP?

No. The regime is for individuals established in the islands. An SL charges IGIC whatever its turnover, and a self-employed person who moves the business into a company leaves the regime with it.

I will pass the threshold in the middle of a year. Do I start charging IGIC at once?

No. The test is always the previous year's turnover, and the exclusion takes effect on 1 January of the following year. You finish the year inside the regime, communicate the exclusion with a Modelo 400 in January and charge IGIC from then on.

I renounced two years ago. Can I come back now that the threshold is higher?

Not yet. A renunciation binds for a minimum of three years and is then extended year by year until it is revoked, in January, with a Modelo 400. The exception was the option of July 2026, which also let those who had renounced come in if their 2025 turnover was within €50,000; it closed on 31 July.

The tax team at our Caleta de Fuste and Costa Calma offices runs the numbers of the regime for your business before January — turnover, customers, investment plans — and files the census return whichever way the answer goes; how the tax itself works is in our piece on IGIC versus IVA. The tax advisory page describes the service and a first meeting can be booked online.

Facts verified in October 2026 (texto refundido approved by Decreto Legislativo 1/2025, of 13 October, articles 27, 32, 89, 90 and 91 and its seventh additional provision; Decreto-ley 3/2026, of 6 April, article 1, validated by the Canary Parliament; Ley 20/1991, articles 19, 29, 40 and 41; the management regulation approved by Decreto 268/2011, articles 13, 47 septies to 47 decies, 57 and 58; the Canary Tax Agency's pages for forms 400, 412, 420 and 425). The leatherworker and her figures are illustrative.