As a general rule, an expense is allowed if it’s necessary to carry out the business or profession. We’ve gone into more detail below though as that can still be a little ambiguous.
This might seem patronising, particularly if you’re not new to business, but it’s worth emphasising: The golden rule is to make sure you collect and keep proper invoices, rather than just receipts.
Nothing can be claimed without a proper VAT invoice with your name, fiscal address and NIE on it.
A shop receipt or delivery note won’t do, even if it has your details and the full amount on it.
If you’re buying from a shop, you can usually ask at the till or take your till receipt to Customer Services and ask for a proper invoice (a factura) in your name. Many suppliers will keep your data on record once you’re set up in their system, to make it easier for future purchases.
Even if you aren’t sure whether something is allowable or not, it’s worth retaining an invoice and asking.
What can I actually deduct?
You can claim deductions on your tax return for the following expenses. We’ve included some additional details for the more controversial or complex categories.
- Social security contributions
- Accounting and tax services
- Trade or professional association fees or subscriptions
- Rent. If you have an office, shop or other premises then the rent is deductible, as long as you have a proper IVA invoice.
As a side note, the rent you pay will be subject to retention deductions, which have to be paid over to the Tax Office quarterly as advanced income tax payments on behalf of the landlord.
- If you have business premises, heating, electric, and water utilities can be claimed as well as insurance premiums.
- Office furniture and supplies
- Software and Internet services
- Advertising and promotional materials
- If you’ve purchased a car or van specifically for your business and use it exclusively for work, the cost is deductible. The VAT is reclaimable right away but the allowable expense for income tax purposes is spread over 8 years (12,5% of the cost is deducted every year). If you’re using your personal car for work purposes, the cost of the car is not generally allowable, even on a proportional basis.
- If you have a car or van exclusively for the business, as described above, maintenance and service costs are also claimable. If you use your personal car, they aren’t because it’s assumed they would have been incurred anyway for personal use.
- Petrol. Good news! Even if your car is not deemed exclusive for the business, as above, as long as you get a proper invoice for petrol you use during business hours, you can deduct the expense.
- Other travel expenses. These might include flights, trains, taxis, parking, etc. Travel expenses are allowed if you can show they were needed for business purposes, but as usual proper invoices in your name are required.
- Telephone and Internet. If you have a mobile, landline or internet connection primarily used for your Autonomo business, it’s generally allowable. If you have a private phone line and a private mobile besides your business one then the business costs will be allowable. As always, proper invoices in your name are required.
- Entertaining. Generally, business meals where clients or other business contacts are present would be allowable with a proper invoice.
- Daily expenses. As from 2018, the self-employed are allowed to claim up to €26,67 a day for direct expenses for food and drink, but only on working days. Payment must be made electronically and the food or beverages must have been purchased outside your municipality.
We go over all your deductible expenses when we set you up as a self-employed “Autonomo”, or when you start working with us if you switch from another accountant and have doubts.
Curious about how else we can help you? Check out our full overview of services for Autonomos.