In recent weeks, headlines about the “elimination of VAT for the self-employed” have once again taken center stage due to the government’s recent political commitments to pass key decrees. However, at Ruiz & Associates, we see a gap between the political announcement and the technical reality. As advisors, our obligation is to separate the noise from the current regulations so that you can plan your business with confidence.
Why is this being talked about now? (Pressure from Brussels)
This is not a voluntary initiative by the Spanish government. The reality is that Spain is the only country in the European Union that has not yet transposed Directive (EU) 2020/285. On March 11, the European Commission referred the case to the Court of Justice of the EU after all grace periods had expired.
The Government’s current commitment to implement a VAT exemption for those with annual revenues below €85,000 is largely an emergency response to stem the multimillion-euro fines that Brussels is about to impose on Spain.
How would the franchise system work (in theory)?
It is vital to understand that this system is not a “help”, but an optional regime change with very defined technical pros and cons:
- Invoicing without VAT: The self-employed person does not pass on 21% (or the corresponding rate) on their bills.
- Goodbye to Form 303: The obligation to file quarterly returns would be eliminated, simplifying bureaucracy.
- The critical drawback: By not charging VAT, the self-employed worker loses the right to deduct VAT on their expenses. For those with high investment or operating expenses (premises, supplies, vehicles), this system could be less profitable than the current one.
The million-dollar question: When will it come into force?
This is where we urge our clients to exercise extreme caution. Despite the announcements, the Tax Agency requires a profound restructuring of its IT systems to manage more than one million self-employed workers under this new model.
- Optimistic scenario: January 2027. It would require ultra-fast legislative processing before August of this year.
- Conservative scenario: 2028. Many analysts point out that the technical complexity and the electoral calendar could move the measure to the end of the legislature.
As of today, May 2026, there is no approved law or open procedure to apply for this regime.
What should Ruiz & Asociados customers do?
To avoid mistakes in your daily management, we remind you of three fundamental points:
- Continue operating as normal: Your second quarter (Q2) obligations remain unchanged. You must continue issuing invoices with the corresponding VAT and collecting your expense receipts for deductibility purposes.
- Do not make investment decisions based on this announcement: Until the final text is published in the BOE, we will not know the details about which sectors will be excluded or what the transition will be like.
- Preventative digitization: Regardless of the system (whether you use ContaSol, Holded, or any other management platform), the important thing is to have your invoicing digitized. If the franchise system is implemented, the transition will be much easier for those who already have their accounting records up to date.
Information vs. speculation
At Ruiz & Associates, we monitor official publications daily. Our mission is to ensure you don’t waste time on procedures that don’t yet exist or on rumors that could jeopardize your profitability. As soon as a concrete implementation schedule is released, we will conduct a personalized study for each of our clients to determine whether or not joining the franchise is right for them.
Note: This article is for informational purposes only regarding current legislation. It does not imply any changes to the tax obligations in force for the 2026 tax year.
Do you have doubts about how this news affects your annual planning? Stay calm and trust your team of advisors. At Ruiz & Asociados we will inform you of any real news at the exact moment it occurs.
