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Investment Assets for Self-employed in Spain

Investment assets

You may have heard of investment goods/ assets at some time, but do you really know what they are and how they affect your business? In today’s post, we are going to analyze them according to the two taxes that are mainly affected, the VAT and the IRPF.

Definition

Investment goods are considered to be those assets that are used to develop your activity or as an instrument of work for a period of not less than one year.

IVA (VAT)

What is the use of having investment goods? Thanks to declaring affection these, you can practice a series of reliefs that insurance will somewhat alleviate the costs of your business. One of the necessary requirements is that the assets appear in the accounting books-registration of your company.

Example:

If you have a private vehicle that you use for your work, you could declare it as an investment asset. Here the so-called partial involvement comes into play. At first, it is assumed that 50% of your vehicle is designated by your business since you can use it for both your activity and your private life. If it turns out that you only use it for your business (total designation), you will have to demonstrate that exclusive use.

However, the presumption increases to 100% in most cases of mixed vehicles used in the transport of goods, passenger transport, driving schools, commercial agents and surveillance services.

What is this for? If you have your car designated to your activity you can get 50% VAT (or up to 100%, depending on your effect) of gasoline bills, tolls, parking, etc., not so bad, right?

IRPF

The IRPF requires that any designated asset must be designated exclusively, so partial affectation is not possible. It only allows a private use if it is done in an irrelevant way in non-working days or hours, but this last one is not applicable to vehicles. In order for you to deduct the expenses related to the vehicle (gasoline, repairs, parking, etc.), it is necessary that the vehicle is 100% designated to your activity.

Those assets that are susceptible to separate use and independent of the rest can be considered as designated to the activity regarding the IRPF.

For example:

If you have a room in your home that you want to use as an office, you can do so and deduce some expenses. In particular, the proportional part to the meters of the room can be used to deduct community expenses, IBI (property tax), internet, etc. The downside is that you can only use that room for your professional activity.

To conclude, the purchase or acquisition of fixed assets is not charged as a direct expense in the same financial year, but is done through amortizations along some years, the subject of which we will also discuss later.


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