Tax Find out what deductible expenses are and what you can deduct on your personal income tax returns in 2022.
We explain the requirements to meet, what can affect your activity and what cannot, the detailed list of items of deductible expenses for the self-employed contemplated by the Treasury, the criteria applied in 2022, and the characteristics of those items that present the greatest problems, such as the premises in their own home, the private vehicle, the mobile phone, travel, and clothing.
To a large extent, they coincide with deductible expenses in corporate income tax, although there are some differences.
- What are income tax deductible expenses
- Requirements for an expense to be deductible
- What are the deductible expenses in the IRPF
- Self-employed expenses: special deductions
- Deductible expenses without an invoice
- Non-deductible tax expenses
1. What are income tax deductible expenses
Do you want to know what they are? Here we tell you:
2. Requirements for an expense to be deductible
- They must be conveniently justified by the corresponding invoices. Sometimes they can be worth receipts or simplified invoices as long as all your tax data appears.
Of these three criteria, the most peculiar is the first, since for certain items of expense the self-employed person must demonstrate that they correspond to their professional activity and not to their private life.
And it is not convenient that you abuse by inflating your expenses because in case they inspect you you will not be able to defend it and it will be worse.
As for the second requirement, it is the one behind that healthy habit of the self-employed of asking for an invoice for everything.
With regard to tickets or simplified invoices, they are not deductible as they do not allow identifying who has made the expense.
So even if it is a bit cumbersome, get used to asking for a bill at restaurants, gas stations, taxis, or supermarkets (if what you buy is related to the business, of course).
3. What are the deductible expenses in the IRPF
- Wages and salaries: payments to workers for salaries, extraordinary payments, allowances and allowances for travel expenses, compensation in kind, prizes, and compensation.
- Self-employed fee: as a necessary expense for the exercise of economic activity, the self-employed fee is deductible in the personal income tax return.
- Other personnel expenses: includes training expenses, compensation for termination of the contract, personnel accident insurance, gifts (eg Christmas baskets), and contributions to pension plans or company social security plans.
- Leases and canons: rents, canons, technical assistance, financial leasing quotas (leasing) that do not have land, plots, or other non-depreciable assets as their object.
- Domestic supplies: the self-employed worker who works from home and has so notified the Treasury in his census declaration (model 037 or 036) can take advantage of a 30% deduction for supplies of water, electricity, etc. of the proportional part of the home destined for the activity.
- So it is not a full deduction. This expense is tax-deductible since 2018 with the entry into force of the Law on Urgent Reforms of Self-Employment.
Reforms of Self-Employment
- Repairs and conservation: maintenance expenses, spare parts, and adaptation of material goods.
- Independent professional services: fees from economists, lawyers, auditors, and notaries, as well as commissions from commercial agents or independent mediators.
- Expenses for maintenance allowances: the self-employed person may deduct 26.67 euros per day (48 euros abroad) when he does not spend the night and 53.34 euros per day when he spends the night in Spain and 91.35 euros abroad.
- Other external services: research and development expenses, transportation, insurance premiums, banking services, advertising, public relations, electricity, water and telephone supplies, and other office expenses not included in the previous items.
- Fiscally deductible taxes: the real estate tax (IBI), the tax on economic activities (IAE), and other non-state taxes and surcharges and state fees, surcharges, and contributions. Penalties and surcharges for urgency or for submitting Treasury declarations after the deadline will not be deductible.
- Input VAT: it will only be deductible when it is not deductible through the VAT declaration, that is, they do not present quarterly VAT declarations and therefore do not have the right to deduct the input taxes.
- What happens in activities exempt from VAT (eg medicine) and in activities under some special regimes (special equivalence surcharge regime and special regime for agriculture, livestock, and fishing)?
- Financial expenses: interest on loans and credits, bill discount expenses, surcharges for deferred payment of debts, late-payment interest on deferred payments to the Treasury.
- Depreciation: the amount of impairment or depreciation of investments considered as tangible or intangible fixed assets assigned to the activity. In normal direct estimation, it can be more complex as there are assumptions of freedom of depreciation.
If you find this tax maelstrom complex, remember that the Infoautónomos online agency manages the taxation of your business so that you can dedicate yourself entirely to it.
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Tax benefits (accelerated depreciation) will be applicable for small companies from corporate tax.
4. Self-employed expenses: “special” deductions
Items on which the Treasury has been increasingly demanding in terms of the requirements to justify the impact on the activity.
Specifically, we are going to delve into the operation of the following deductible expenses:
- Local or office, for rent or own home
- Vehicle and associated expenses: gasoline, maintenance, insurance
- Mobile phone
- Travel expenses and allowances: meals, dinners, plane tickets, taxis
- locker room expenses
Specific premises or offices for the activity
You will be able to deduct all the expenses associated with that place: rent, reforms, maintenance, electricity, water, telephone, and expenses associated with the mortgage or insurance.
You can also amortize the investment made if you had bought it.
Local or office in a house
And this is done by very few people, largely because of the hassle it entails for the owner. This is because the rental of business premises is subject to VAT.
And one more thing, the Treasury is quite picky about these issues and usually asks for separate water or electricity meters for the “professional” and the “private” part of the home.
The Treasury will allow you the deduction as long as you have two different telephone lines, one for personal use and the other for professional use.
Only then can you justify that the expense is related to the activity.
Private vehicle and associated expenses (maintenance, gasoline, insurance…)
If you want to delve into this topic, we have prepared a specific article on how to deduct car expenses.
Travel and representation expenses
You will be able to deduct both travel expenses on public transport (plane and train, but also taxis) as well as hotel stays and living expenses (meals, dinners).
On the other hand, spending on work meals is one of the most controversial, you should limit it to the logic of your activity and always write down in an agenda or on the back of the invoice with whom you had the meal.
Work trips outside where you live, it does not pose problems, but be careful because the Treasury does not allow deductions for per diems if the expense has been made in the municipality where you live.
locker room expenses
The case of the artists admits a more flexible interpretation.
5. Deductible expenses without an invoice
The personal income tax regulations regarding deductions are more permissive than the VAT regulations, which always oblige the self-employed person to present the regulatory invoice. There is a series of expenses that do not require an invoice for their deduction in personal income tax.
- Insurance policies.
- Salaries and social security.
- Self-employed quota.
- Banking expenses.
- Expenses of commercial contracts ( transfers of premises, rental bonds, or deeds of the constitution of a company).
- Municipal taxes and fees (IBI, garbage rate).
6. Fiscally non-deductible expenses
- Fines and penalties, including surcharges for submitting tax returns after the deadline.
- Donations and liberalities.
- Game losses.
- Expenses made with persons or entities resident in tax havens.
- Input VAT that is deductible in the VAT return.