Will VAT be abolished for autónomos?
What is happening and the background to the decision
In 2020, the European Union adopted Directive 2020/285 , requiring all member states to introduce a simplified VAT regime for small business owners and the self-employed. The idea is straightforward: if annual turnover does not exceed a set threshold, the entrepreneur is exempt from charging VAT and filing quarterly returns.
All EU countries except Spain have implemented this rule. The January 1, 2025 deadline was ignored. On March 11, 2025, the European Commission referred the case to the EU Court of Justice. Spain now faces multi-million euro fines and daily penalties.
Current status of the VAT exemption (franquicia del IVA)
As of March 30, 2026, the law has not been passed.
The ruling PSOE party has agreed to support a Proposición No de Ley (PNL) — a non-binding parliamentary resolution put forward by Junts, the seventh point of which calls for abolishing VAT for self-employed people with turnover up to €85,000 before tax (the maximum threshold permitted under the EU directive).
A PNL does not carry the force of law. It is a political recommendation from parliament to the government, formally non-binding.
So at this point there is a political commitment and EU pressure, but no concrete piece of legislation.
Timeline and implementation
Even if the law is passed in the near future, the optimistic scenario for it to take effect is January 2027. The pessimistic (and realistic) scenario is 2028.
The amendments themselves envision the introduction of a new franquicia del IVA regime. Participation in this regime is to be voluntary — entrepreneurs will decide for themselves whether to use it or not.
Beyond the political and bureaucratic hurdles, there are several other important details to consider:
IT systems. The tax authority will need to modernize its IT systems to handle the new regime, monitor turnover thresholds, and carry out annual verification.
Clash with the módulos system. Today, hundreds of thousands of self-employed people (bar owners, taxi drivers, shop owners, craftspeople) operate under the módulos system — a simplified regime where taxes are calculated using objective indicators (floor area, staff, equipment) rather than actual income (somewhat comparable to Russia’s imputed income tax). The franchise and the módulos system solve the same problem — simplification for small entrepreneurs — but work in fundamentally different ways. Running two parallel simplified systems in parallel is complex and illogical. The president of UPTA has said outright: the franchise effectively means the end of módulos, and that will affect hundreds of thousands of people for whom módulos is the more convenient option.
This is precisely why UPTA is proposing a threshold of €50,000 instead of €85,000: at a lower threshold, the franchise only covers those who actually benefit from it, while traditional sectors remain on módulos.
For comparison, here are the VAT exemption thresholds in selected EU countries:
| Country | Threshold (€) | Country | Threshold (€) |
|---|---|---|---|
| Denmark | ~6,700 | Italy | 85,000 |
| Sweden | ~10,800 | France | up to 85,000 |
| Portugal | 15,000 | Czech Republic | ~80,000 |
| Germany | 22,000 | Hungary | ~50,000 |
| Belgium | 25,000 | Poland | ~45,000 |
| Estonia | 40,000 | Ireland | 42,500 / 85,000 |
| Spain | Not implemented |
Who benefits from this
The regime offers real advantages to self-employed people with a low-cost structure — those who incur almost no VAT-eligible expenses:
- No VAT on invoices — the ability to lower prices or increase margins.
- Elimination of the quarterly return (modelo 303) and the annual 390.
I would argue that even a €50,000 threshold is high — these businesses simply don’t earn that much.
According to ATA estimates, at a threshold of €85,000 the measure would affect around 770,000 self-employed people (22% of the total), who would collectively save €508 million per year — roughly €660 per person.
If some people save, the state treasury conversely loses those €508 million — so the question becomes which weighs more: EU fines or budget revenue from VAT.
On the other hand, this regime could lead to lower prices in many consumer sectors, which might ease some of the current discontent over rising costs — or at least give the government something to point to before the upcoming elections.
Why many people won’t benefit
The key constraint: once a self-employed person switches to franquicia del IVA, they lose the right to deduct input VAT — the VAT they pay on purchases, rent, and equipment.
Example: a taxi driver with €60,000 in turnover and €25,000 in expenses for fuel, repairs, and insurance. Embedded in those expenses is around €4,500 in VAT. Under the franchise regime, they don’t charge VAT to clients — but they also lose those €4,500 permanently. For them, the franchise is not a saving but an added cost.
The same applies to bar owners, shop owners, builders, and car repair workshops — anyone whose expenses carry a significant VAT component. In addition, UPTA warns of a growth-suppression effect: entrepreneurs may artificially cap their turnover to avoid exceeding the threshold and losing the preferential regime.
This also raises the prospect of business-splitting schemes — a well-known tactic when thresholds create strong disincentives to grow.
Why this is not beneficial for Digital Nomads
At first glance, digital nomads look like ideal candidates: low expenses, knowledge work, minimal input VAT. But there are important nuances:
Turnover cap. The €85,000 threshold (and especially €50,000 if UPTA’s proposal is adopted) is a hard ceiling. For skilled professionals in IT, design, or consulting who work for international clients, this limit is easy to exceed. Exceeding it means an automatic switch to the standard regime — with the full reporting burden.
Working with EU and non-EU clients. Services provided to legal entities in other EU countries (B2B) are already subject to the reverse charge mechanism — the buyer accounts for VAT in their own country. Services to clients outside the EU are not subject to Spanish VAT at all. So for nomads working primarily with foreign clients, the franchise solves a problem that doesn’t actually exist — VAT is already charged at 0%.
Loss of input VAT deduction. If a nomad rents a coworking space, buys equipment, or pays for software subscriptions — all of that carries VAT, which cannot be deducted under franquicia del IVA.
Administrative simplification is minimal. Saving one quarterly return and one annual return does not compensate for the loss of deductions.
In the end, for most digital nomads registered as autónomos, the standard IVA regime remains the more advantageous option.
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