From taxable base to compound interest: plain-language concepts connected to Aurio’s guides and calculators.
50 terms
A rule of thumb dividing net income among needs, wants, and saving or debt repayment.
It is a starting point, not a requirement or a universal allocation. It helps show whether spending reflects household priorities and can be adapted when housing, income or debt makes the split unrealistic. Consistent categories and trend reviews matter more than hitting an exact percentage.
A reference table grouping assets and setting coefficients and periods for calculating tax-allowable depreciation.
The tables are not identical for every method of determining taxable profit. The general and simplified tables group assets differently and establish the applicable straight-line depreciation range. Before selecting a row, the asset and the tax regime being used must be identified correctly.
An annual equivalent rate expressing effective yearly cost or return while accounting for payment frequency and specified fees or charges.
It helps compare offers with different structures by converting their cash flows to a common annual reference. It is not the same as the nominal rate and may not include every possible cost. When comparing products, check that the rates were calculated using equivalent assumptions.
A gain arising when an asset’s disposal value exceeds its tax-recognised acquisition cost.
The calculation uses the relevant valuation rules and costs attached to acquisition and disposal. FIFO may apply to homogeneous securities, and some losses can be temporarily disallowed after repurchase. A realised capital gain is different from an unsold increase in market value.
Growth in which accumulated interest is added to principal and may itself earn interest in later periods.
Its effect depends on starting capital, contributions, time, compounding frequency, costs and the return actually achieved. A simulation illustrates mathematical scenarios, not a promise. Small changes in the rate or time horizon can materially change a long-term result.
Digital assets whose sale, exchange, receipt or use can have different tax consequences depending on the transaction and taxpayer.
In general terms, disposing of cryptocurrency may create a capital gain or loss, including when exchanged for another token. Payments, staking, mining and other activities may fall into different categories. Valuation, acquisition history and fees are essential. Aurio does not cover every case and does not file returns.
The tax allocation of a long-lived asset’s cost across several years instead of deducting the whole amount when purchased.
It applies to assets and rights used over more than one period. The deductible charge depends on the asset type, permitted method, date placed in service and applicable tables. Land is not depreciated, and some assets or regimes have specific rules. Aurio produces informative straight-line schedules.
A distribution of profits or reserves by a company to its shareholders, generally treated as savings income.
It may be paid in cash or, depending on the arrangement, through shares or other forms with specific treatment. For Spanish income tax it is generally investment income and may be subject to withholding. It is different from selling shares, which creates a capital gain or loss.
A liquid reserve intended to cover unexpected costs or a temporary loss of income without immediately using debt.
Its size is often expressed in months of essential spending because every household has different needs. It should be kept separate from money for foreseeable goals and investments exposed to market fluctuations. The suitable amount depends on income stability, responsibilities and the ability to rebuild it.
An exchange-traded fund whose units trade on a market in a similar way to shares.
It may track an index or another strategy, but pricing and costs depend on the product. Under Spanish tax rules, its exchange-traded nature matters for rules including identification of securities and fund transfers. This definition explains the general mechanics and does not recommend any particular ETF.
The “first in, first out” method used to identify which units are treated as sold among homogeneous assets.
Where the same homogeneous security was bought in several lots, a sale is matched first with the earliest units acquired. That order determines tax cost and therefore the realised gain or loss. It is not an elective choice for each trade and requires records of dates, quantities, costs and fees.
A Spanish income tax instalment for certain activities under direct assessment, calculated from year-to-date figures.
It prepays part of the income tax attributable to a business activity. The calculation starts from cumulative income and deductible expenses, then subtracts withholdings and earlier instalments where applicable. Not every professional must file it. The annual income tax return later reconciles these advances with the taxpayer’s overall income.
Spain’s periodic VAT self-assessment, summarising items including accrued VAT and deductible input VAT.
This is the form many Spanish freelancers and businesses use to calculate their periodic VAT result. In the basic case, it starts with output VAT, includes any other VAT accrued as required and subtracts deductible input VAT. The result may be payable or carried forward, depending on the circumstances. Aurio provides an informative calculation only.
