When it comes to being self-employed in Spain, it's important to take advantage of the various deductible expenses available to optimise your tax savings. Understanding the most common deductible expenses can help ensure that you don't miss out on valuable deductions in your accounting.
While deductibility rules may vary based on the nature of your activities, this article aims to highlight the frequently encountered deductible expenses that should be considered for inclusion in your records.
What Qualifies as Deductible Expenses?
For an expense to be considered deductible for tax purposes, it must meet the following criteria:
Common Deductible Expenses:
1. Purchases of Goods:
This category encompasses the purchase of goods consumed within the current fiscal year. For example, office materials are commonly deductible.
Manufacturing businesses may deduct the cost of raw materials, while traders can include goods acquired for resale.
2. Fixed Assets (Amortizations):
Fixed assets are long-term assets that extend beyond a single financial year, such as computers or websites. Deducting their cost gradually through amortisation, according to specified percentages, can be a beneficial approach.
3. Contributions to Social Security or Professional Mutuality (Mutua):
Deducting Social Security payments and fees paid to professional mutualities (e.g., lawyers, doctors, engineers) is allowed. If you opt for a professional Mutuality, it serves as an alternative to the RETA (Special Regime for Self-Employed Workers).
4. Leases (Premises or Personal Property):
Rent expenses for premises used for business activities are commonly deductible. Additionally, renting movable property like a photocopier is also considered deductible.
5. Deductible Expenses Related to Vehicles:
Expenses related to vehicles, including fuel, repairs, maintenance, insurance, and municipal taxes, are generally deductible for self-employed individuals engaged in commercial or transportation activities. However, for other self-employed individuals, deductibility may be limited to VAT deductions (50%) if they can prove partial use for business purposes.
6. Fees of Independent Professionals:
Professional fees paid to financial advisers, lawyers, economists, registrars, and notaries for services related to your business activities are deductible.
7. Supplies (Designated Business Premises):
Expenses related to supplies, such as water, gas, electricity, telephony, and internet, are 100% deductible if they are directly associated with a designated location for your business.
8. Supplies (Home Office):
If you use a room in your home for business purposes, you can deduct a percentage of expenses for supplies (e.g., water, gas, electricity, telephony, internet). The deduction is calculated based on the proportion of the space used for business relative to the total area of the house.
Learn more about utility bill deductions for the self-employed and how much you may claim as a legitimate business expense.
9. Financial Expenses (Financing of Loans):
Interests and commissions charged on loans obtained for business purposes can be considered deductible.
10. Health Insurance:
It is worth mentioning that certain portions of private health insurance premiums can be tax-deductible. However, it is essential to understand that only expenses directly linked to sickness or healthcare coverage are eligible for this deduction. Other types of insurance, such as accident insurance or supplementary coverages, do not qualify for this tax benefit.
When it comes to deducting health insurance expenses, the deduction applies to payments made by the policyholder, their spouse, and dependent children under the age of 25. The maximum deductible amount per member per year is set at €500.
11. Living Expenses of the Self-Employed Worker:
Certain expenses incurred during business days in restaurants and catering establishments can be deductible. Electronic payment, such as card or transfer, and proper invoice retention are necessary. There are limits defined by regulations, distinguishing between expenses with or without overnight stays.
The limits established by regulation for deducting living expenses are as follows:
- WITHOUT OVERNIGHT:
- €26.67 / day (Spain)
- €48.08 / day (abroad)
- WITH OVERNIGHT:
- €53.34 / day (Spain)
- €91.35 / day (abroad)
12. Mobile Phone:
To deduct the invoice for your mobile phone, you must have a specific telephone line dedicated to your business activities.
13. Expenses Related to Travel:
If you frequently travel for business purposes and incur transportation and accommodation costs, these expenses can be related to your activity. It is important to collect evidence, such as invoices, tickets, and payment records, to substantiate the business nature of these expenses. Following certain precautions, such as obtaining invoices in your name and traveling during working hours, can help support the deductibility of these expenses.
14. Outsourced Work:
Expenses related to subcontracting part of your work as a professional, especially during periods of high demand or tight deadlines, can be considered deductible.
The costs associated with online advertising, such as Google Ads, or any other advertising services used to promote your business can be deductible.
16. Entertainment Expenses:
Expenses incurred while entertaining clients or conducting business meetings over meals can be deductible, as long as they are reasonable, occasional, and can be supported by relevant bills or receipts.
Understanding the deductible expenses available to self-employed individuals in Spain is crucial for optimising tax savings.
While the specific deductibility rules may vary depending on the nature of your activities, being aware of the commonly encountered deductible expenses can help ensure you include them in your accounting records.
It is advisable to consult with a qualified tax professional or accountant to ensure compliance with current tax regulations and to maximise your tax deductions based on your specific circumstances.
Registering As Self Employed Autonomo In Spain
Self-Employed In Spain: Minimum Wage and Tax Obligations
Can You Hire Someone In Spain If You Are Self-Employed?
Over 400,000 Self-Employed In Spain Are Now Foreigners
Can I Deduct Utility Bills When Filing A Tax Return If I Work From Home?
September 25, 2023
September 22, 2023
September 12, 2023