What expenses an autónomo can deduct

The rule that decides everything

An expense is deductible when it meets four conditions at once. If one fails, it is not, however obvious it may seem:

1. It is linked to the activity. That is the substantive condition: the expense has to serve to earn the income.
2. It is evidenced with a full invoice. Not with a till receipt: with an invoice in your name and with your NIF.
3. It is recorded in your expense books, in the right period.
4. The payment can be evidenced, preferably by means that leave a trail.

The ones nobody argues about

These go in without more ado, as long as they are in your name and belong to the activity:

• Purchases of goods and raw materials, and changes in stock.
• Wages, salaries and Seguridad Social for your staff, and your own cuota de autónomos.
• The rent for the premises, with its withholding, and the utilities for those premises.
• Professional services: accountancy firm, lawyer, designer.
• Insurance: public liability and for the premises. Health insurance has its own annual limit per person.
• Advertising, training related to the activity and professional subscriptions.
• Depreciation of fixed assets: what you buy to use for years is not deducted in one go, it is spread. Details here.
• And, on estimación directa simplificada, an extra 5% for gastos de difícil justificación, capped at €2,000 a year, which does not have to be substantiated.

The five difficult cases

This is where inspections are lost. The five have something in common: they are expenses you would have anyway if you were not an autónomo.

1. The car

It is the most restrictive of all and it is worth knowing before you buy one. For IRPF purposes, a passenger car is only deductible if it is used exclusively in the activity. There is no halfway house: either it is exclusive, or nothing is deducted. There is a closed list of exceptions — taxis, driving schools, commercial agents, goods transport, sales representatives' vehicles — where mixed use is allowed.

For VAT purposes the rule is different and more generous: business use of 50% is presumed, unless you prove otherwise. That is why so many people believe the car «is half deductible»: it refers to VAT, not to IRPF.

2. The phone and the internet

Deductible for the share used in the activity. The problem is proving that share, and the clean way is to have a line in the business's name and use it only for that. With a single line and a made-up percentage, the deduction is arguable.

3. Working from home

There are two layers here and they are constantly mixed up:

• The ownership costs — IBI, service charges, insurance, depreciation — are deducted in proportion to the square metres of business use, which have to have been declared on the 036.
• Utilities — electricity, water, gas, internet — have had their own rule since 2018: you deduct 30% of the share corresponding to the square metres of business use, unless you prove a higher percentage.

An example: a 100 m² flat with a 20 m² office. The proportion is 20%, and of that proportion you deduct 30%. On a €100 electricity bill, that is €6. Not much, but it is what the rule says.

4. Meals

Since 2018 an autónomo can deduct their own subsistence expenses, with four strict conditions: that they are incurred in hospitality establishments, that they are paid by electronic means — card or transfer, never cash — that they are linked to the activity, and with these daily limits:

Limits set by article 9 of the IRPF Regulations, to which article 30 of the Act refers. And an important point: this is subsistence. A meal with a client is client entertainment, which goes down a different route and has its own limit.

5. Clothing

Only if it is specific work clothing: a uniform with the business's name, safety clothing, an overall. A suit is not deductible even if you only wear it to see clients, because it can be worn outside the activity. It is one of the cases where the rule is clearest and popular belief most firmly the opposite.

The ones that never are

• Fines and penalties, and surcharges for filing late.
• Donations and gifts, beyond client entertainment expenses within their limit.
• Expenses from earlier financial years that are already statute-barred.
• The input VAT you have already deducted on the 303: if you deduct it there, it is not an expense for IRPF.
• And any expense in somebody else's name, however much you paid for it yourself.

How to handle this without going mad

The difference between deducting what you are due and losing money is not in knowing the rules: it is in having the paperwork when the quarter comes round.

• Ask for an invoice there and then. Always. It is the only moment when it is easy.
• Photograph the receipt when you get it. An expense recorded three weeks later is an expense that probably never gets recorded.
• Pay with the business card. It leaves a trail and separates what is yours from what belongs to the activity, which is half the problem.
• Note the business-use percentage when the expense is a mixed one, and keep a record of why it is that one.

In Cairos an expense is recorded from your phone with the photo of the till receipt or the invoice attached, its category and its VAT, and from there the 303 and the 130 come out without touching it again. What there is not yet is a business-use percentage box: on a mixed expense you record the share you deduct and write in the notes where that split comes from.