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Investment Assets for Self-employed in Spain
Accounting obligations
You may have heard of investment assets or goods at some time, but do you really know what they are and how they affect your business? Today’s article will analyze them according to the two taxes that are mainly affected, the VAT (IVA) and the IRPF (income tax).
Table of Contents
Definition
Investment goods are considered assets used to develop your activity or as an instrument of work for a period of not less than one year.
IVA (VAT) in investment assets
What is the use of having investment goods? Thanks to declaring these goods as related to your activity, you can benefit from reductions that will alleviate your business’s costs. One of the main requirements is that the assets appear in the accounting books-registration of your company.
Example:
If you have a private vehicle used 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 your business designates 50% of your vehicle 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 (full designation), you will have to prove that exclusive use.
However, the presumption increases to 100% in most cases of mixed vehicles used in transporting 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 deduct 50% of VAT (or up to 100%, depending on your effect) on gasoline bills, tolls, parking, etc., not so bad, right?
IRPF in investment assets
The IRPF requires that any designated asset be designated exclusively, so partial affectation is impossible. It only allows private use if it is done in an irrelevant way on non-working days or hours, but this last one does not apply to vehicles.
For you to deduct the expenses related to the vehicle (gasoline, repairs, parking, etc.), the vehicle must be 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 deduct some expenses.
In particular, the proportional part to the metres 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 made through amortizations over some years, the subject of which we will also discuss later.
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