How to reduce your self-employed taxes in Spain?

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Spain self-employed tax can feel overwhelming, especially with the many rules and deductible expenses.

To simplify the process, we’ve created this guide to help you understand how to become self-employed in Spain, reduce your Spain self-employed tax and manage your deductions effectively.

What expenses can self-employed individuals deduct in Spain?

Here’s a clear breakdown of deductible expenses for autónomos (self-employed individuals):

1. Operational Costs

  • Purchases of raw materials or goods used in your business.

2. Employee Costs

  • Salaries, bonuses, daily expenses, training costs, retirement contributions, and accident insurance.

3. Social Security Contributions

  • Your monthly social security payments are fully deductible.

4. Rent and Royalties

  • Costs for renting property or equipment, as well as fees for patents, trademarks, and intellectual property.

5. Repairs and Maintenance

  • Necessary expenses for maintaining business assets, excluding improvements or expansions.

6. Professional Services

  • Payments to accountants, lawyers, auditors, or other independent professionals.

7. External Services

  • Costs for transportation, insurance, advertising, and banking services (capped at 1% of turnover).

8. Taxes

  • Certain local taxes, such as Economic Activities Tax (IAE) or Property Tax (IBI), can be deducted if related to your activity.

9. Financial and Depreciation Costs

  • Interest on loans or depreciation of business assets due to use, wear, or obsolescence.

10. Work-from-Home Expenses

  • If you work from home, you can deduct up to 30% of household utility bills (water, electricity, internet) for the space allocated to your business.

11. Health Insurance

  • Premiums for you, your spouse, and dependents under 25 living with you are deductible, with a limit of €500 per person (€1,500 for those with disabilities).

12. Travel and Meal Allowances

  • Meal expenses are up to €26.67/day (€48 abroad) and overnight stays are up to €53.34/day (€91.35 abroad), provided they are justified with receipts and paid electronically.

13. Business Phone and Uniforms

  • Mobile phone bills and clothing required for your business (e.g., uniforms with company logos).

14. Fuel and Vehicle Costs

  • Full deduction for those using vehicles for business activities like transport, delivery, or driver training. For others, only 50% VAT is deductible.

How to Claim These Deductions

To effectively manage your self-employment taxes in Spain, it’s essential to keep proper records by maintaining invoices and receipts for all business-related expenses.

Additionally, separating business and personal finances by using a dedicated bank account ensures clarity and avoids complications during tax reporting.

Lastly, familiarize yourself with the correct tax forms, such as Modelos 036 or 037, to accurately report your expenses and comply with legal requirements.

How to Reduce Your Self-Employment Tax in Spain

Beyond deductions, Spain offers opportunities to reduce your tax burden through specific strategies:

Take advantage of expat tax laws, such as the Beckham Law, which offers eligible individuals a flat tax rate.

Additionally, consider a strategic business setup by structuring your income and expenses to maximize deductions and reduce taxable income.

Finally, leverage VAT deductions, as many business expenses qualify for partial or full VAT recovery, helping to lower your overall costs.

How We Can Help

Managing your Spain self-employed tax can be complex, but our law firm specialises in guiding autónomos through the process.

Our services include:

  • Identifying all deductible expenses for your business.
  • Advising on how to reduce Spain self-employed tax using expat tax laws.
  • Handling administrative and legal procedures to avoid costly mistakes.

Focus on growing your business while we take care of the tax complexities.

Contact our English-speaking law firm today to learn how we can help you save on Spanish taxes and simplify your self-employment journey in Spain!

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