An information return for certain intra-EU transactions with businesses or professionals in other European Union Member States.
It reports intra-EU transactions by operator and period, including certain supplies, acquisitions or services. It is an information return coordinated with the VAT treatment of those transactions. Filing frequency and the obligation to file depend on the activity and the transactions actually carried out.
An annual information return summarising the year’s VAT transactions for taxpayers who are required to file it.
It consolidates VAT information for the year, usually from the periods reported on form 303. It is not another payment assessment, and some taxpayers are exempt from filing it. The exact obligation depends on the taxpayer’s circumstances and should be checked for each tax year.
An invoice containing the complete required identification and details for the issuer, customer, transaction, taxable amount, taxes and numbering.
It is the ordinary format where a simplified invoice is not permitted or where the customer and transaction need to be documented in detail. It must follow a consecutive series and numbering and include any statements required for the case. A full invoice supports evidence of an expense but does not make it deductible by itself.
The result of applying tax scales or rates to the relevant bases before certain later credits and adjustments.
For Spanish income tax it is obtained by applying the state and regional scales under the tax rules, including the personal and family allowance mechanism. It is not necessarily the final amount payable: tax credits, withholdings, advance payments and other components may still affect the assessment.
A code in Spain’s Economic Activities Tax schedule that classifies the activity reported by the taxpayer.
Selecting the code describes the activity carried out and may affect census and tax obligations. Being classified does not necessarily mean paying an IAE charge because exemptions exist. One person may need more than one code when carrying out different activities.
A tax incentive allowing certain assets to be depreciated outside the ordinary table schedule when its conditions are met.
It may allow a larger portion, or even the full cost, to be deducted earlier than under ordinary straight-line depreciation. It is not available for every asset: eligibility depends on the legal provision, the taxpayer and possible aggregate limits. It should be documented and checked before use.
Ranges of taxable income subject to progressive rates, with each rate applying only to the portion within its band.
Moving into a higher band does not make all income taxable at the highest rate. Spanish income tax combines state and regional scales and also distinguishes categories of income. Scales change by year and territory, so a table without a year and region is only an approximation.
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An advance income tax payment deducted by certain professionals on invoices and paid to the tax authority by the obliged customer.
Where applicable, withholding reduces the cash collected by the professional but not the gross business income. The customer retains that amount and pays it in under the professional’s name. It is later deducted from instalments or the annual return. Whether withholding applies and at what rate depends on the specific circumstances.
VAT paid on purchases and expenses. It reduces VAT payable only when it meets the requirements for tax deduction.
It appears on supplier invoices. Not all input VAT is deductible: the purchase must be connected with the business activity and meet the relevant substantive and documentary requirements. Only the deductible portion is subtracted on form 303; foreign VAT and certain transactions receive different treatment.
Spain’s personal, progressive income tax on resident individuals, including income from self-employment and business activities.
Spanish personal income tax combines different sources of income and applies rules, allowances, reductions, tax credits and scales that depend on the tax year and partly on the autonomous region. Withholdings and instalments are advance payments: the final position is reconciled in the annual return.
A new tangible fixed asset whose unit cost may qualify for immediate depreciation when the tax requirements and limits are met.
It does not mean that every inexpensive purchase is automatically deductible. The rules impose conditions on the type of asset, whether it is new, its unit cost and the aggregate limit for the year. Where available, the relief allows faster depreciation. Aurio’s guide contains the figures verified in its tax engine.
The maximum number of years allowed by the table to complete straight-line depreciation for an asset category.
Together with the maximum coefficient, it defines the ordinary straight-line depreciation range. A longer period means a smaller annual charge. Aurio’s current engine uses reference coefficients to build schedules, but the validity of a chosen percentage must be checked against the applicable table and regime.
The maximum annual straight-line depreciation percentage assigned to an asset category by the applicable tax table.
