Deductible expenses for autónomos: what you can really deduct

The three requirements Hacienda always checks

For an expense to reduce your IRPF (Spanish personal income tax) and for its IVA (VAT) to be deductible, three conditions must hold at the same time. If any of them fails, the whole deduction falls, however real the expense is.

• Linked to the activity. The expense must be tied to your business and necessary to earn your income. The laptop you work on qualifies; the streaming subscription you watch on the sofa does not.
• Backed by a full invoice in your name with your NIF. As a general rule, the document the law accepts as proof for a deduction is an invoice that meets the Spanish invoicing regulation (Royal Decree 1619/2012): your name, your NIF (tax ID) and the VAT itemised. A till receipt is not that document.
• Recorded in your books. The expense must be entered in your register of purchases and expenses or of received invoices. The income tax regulation presumes that whatever is missing from your records is not used for the activity, so an unrecorded expense is a lost expense.

Add conservation to the list: keep every invoice for at least the four-year limitation period, because Hacienda (the Spanish tax office) can ask for it in any review. Our glossary entry on the libro registro de IVA (the VAT register book) explains what these registers must contain and how to keep them current.

Receipt or invoice: the difference that decides the deduction

The restaurant or petrol station receipt is, in legal terms, a factura simplificada (simplified invoice) without the recipient's details. That is exactly the problem: the VAT law only allows the deduction when you hold a valid supporting document, and that document is the invoice that meets every regulatory requirement, with your name and your NIF on it. On top of that, you can never deduct more VAT than the amount expressly itemised on the document: if the receipt does not break out the VAT, there is nothing to deduct.

The fix is to always ask for a factura completa (full invoice), or at least to have your NIF, your address and the itemised VAT added to the receipt: the invoicing regulation obliges the issuer to do it if you ask. With those details, the "qualified" simplified invoice does support the deduction.

What about the expense itself in IRPF? A receipt without your details does not identify who paid, so defending it in a review is an uphill battle: it may survive alongside other evidence, such as payment with your card and a clear link to the activity, but the tax office rejects it often. The practical rule: without an invoice in your name, treat the expense as non-deductible.

kontora classifies each expense as you record it, tells receipts and invoices apart and separates the deductible VAT from the rest, so the draft of your modelo 303 (the periodic VAT return) only carries the amounts you can genuinely deduct; filing remains up to you.

The clear-cut expenses: the list nobody argues about

With an invoice in your name and an obvious link to your activity, these expenses are deducted without a fight:

• Your social security contribution (RETA). Fully deductible. It is the exception to the invoice rule: social security does not issue invoices and the bank charge is sufficient proof.
• Software and tools. Programs, professional subscriptions, hosting, domain, computer equipment.
• Advisory and accounting services. The fees of whoever handles your taxes or advises you legally.
• Materials. Office supplies, consumables and whatever is specific to your trade.
• Advertising. Ads, website, campaigns and anything aimed at winning clients.
• Training related to your activity. Courses and books connected to what you do. A pastry course while working as a programmer does not qualify.
• Health insurance. With its own rule: health premiums for you, your spouse and children under 25 living with you, up to 500 euros per person per year (1,500 with a disability), under article 30.2.5.ª of the income tax law.

There is also an automatic cushion: under estimación directa simplificada (the simplified direct assessment regime most freelancers use), an extra 5% is subtracted from your positive net income for provisions and hard-to-justify expenses, capped at 2,000 euros per year. It requires no receipts at all: the tax calculation applies it by itself.

Working from home: the real rule for utilities

The usual myth here is "I deduct half my electricity bill". The real rule sits in article 30.2.5.ª b) of the Spanish income tax law: if you use part of your main home for the activity, you can deduct home utilities (water, gas, electricity, phone and internet) in the percentage that results from applying 30% to the proportion between the square metres used for the activity and the home's total surface, unless you can prove a higher or lower percentage.

