A Spanish freelancer can deduct expenses for income tax and VAT when they are tied to the business, supported by an invoice and recorded in the books. The deduction varies by expense: professional software may reach 100%, mixed-use vehicles have different VAT and income-tax limits, and personal spending is never deductible. Business use, documentation and bookkeeping are the three basic requirements.
"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.
What makes an expense deductible in Spain?
It needs a business purpose, supporting documentation and an entry in the appropriate records. Meeting one of these requirements does not replace the other two.
- 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.
How do you separate net cost, VAT and the amount paid?
Take a software subscription used only for your business, invoiced at a net €100 plus €21 VAT. The payment is €121, but that does not mean €121 is an income-tax expense with a further €21 of deductible VAT. Assuming full deductibility, the €100 net cost reduces profit and the €21 VAT belongs in the VAT calculation. This fictional example separates the figures; it is not permission to deduct any subscription. Check the business purpose, invoice and applicable rules before using the amounts.
What if the invoice is missing or business use is unclear?
Keep the transaction in your record of money movements even if you cannot yet include it as a deductible expense. Request the missing document and check who it was issued to, which service it describes and which period it covers. A merchant name on a bank charge does not itself demonstrate business use. Changing its category to software, transport or utilities also proves nothing. Categories help organise records; documentation and business-use rules determine the tax treatment. Keep unresolved entries visible for follow-up.
How do you review a refund without duplicating an expense?
Find the original purchase and the corrective invoice or other relevant document. If you paid for a subscription and later received a refund, keeping only the charge would give an incomplete picture of its cost. Compare dates, amounts and descriptions before adjusting your records. The review should distinguish a refund from sales revenue. If the correction affects a period already filed, check with a professional how to regularise it: organising a transaction in Aurio does not amend a submitted return. Preserve both sides of the evidence.
What should you give your accountant?
Provide the records together with invoices, supporting documents and unresolved questions. Flag mixed use and missing documentation instead of treating every categorised item as deductible. Keep each original document and a reference that helps you find it. The aim is to reconstruct where every figure came from, without relying on a memory of why you marked an expense several months earlier. Aurio helps gather and calculate this information; filing and professional judgement remain outside the app. Ask for clarification where the facts are incomplete.