Using that percentage allocates the depreciable cost at the fastest rate allowed by the relevant row, unless another incentive or specific rule applies. The coefficient depends on the asset type and the table used. It should not be guessed: incorrect classification changes the annual deduction.
The tax result of a business activity after subtracting deductible expenses and applying the relevant adjustments to income.
It is not necessarily the same as a bank balance or accounting profit. Under direct assessment, it is obtained by applying tax rules to income, expenses and items such as depreciation. It feeds calculations including income tax instalments and can affect other obligations of a freelancer.
The value of a person’s assets minus their debts and other liabilities at a particular date.
It summarises financial position better than a bank balance because it includes what is owned and what is owed. To compare it over time, assets should be valued consistently and debts recorded at outstanding principal. It is a tracking measure, not an investment recommendation.
The stated rate agreed for paying or charging interest on capital, which does not by itself show the total effective cost.
It states the nominal percentage applied to principal over a period but does not automatically account for payment frequency or fees. Two loans with the same nominal rate can therefore have different effective costs. Comparing offers usually also requires the effective annual rate and total cost.
VAT that a business or freelancer charges customers on issued invoices and that forms part of VAT accrued for the period.
This is the VAT amount attached to taxable sales and services. Although it is collected with the invoice price, it is not treated as available income: it is compared with deductible input VAT when working out form 303. Some transactions follow special rules and fall outside this basic explanation.
The portion of income intended to cover basic needs that receives specific treatment in the Spanish income tax calculation.
It does not work simply as an expense subtracted from income. In the Spanish calculation, the scale is also applied to the personal and family allowance and that tax amount is then deducted under the statutory mechanism. The allowance depends on personal circumstances and the tax year.
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The common name for a reduced contribution available to newly registered self-employed workers who meet the legal conditions.
It is a contribution reduction, not a general exemption or a permanent amount. Its amount, duration and any extension depend on the rules and the worker’s circumstances. Aurio’s engine does not invent a figure when the legal source for the year does not set one clearly, so the specific year should be checked.
Spain’s Special Social Security Scheme for Self-Employed Workers, covering people who meet its inclusion conditions.
Contributions are linked to assessable net income and the contribution base within the applicable band, subject to special rules. A provisional base may apply during the year, followed by a later reconciliation. Aurio provides an informative estimate based on the year supported by its engine.
A special VAT regime for certain individual retailers in which the supplier charges an additional surcharge.
It simplifies VAT obligations for the retailer: the supplier charges both VAT and the relevant surcharge and pays them to the tax authority. The retailer normally does not deduct that VAT or file an ordinary return for those transactions, although other obligations may remain. Aurio’s basic calculator does not model this regime.
The Social Security contribution paid by a self-employed worker, calculated from a contribution base and the applicable rates.
The ordinary contribution applies several components to a base selected within the relevant band, subject to limits and possible special cases. It is neither a tax nor the same as net taxable profit. Tables and rates change by year, so every figure should be dated and verified.
A person who habitually carries out an economic activity on their own account and assumes the related tax and Social Security obligations.
The term covers different professional and business situations. Registration, invoicing, record keeping, tax filing and Social Security contributions are separate obligations that depend on the activity and personal circumstances. Aurio helps explain and estimate some figures, but it does not register users or file tax forms.
A method for determining profit from certain Spanish business activities using simplified rules compared with normal direct assessment.
It calculates taxable profit from income and tax-deductible expenses, with its own features, including a specific depreciation table and treatment of certain expenses. It is different from objective assessment. Whether it applies depends on the taxpayer’s eligibility and tax elections.
A billing document with fewer mandatory details than a full invoice, permitted only in specified circumstances.
It replaced the former receipt but cannot be used freely for every transaction. It must include its own numbering, date, issuer identification, description, consideration and required tax details. To exercise certain deduction rights, the customer’s identification and a separate tax amount may need to be added.
A periodic advance tax payment that is later credited against the final assessment for the tax year.
