IGIC Exemption (REPEP): A Guide for Small Businesses

The IGIC small-business exemption is called REPEP: the special regime for small entrepreneurs or professionals. In 2026 the general threshold is €30,000; the increase to €50,000 could only apply from 1 July to those who met the transitional requirements and expressly exercised the extraordinary option that month. From 1 January 2027 the general threshold rises to €50,000. Under the regime, you invoice your domestic operations exempt from IGIC and do not file the quarterly model 420, but you also cannot deduct the IGIC on your purchases.

For the wider tax context, start with our IGIC and IVA comparison for the Canary Islands.

Beware of the name: here “franchise” has nothing to do with opening a commercial franchise. It describes a special regime in which certain operations are exempt when the individual meets the legal requirements.

This guide covers who can join, the 2026 threshold change, when it really pays off, and which obligations remain.

What is REPEP and what does “fiscal franchise” mean

REPEP is one of the special regimes of IGIC. It is currently regulated in articles 89 to 91 of Legislative Decree 1/2025, of 13 October, the consolidated text of the IGIC and AIEM rules approved by the Autonomous Community of the Canary Islands (published in the BOC on 20 October 2025 and in force since 21 October 2025). Before the consolidation, the regime was in article 109 of Law 4/2012 — if you see that reference in older articles, it is the same figure.

Its mechanics are simple:

• Operations located in the Canary Islands that are covered by the regime are exempt from IGIC: you charge no IGIC on those invoices.
• Input IGIC related to those exempt operations gives no right to deduction.
• The quarterly self-assessment (model 420) disappears, and an annual informative declaration (model 425) remains.

In other words: the ordinary periodic self-assessment disappears, but not every obligation, and input IGIC can become a cost. The economic result is not universal: it depends on your expense structure and how you set your prices.

Who can join (and who cannot)

The requirements, according to the regulations in force and the criteria published by the Canary Islands Tax Agency (ATC) (valid in 2026):

Whoever meets the requirements is in principle included unless they renounce, but the ATC requires you to report the inclusion expressly using model 400. When starting an activity this is done in the prior census declaration; to change regime in a later year, you report it in January.

The 2026 change: the threshold rises from €30,000 to €50,000

This is the tax novelty of the year in the Canary Islands. Decree-Law 3/2026, of 6 April (BOC No. 66, of 7 April 2026), raises the REPEP maximum turnover limit from €30,000 to €50,000, on this schedule:

How it works in practice: invoices without IGIC

While in REPEP, your invoices for domestic operations in the Canary Islands go out without IGIC and must include the wording “Exención franquicia fiscal”. That wording is not decorative: it is the reference that justifies to your customer (and in any audit) why the invoice carries no tax.

Hypothetical example. A self-employed photographer in Tenerife invoices €2,000 for a shoot:

In this example, keeping the same base lowers the invoiced total by €140 compared with the general regime. That does not mean the market price must fall or that the difference automatically becomes margin: it depends on your pricing policy and on non-deductible costs.

The other side: if that photographer buys a lens for €1,000 + €70 IGIC, that €70 is no longer deductible. It is pure cost.

Does it suit you? The calculation to make

REPEP is not automatically good. It is a trade-off, and the answer depends on three variables: who your customer is, how much you spend and how much you will invest.

Factors that may favour it

• Mostly private customers: the absence of charged IGIC can affect the final price, but the result depends on how you set prices and on the input IGIC you stop deducting.
• Light expense structure: service activities where current spending with input IGIC is small relative to income.
• Fewer periodic self-assessments: the ordinary 420 is not filed, although model 425 and, where applicable, models 412 and 415, invoicing and the record books remain.

When to think twice

• Business customers: the comparison requires checking whether the customer could have deducted the tax and how much input IGIC your business stops deducting.
• Big investments ahead: input tax related to franchise-exempt operations gives no right to deduction. In an example investment taxed at 7%, €20,000 of base carries €1,400 of tax; confirm the allocation and treatment for your case.
• Narrow margins with heavy purchasing: if you resell goods at low margin, non-deductible input IGIC can eat the advantage.

Formal obligations: few, but with deadlines

That REPEP simplifies does not mean all obligations disappear. Among the main ones published by the Canary Islands Tax Agency as of 24-10-2026 are these:

If you used the extraordinary July 2026 option, keep the first-half filing obligations and check the pro-rata and capital-goods adjustments in article 1 of Decree-Law 3/2026. Entering the exemption does not cancel those adjustments.

For the covered operations, there is no ordinary quarterly Form 420. In fact, filing it has consequences — see the next section.

Renunciation, exclusion and returning to the regime

Here is the small print that causes the most trouble.

Renunciation binds for three years. You can renounce REPEP expressly (model 400, in January) or tacitly — and this is the trap: filing on time the first periodic self-assessment of the year or the first on starting the activity (Form 420 or 421) amounts to renouncing. Renunciation, express or tacit, has effect for a minimum of three years, counted from date to date, and until they pass you cannot rejoin.

Exceeding the threshold is not renouncing. Exclusion depends on your annual turnover and the threshold applicable to the following year. For 2027, compare 2026 turnover with €50,000: exceeding €30,000 in 2026 does not by itself exclude you in 2027. If you exceed €50,000, report exclusion with Form 400 in January 2027. The difference matters: exclusion does not trigger the three-year block. If your volume later falls below the threshold again, you can rejoin by meeting the requirements.

VeriFactu and REPEP: exempt from IGIC does not mean exempt from invoicing

Being in the franchise does not remove the invoicing obligations that apply to you nor, by itself, exclude the taxpayer from the rules on invoicing computer systems.

For an overview of those rules, see our VeriFactu guide for freelancers.

The VeriFactu calendar, after Royal Decree-Law 15/2025 of 2 December (BOE of 3 December 2025):

• 1 January 2027: Corporate Income Tax taxpayers.
• 1 July 2027: the other persons obliged under article 3.1, with the exclusions and special rules in the regulation.

VeriFactu timeline (reviewed 24 October 2026). The rule in force, Royal Decree-Law 15/2025, sets the deadline before 1 January 2027 for Corporate Income Tax payers and before 1 July 2027 for everyone else. On 5 October 2026 the Ministry of Finance announced, in an information note, that it will postpone the pending obligations of Royal Decree 1007/2023 until October 2028. That postponement has not yet been published in the BOE.

Article 13 of Royal Decree 1007/2023 channels compliance through a responsible declaration by the system’s producer. Before buying, ask for that declaration and check that it identifies the version and components it refers to.

For a self-employed person in REPEP, the practical message is that IGIC simplification is not an automatic exception from the rules on invoicing computer systems. Before the applicable dates, check whether you are within the scope of Royal Decree 1007/2023 and that your provider documents its responsible declaration.

In summary

In 2026 the general €30,000 threshold was maintained, with an extraordinary option for certain taxpayers whose 2025 turnover did not exceed €50,000; from 2027 the general threshold is €50,000. The regime reduces periodic obligations and exempts the covered operations, but it also limits the deduction of input tax. The decision requires reviewing the data and census situation of the specific case.