Learn About the Most Common Deductible Expenses for Self-employed in Spain
The best way to save on taxes is to not miss out expenses that can be considered deductible in the development of your activity. Of course, there are many specialties in the deductibility of expenses, as many as activities (a programmer who works at home will not have the same kind of expenses as a musician who toured the world), but there are expenses that are usually most common. And this is the objective of this article, to relate the most common expenses to remember them and that they do not escape you when doing your accounting.
For an expense to be fiscally deductible, it must meet the following conditions:
- 1. That it is a real operation.
- 2. That has been made for the attainment of income.
- 3. That is duly registered in the expense book.
- 4. That it was charged in the year in which it occurred.
- 5. That is duly justified, as a priority by the invoice delivered by the entrepreneur or professional who has made the corresponding operation.
Purchases of goods
In this section we would include all the purchases of goods consumed in the current year, specifically, something that everyone uses is the office material. If your activity is manufacturing, you should include the raw materials you need, and if you do trade, here you would include the goods for resale.
Fixed assets (amortizations)
Fixed assets are a set of assets included in the book of investment assets, which are not intended for sale and which you will use in your activity beyond an economic year. The most common examples are a computer (tangible assets) or a web page (intangible assets).
Since these goods are going to be used for more than a year, it makes sense for them to be included as expenses little by little, and for that, there are tables with percentages of amortization. With an example, you will get it clearer. Imagine that you acquire a computer whose tax base amounts to € 1,000, since the percentage of amortization of this type of goods is 33% if you had purchased it on January 1 the amortization expense in that year would be € 330.
Contributions to Social Security or Professional Mutuality (Mutua)
Tanto las cuotas que abonas a la Seguridad Social por haberte dado de alta como autónomo, como las cuotas que abonas a tu Mutualidad profesional (abogados, médicos, ingenieros, arquitectos, etc.) , en el caso de que uses la Mutualidad como régimen alternativo al RETA, son gastos deducibles.
Both the payments you pay to Social Security for having registered as self-employed, as well as the fees you pay to your professional Mutuality (lawyers, doctors, engineers, architects, etc.), in case you use Mutuality as an alternative scheme to the RETA, are deductible expenses.
Leases (premises or personal property)
The most common are expenses for renting premises for the exercise of activity, but also rents of movable property, such as renting a photocopier, are also considered deductible.
Expenses related to vehicles (totally / partially designated)
This section would include fuel, necessary repairs, maintenance costs (ITV), insurance and municipal taxes (IVTM). But it is very important that you know that all these expenses are only fully deductible in Personal Income Tax for the self-employed who dedicate themselves to:
- 1. Commercial activities (commercial agents)
- 2. Passenger transport activities (taxi drivers)
- 3. Freight transport activities (transporters, delivery people, messengers)
- 4. Driver education activities (driving schools)
For the rest of the self-employed, the regulations do not allow deducing anything from the taxable base of these expenses, although it does allow a 50% VAT deduction provided that the self-employed can show that the vehicle has partially designated their activity.
Fees of independent professionals
This includes the costs of the financial adviser, lawyers, economists, registrars, notaries, for all the services rendered to you related to the exercise of your activity.
Supplies (if you have a location designated to your activity)
If you use a place to develop your activity, all the expenses of supplies related to the premises will be 100% deductible.
Supplies (if you use a room in your home for your activity)
In the cases in which the self-employed person partially designates his / her habitual residence to the development of the economic activity, the expenses of supplies of said dwelling, such as water, gas, electricity, telephony and Internet, will be considered a deductible expense in the resulting percentage of apply 30 percent to the existing ratio between the square meters of the house intended for the activity with respect to its total area, unless a higher or lower percentage is proved.
After many years of uncertainty about what and how much can be deducted by a self-employed person working at home, we now know what can be deducted, although the result of the amount to be deducted after applying the percentages is really small. You can check it with an example:
A software developer who works from home, has enabled a room of 18 m2 for the exercise of his activity, having his house an area of 90 m2. Therefore, the percentage of the surface that it allocates to its activity is 20%. What operation will you have to perform to know what can be deducted from a telephone and Internet bill that amounts to € 145.00?