For Spanish freelancers, it commonly refers to the income tax advance calculated on form 130 for certain direct-assessment activities. It is not an additional tax: it reduces the amount outstanding on the annual return. Its cumulative calculation prevents each quarter from being treated as a separate tax year.
The moment a tax obligation to report a transaction arises, even if payment or collection happens later.
The tax point determines the tax period to which a transaction belongs. It does not always match the invoice date, bank movement or due date. Rules vary by tax and transaction type, and special regimes such as cash accounting exist. Using the wrong date shifts amounts between periods.
Notification to the Spanish Tax Agency that an activity is starting, including its relevant tax details, obligations and elections.
Tax registration places the taxpayer on the census and reports information such as the activity, premises, VAT regimes or withholding obligations. Available forms and procedures may change, so the correct route should be checked when registering. It is separate from Social Security registration.
An expense that may reduce a taxable base or profit because it meets the relevant business-use, evidence, recording and other requirements.
A genuine payment is not automatically deductible. It must be connected with the business, supported by valid evidence, recorded correctly and comply with the limits or exclusions for each tax. The same expense can receive different treatment for income tax and VAT, so the two analyses should be kept separate.
The economic amount to which a tax rate is applied before calculating the resulting tax charge.
On a VAT invoice it generally starts from the consideration before tax, with any adjustments required by the rules. For income tax, the base is constructed by combining and adjusting income according to its type. The expression has a common role, but its precise calculation differs between taxes.
Replacing identifying data with a stable token so records can be linked without exposing the original value.
In Aurio, data such as counterparties, merchants or sensitive identifiers is transformed before any cloud or AI use. The token preserves the ability to recognise that two records refer to the same entity while avoiding transmission of the identifying value in plain text. Tokenisation is not encryption; the two safeguards complement each other.
A non-reversible representation used to link an account without storing or sharing the full IBAN in plain text.
Aurio retains only the minimum information needed to recognise an account: a stable token and the final digits that help the user identify it. The full IBAN is not sent to AI. Tokenisation reduces exposure, while encryption protects other information that must be retained.
The date goods are supplied or services performed when it differs from the date the invoice is issued.
It documents when the transaction actually occurred and may be relevant to the tax point and reporting period. It must appear on the invoice when required by the rules. It should not automatically be replaced with the payment date or the date a bank movement was imported.
An indirect tax on consumption. A freelancer usually charges it on sales and may deduct eligible VAT paid on business purchases.
Value added tax is included on many invoices for goods and services. For an activity under the standard regime, the return compares VAT accrued on income with eligible input VAT. Aurio estimates that difference for information only; it does not file returns or replace a review of the rules that apply to the activity.
A special VAT regime that defers, within limits, accrual and deduction until invoices are collected or paid.
Unlike ordinary accrual accounting, it links VAT timing to cash receipts and payments, but it has formal requirements and mandatory cut-off rules. It also affects recipients of invoices covered by the scheme. Aurio’s basic calculator does not model this special treatment.
A rule limiting input VAT deduction when a business carries out transactions both with and without a right to deduct.
The pro rata determines how much common input VAT can be deducted when expenses support activities with different deduction rights. It may involve provisional calculations and a later adjustment. Aurio’s basic calculator does not cover this special regime, so the percentage should not be inferred automatically.
A mode for invoicing software that sends billing records to the Spanish Tax Agency under the regulatory requirements.
It forms part of Spain’s invoicing-system rules and aims to ensure the integrity, preservation, traceability and immutability of records. It does not make Aurio invoicing software: Aurio is informational, does not issue invoices and does not send records to the tax authority. Dates and obligations must be checked against current rules.
Import your statements or add your invoices and keep your quarterly VAT, estimated form 130 and depreciation always up to date. Informative, private and with your data encrypted.
Get started for freeIndicative, informational calculations: they are not tax advice and Aurio never files anything with the Spanish Tax Agency (AEAT). Check amounts and deadlines against current regulations or with your advisor.
Informational and indicative content: it is not financial advice or an investment recommendation. We explain how the numbers work so you can decide for yourself; for important decisions, consult a professional.
