Managing Expenses and Deductions as an Autónomo
Maximize your tax savings by properly tracking and deducting business expenses
Keeping track of your business expenses is crucial for reducing your taxable income and reclaiming IVA (VAT) on purchases. As an autónomo in Spain, understanding which costs you can deduct—and how to properly document and record them—can save you significant money on both your IRPF (income tax) and IVA returns.
This guide provides practical advice on which expenses are deductible, the differences between IVA and IRPF deductions, and best practices for recordkeeping. By following these guidelines, you'll be better prepared for quarterly and annual filings and ensure you remain compliant with Spanish tax laws.
Tip
1. Why Keep Track of Expenses?
Lowering Your Tax Bill
Every deductible expense reduces your net taxable income, meaning you pay less IRPF. Similarly, if you pay IVA on business purchases, you can reclaim it as a credit on your IVA returns.
Legal Compliance
Spanish law requires that you keep receipts and invoices for all deductible expenses for at least 4 years. This documentation is essential in case of an audit.
Organizational Benefits
A systematic record of your expenses helps you track cash flow, manage your budget, and easily complete your quarterly Modelo 130 (income tax) and Modelo 303 (IVA) filings.
Best Practices
Set up a dedicated system—whether a spreadsheet or accounting software—to log every expense as soon as it occurs.
Save both digital copies (scanned PDFs) and physical copies whenever possible.
2. Deductible Expenses
Here are common categories of expenses that you can typically deduct as an autónomo:
Home Office Expenses
What Qualifies: If you use part of your home exclusively for business, you can deduct a portion of your rent, utilities, and maintenance expenses.
How to Calculate: Typically based on the proportion of your home's square footage dedicated to business use.
Equipment and Supplies
Items: Computers, phones, office furniture, software subscriptions, and other tools that are directly related to your work.
Deduction Rules: You may be able to deduct the full cost or depreciate expensive items over several years.
Professional Services
Examples: Fees for accounting, legal advice, or consulting services that support your business operations.
Travel and Transportation
Allowable Costs: Business-related travel expenses, including mileage for using a vehicle, public transportation, lodging, and meals (subject to limits).
Vehicle Expenses: For vehicles used both personally and for business, only 50% of the IVA paid is generally deductible. If the vehicle is used exclusively for business, you may deduct 100% of the IVA.
Communication Costs
Examples: Internet, telephone bills, and mobile phone expenses if they are used for work.
Other Expenses
Include: Marketing, training courses, insurance premiums, and other costs directly related to your business activities.
Note
3. IVA vs. IRPF Deductions
IVA (VAT) Deductions
What It Means: The IVA you pay on business expenses is generally deductible (reclaimable) on your IVA return (Modelo 303).
Key Point: For mixed-use items like vehicles, only 50% of the IVA is deductible unless the vehicle is used exclusively for business.
Recordkeeping: Ensure your invoices clearly show the IVA amounts paid so you can match them against your IVA returns.
IRPF (Income Tax) Deductions
How They Work: Deductible expenses reduce your net income, which in turn lowers the IRPF you owe.
Calculation: The net expense (the cost after subtracting any IVA reclaimable) is what lowers your taxable income.
Important Distinction: While IVA deductions give you a credit or refund, IRPF deductions directly reduce your income tax liability.
4. Documentation Requirements
To ensure your deductions are accepted by Hacienda, keep the following:
Invoices and Receipts
Originals (or clear, legible digital copies) that include your name/NIE, supplier VAT details, and a detailed breakdown of costs.
Proof of Payment
Bank statements or payment receipts that show when expenses were paid.
Record Retention
Maintain these documents for at least 4 years.
Organization Tips
Use a consistent file naming system and digital backups.
Regularly update your records and cross-check with your accounting ledger.
5. Recording Expenses
Methods for Keeping Track
Spreadsheets
Set up columns for date, vendor, description, net amount, IVA paid, IRPF adjustments, and total expense.
Invoicing/Accounting Software
While we're not recommending a third‑party tool right now, sign up for our upcoming automated tax assistant to eventually streamline this process!
Best Practices
Regular Updates
Update your expense log weekly or monthly.
Reconciliation
Periodically reconcile your expense records with your bank statements and invoices.
6. Place in the Process
Managing expenses and deductions is an ongoing task from the moment you start working as an autónomo. Proper expense tracking is critical:
Before Filing Taxes
Record every expense accurately to make quarterly Modelo 303 (IVA) and Modelo 130 (IRPF) filings smoother.
For Compliance
Good recordkeeping ensures you're ready for any tax audits and that you maximize your deductions.
Building a Habit
Starting early and staying organized saves time and money over the long run.
7. Final Thoughts and Best Practices
Be Consistent
Dedicate time each week to update your records.
Keep Everything
Don't throw away receipts; every invoice matters.
Review Regularly
Check that your records match your accounting system before each quarterly filing.
Prepare for Growth
As your business grows, your expense tracking system should evolve. Our upcoming automated tax assistant will help you manage this effortlessly—so join our waitlist today!
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Subscribe to our newsletter for Spanish tax tips, updates, and more.
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Subscribe to our newsletter for Spanish tax tips, updates, and more.