€ 145,00 x 20% (percentage of m2) = € 29,00 x 30% (percentage established by the regulation) = € 8,70
IMPORTANT NOTE: these deductibility rules can only be used to deduct a proportion of the taxable base of the expense, that is, you will not be able to deduct any amount from the VAT of the invoice.
If you are the owner of the home in which you develop your activity, you will also pay community of owners, housing insurance and IBI. Well, in this case, you can deduce the percentage that represents the proportion between the square meters of the house intended for the activity with respect to its total area.
Financial expenses (financing of loans)
If you have used some kind of financing for the development of your project, the loan interests and commissions charged to you by the financial institution are also considered deductible.
The tax deductibility of insurance premiums is limited exclusively to health insurance and only in the part corresponding to sickness or healthcare coverage, and can not be extended to different insurance, such as accident insurance, or to different coverages. The health insurance payments paid by the holder, his spouse and children under 25 years of age, up to the maximum amount of € 500 per member per year, are considered deductible expenses.
On the other hand, it is possible that for the development of your activity you need or require a civil liability insurance policy, in this case, this insurance would also be deductible.
Living expenses of the self-employed worker
This has been another controversial expense for deductibility by the self-employed until in 2018 the rule clarified what type of expense and amounts could be considered as deductible.
The requirements that these expenses must meet to be considered deductible are:
- 1. They must be produced in business days.
- 2. They must be produced in restaurants and catering establishments.
- 3. They must be paid by any electronic means of payment (card or transfer).
- 4. The invoice must be kept, indicating the day, establishment and amount.
- 5. They cannot exceed the quantitative limits established by regulation:
– WITHOUT OVERNIGHT: € 26.67 / day (Spain); € 48.08 / day (abroad)
– WITH OVERNIGHT: € 53.34 / day (Spain); € 91.35 / day (abroad)
To be able to deduct the invoice of your mobile phone, you must have a specific telephone line for the development of your activity. Otherwise, the Treasury will not allow you to include that invoice among your expenses.
Expenses related to travel
If you are a professional who must travel often to visit your customers and have to bear transportation and accommodation costs, you can relate these expenses to your activity, although you should follow a series of precautions since the Administration is strict to accept them.
The important thing is that you can show that these expenses are related to your activity, so the first thing is to collect evidence to prove that these expenses are really yours. It is interesting that whenever possible you can obtain an invoice in your name and if it is not possible, save the ticket and pay whenever you can with a credit or debit card.
In addition, to prove that they are really related to your activity we advise you to follow these precautions:
- If you travel by taxi. Ask the taxi driver to indicate on the bill your name, date, time and the journey made so that you see the purpose of the trip and that it was related to the activity.
- If you travel by bus, metro or train. It will have to be during working hours since Hacienda only considers the related trips in those hours as related to the activity, so you can deduct tickets and transportation vouchers that reflect the date and time of use and that are in that time interval.
Finally, we leave you with the best solution when it comes to demonstrating the deductibility of these expenses. If possible, try to have your fees broken down in the invoices you issue to your customers and, apart from that, the expenses for food, stay and transportation that you have had to bear for providing the service billed, as expenses incurred by your account. If you do so, the Treasury will not question that these costs are really related to your activity, since you will have incurred them on your customers.
If part of the work you do as a professional you have to subcontract because you have to meet deadlines or have had a flood of customers, those expenses that incurred will also be considered deductible.
Nowadays there are many self-employed workers who use Internet advertising to make themselves known. Specifically one of the most used services is Google Ads. Both the invoices of Google and those of any other company that charges you for advertising your services will be considered deductible.
What professional has not closed business or contract after a meal with a client? And what is expected is that you are the one who invites. In these cases, you can deduct both his food and yours, regardless of the location of the restaurant, since customer care is deductible. Even so, the expense assumed should be reasonable and sporadic and you should also ensure that the bills or tickets show that there were several partakers.
With Self-Employed Spain’s platform, you can include all these expenses and much more. In addition, the percentages of supplies are calculated automatically so you do not have to perform complex calculations. You can access and try the platform for 10 days whenever you want and if you have any questions, get in touch with us.