An example shows how modest that is: a 20 m² office in a 100 m² flat. The business proportion is 20%, and 30% of that 20% is 6% of every electricity, water or internet bill. Not half: 6%.

Two practical conditions: declare the square metres used for the activity in your census registration (form 036 or 037), so the partial business use of your home is on record with the tax office, and keep the utility invoices in your name. Costs tied to owning the home, such as the local property tax (IBI) or community fees, follow a different logic: they are deducted according to the proportion of the home used for the activity, without the extra 30% factor, because that part of the home is treated as a business asset as such.

Work meals and subsistence allowances: the real limits

Your own meal costs are deductible, but with three requirements set by the income tax law and daily limits set by its regulation, all of them verifiable in the BOE:

• They must occur in the course of the activity: lunch on a working day, not Saturday dinner.
• They must be in restaurant and hospitality establishments: a restaurant or cafe qualifies; the supermarket run does not.
• They must be paid electronically: card or mobile payment. Pay in cash and the deduction is gone.

The limits are the same ones that govern employees' subsistence allowances, the dietas (article 9 of the income tax regulation): 26.67 euros per day in Spain and 48.08 euros abroad. If the trip includes an overnight stay outside your municipality, they rise to 53.34 and 91.35 euros respectively. Anything above those amounts is not deductible, invoice or no invoice.

In practice the tax office also weighs plausibility: a working day, a place connected to your work or your clients, and a reasonable frequency. And mind the VAT: hospitality VAT is only deductible if the expense itself is deductible for income tax and you hold a full invoice; VAT on client entertainment is never deductible, and the expense itself has its own income tax cap, as we will see among the myths.

The car: 50% for VAT, almost never for income tax

The car is the most misunderstood grey area because VAT and income tax follow different, even opposite, rules.

For IVA, article 95.Tres of the Spanish VAT law presumes that cars, mopeds and motorcycles are used for the activity at 50%: you can deduct half the VAT on the purchase without proving anything, and the same rule extends to fuel, repairs, tolls, parking and spare parts. Deducting more than 50% requires proving a higher degree of business use, and the law itself makes clear that simply booking the car in your accounts is not sufficient proof. There is a closed list with a 100% presumption: mixed-use vehicles used for goods transport, passenger transport, driving schools and the travel of sales representatives or commercial agents, among others.

For IRPF the rule is much harsher: the regulation only accepts a car as a business asset if it is used exclusively for the activity. A car is indivisible, partial use cannot be split, and the tolerance for private use "on non-working days or hours" that applies to other assets is expressly excluded for cars. Translation: if you also drive it at the weekend, neither depreciation nor fuel nor insurance is deductible in your income tax. The exceptions are the same sectors as the VAT list, such as commercial agents or transport businesses.

Costly myths and what happens if Hacienda strikes an expense

Three myths that end in tax assessments:

• "Everything I pay with the business card is deductible." No. The card is just a means of payment: it does not turn a personal expense into a business one and it does not replace the invoice. Hacienda looks at the nature of the expense, not at the plastic used to pay it.
• "Client meals are deductible without limit." No. VAT on client entertainment is never deductible (article 96 of the VAT law). For income tax, the expense can be deductible if you prove its link to the activity, and even then it is capped: at 1% of your year's net turnover (article 15.e of the Spanish corporate income tax law, which reaches autónomos through article 28 of the income tax law). It is also among the most scrutinised items in any review: with whom, what for, and with a full invoice.
• "If Hacienda says nothing, the expense was accepted." No. Filing your return validates nothing: the administration has four years to review it.

And if a review strikes one of your expenses? The tax office issues an assessment: you pay back the tax you failed to pay plus late-payment interest and, depending on the case, a penalty is added if it finds negligence or concealment. If you spot the mistake yourself before any notice arrives, filing a corrected return on your own initiative replaces the penalty with a much softer surcharge. The best defence is, as ever, boring: full invoices, expenses coherent with your activity and books kept up to date.

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