Deductible expenses for Spanish freelancers: what you can (and can’t) write off

Deducting well is the fastest legal way to lower your tax bill: every valid expense reduces your income-tax base and often the VAT you bear too. The problem is that the line between deductible and rejectable is not always intuitive. Let’s break it down.

The golden rule: business use

An expense is deductible when it is necessary for your activity and you can prove it. In practice the tax agency asks for three things: the expense must be linked to your economic activity, properly recorded, and backed by evidence. And watch the evidence: deducting VAT always requires a full invoice issued to you, with your tax ID — a simple receipt does not count, and for income tax it is questionable at best.

Income tax and VAT play by different rules

This is the nuance that causes the most confusion. The same expense can be deductible in one tax and not in the other:

• For income tax (IRPF) you deduct the expense amount (excluding VAT) as a cost of your activity, lowering the net profit you are taxed on.
• For VAT you only recover the input tax when the expense is used for the activity and you hold a full invoice.
• Some expenses are deductible for income tax but not VAT (certain insurance or exempt services), and partial business use complicates both.

Common examples, case by case

• Home office: if you work from home, you can deduct utilities (electricity, water, internet) at 30% of the share of square metres used for the activity, as declared in your census registration.
• Vehicle: for income tax it is only fully deductible when used exclusively for the activity; for VAT the general rule presumes 50% business use, except for cases like carriers or sales agents.
• Software and subscriptions: work tools, hosting, licences and cloud services are 100% deductible when used for the activity.
• Autónomo Social Security contributions: deductible as an expense for income tax.
• Client meals: deductible within limits when paid electronically, linked to the activity, and backed by an invoice.

The mistakes that cost the most

• Deducting with receipts instead of full invoices: worthless for VAT and easily rejected for income tax.
• Mixing personal and business spending without criteria: Saturday lunch with friends does not become deductible because you paid with the business card.
• Forgetting small recurring expenses: subscriptions, bank fees and domains add up to hundreds of euros a year.
• Not keeping proof of payment: an invoice with no bank trail is much weaker under inspection.

A deductible expense is not a favour from the tax agency: it is part of your margin. Every lost invoice is money you overpay.

The key is not knowing more — it is recording better

Almost nobody loses deductions because they ignored the rule; they lose them because the expense stayed in an undownloaded email or on a crumpled receipt. A system that captures every invoice the moment it arrives — and classifies it against your activity profile — is worth more than memorising the law.