"Can I deduct this?" is probably the most common question among Spanish freelancers. The short answer: only expenses tied to your activity, properly documented and recorded. The long answer, with the income tax and VAT nuances per category, is this guide.
The three requirements (always)
- Tied to the activity. A laptop for design work qualifies; Saturday dinner does not.
- Documentation. As a general rule, a full invoice in your name (with tax ID). A till receipt without your details carries little weight in an audit.
- Bookkeeping. The expense must appear in your expense and investment ledgers.
Indicative table by category
This mirrors the conservative criteria Aurio applies when analysing your expenses. "VAT" indicates how much of the input VAT is usually accepted; "Income tax", whether the expense reduces your profit.
| Expense | VAT | Income tax | Nuance |
|---|---|---|---|
| Professional software and subscriptions | 100 % | 100 % | When tied to the activity. |
| Social security contribution (RETA) | — | 100 % | No VAT; fully deductible for income tax. |
| Home-office utilities (power, water, internet) | Restrictive | ~30 % of the allocated share | Income tax: 30 % of the proportion of the home allocated to the activity (e.g. if 20 % of your home is allocated, you deduct 30 % of that 20 %). VAT criteria are very restrictive unless the invoice is tied to the activity. |
| Mixed-use vehicle | 50 % | 0 % | VAT: 50 % presumed allocation. Income tax: only with exclusive business use (hard to prove). |
| Meals and restaurants | 0 % | Only per-diems with requirements | Hospitality VAT is generally not deductible (art. 96 of the Spanish VAT Act). For income tax there are meal allowances with strict requirements: working day, electronic payment, hospitality establishment and daily caps. |
| Health insurance | — | With limits | Up to €500 per person per year (more with disability), as a reference. |
| Groceries and personal shopping | 0 % | 0 % | Personal expenses are never deductible. |
"Hard-to-justify" expenses
Under simplified direct assessment, you can additionally deduct a percentage of positive net profit for expenses that are hard to document: 5 % as a reference, capped at €2,000 per year (the percentage has changed between tax years; check the current one). Our form 130 calculator applies it automatically.
Investments are depreciated
A durable asset (a computer, furniture, machinery) is not deducted in full in the year of purchase: it is spread over its useful life following the AEAT coefficients. As a reference, low-value items (up to ~€300 per item, with a joint annual limit) can be deducted within the year. For everything else, use the depreciation calculator with the coefficient table.
Common mistakes
- Deducting 100 % of the car (rarely valid for income tax without exclusive use).
- Keeping till receipts without a tax ID instead of asking for a full invoice.
- Deducting home utilities without having declared the home partially allocated.
- Forgetting the RETA contribution — one of the few "free" deductions.
