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Suppose you have developed an economic activity during 2022. In that case, you will be interested in how to save on your annual income statement in 2022-2023 with these reductions...

1. 20% reduction for starting an economic activity

That is undoubtedly the “star” reduction of self-employed entrepreneurs who have started economic activity in previous years. I explain below what requirements you must meet and the advantages.

What requirements must you meet to access this reduction and save on your annual income statement?

1. Start an economic activity

Here you should consider that the start of economic activity is when no economic activity was carried out in the year before starting the same, both in Spain and abroad. 

With an example, it will be more apparent to you. We imagine that you started the activity on 03/03/2021 because to consider that it is the start of an activity, you cannot have carried out any economic activity since 03/03/2020.

2. You will be able to apply this reduction in the first tax year, where the activity’s net return is positive, and the following tax year.

We continue with our example. If you started the activity on 03/03/2020 and in 2021 the net return, the profit from the activity was negative (you had losses), but in 2022 you did have some profit, you can apply the reduction in the tax year 2021 and 2022.

3. What if you work as a freelancer at the company where you were previously employed? If this is your case, you will only be able to apply the reduction if, during the 2022 financial year, you have invoiced your old company less than 50% of your income.

Example: you registered on 03/03/2021, and in the previous year, that is, from 03/03/2020 to 03/03/2021 you were working for a company as an employee.

Now imagine that the total income in 2022 is € 18,000 (without taking VAT into account). To apply the reduction, you will have to have invoiced your old company for less than € 9,000.

How much do you benefit from applying this reduction?

If you meet the above requirements, you can apply a 20% reduction to your economic activity’s net return. That is, if we calculate your profit (income minus expenses) to that figure, we remove the 20%.

Let’s go with an example. If your profit in 2022 has been € 15,000 (€ 18,000 of income minus € 3,000 of expenses), you will only pay € 12,000 (€ 15,000 – 20%), and the tax savings will be greater than € 600.00.

2. Don’t forget to include all deductible expenses to save on your annual income statement

Another way to pay only the corresponding taxes and never more than that is to include all the expenses considered deductible in the exercise of your activity and have the necessary supporting documents.

In this article, we list the most common expenses that freelancers usually have. We advise you to review them one by one and analyze which ones occur in your activity exercise. In this way, you will reduce your profit and, therefore, the payment of taxes.

3. Autonomous deductions related to the self-employed to save on your annual income statement

Only two autonomous communities include (in the annual income of 2020 and 2021 they were included) in their battery of autonomous deductions any related to the self-employed. Let’s analyze them.

MADRID’S COMMUNITY. Deduction for the promotion of self-employment of young people under 35 years of age.

It is a direct deduction of € 1,000 that can be applied by those self-employed under the age of thirty-five who start an economic activity for the first time. Therefore, it is a deduction that you can only use once.

What requirements must you meet to apply this deduction?

1. You can have a maximum of 34 years of age in 2022.

2. You must develop your economic activity mainly in the territory of the Community of Madrid.

3. You must maintain the activity for at least 1 year from the registration date.

When we talk about direct deduction, we mean that the deductions from the fee mean that if you have to pay € 2,500 in your 2022 income, then approximately half, € 1,250 corresponds to the personal income tax you pay to your community and the other half is the corresponding income tax to the State. Well, of the € 1,250 that corresponds to your community, you would only have to pay € 250 when applying the deduction, leaving the total rent payment at € 1,500.

COMMUNITAT VALENCIANA. Deduction for reconciliation with family life.

Mothers who carry out an activity on their own for which they registered in the corresponding Social Security or mutual insurance scheme, will have the right to a deduction of 418 euros for each child over 3 years old and under 5 years old.

Besides, you must meet two other requirements to save on your annual income statement:

1. The minors who generate the deduction’s right must also give the right to the minimum for descendants.

2. The sum of the general taxable base and the taxpayer savings tax base may not exceed 25,000 euros in individual taxation or 40,000 euros in joint taxation.

This deduction is also applicable to mothers who carry out an activity as employed workers.

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