Essential tax deductions with examples

Before we dive into specifics, let's clarify what makes an expense deductible. For an expense to be claimed against your income, it must be directly and exclusively related to your professional activity. This is the golden rule. You need to be able to prove to the Spanish tax agency (Hacienda) that the cost was necessary for you to do your job.

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Keeping organized records is not just good practice; it's a requirement. You'll need a proper invoice (a factura completa) for most deductions. A simple receipt or ticket usually isn't enough. An invoice must include your full name and tax number (NIF), the supplier's details, a description of the service or product, the date and a clear breakdown of the tax.

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Let's look at the main categories.

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Professional and operational expenses

This is a broad category that covers many of the day-to-day costs of running your business. These are expenses that don't fit neatly into other specific groups but are vital for your work.

Common examples include:

• Supplies and Materials: Anything you buy to produce your work, from design software to raw materials for a physical product.
• Management Fees: Costs for services from accountants, lawyers or other professionals who help you run your business.
• Memberships: Fees for professional associations or chambers of commerce related to your industry.
• Marketing and Advertising: Expenses for promoting your services, like online ads or printing business cards.

A key detail to remember involves invoices from other professionals. If you receive an invoice that includes a withholding tax (IRPF retention), you are responsible for paying that retained amount to the tax office on their behalf. This is done quarterly. Similarly, if you rent an office or workspace, the rent invoice will likely have a withholding tax that you must declare and pay.

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For all these costs, the rule is simple: get a full invoice and ensure the expense is 100% for your business.

Transportation expenses for work

As a freelancer, you might need to travel to meet clients, attend events or visit work sites. Many of these travel costs can be deducted, but the rules vary depending on the mode of transport.

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Public transport and ride-sharing

• Taxis and Ride-Sharing (Uber, Cabify): To deduct both VAT and the cost against your income tax, you must have a full invoice. Most ride-sharing apps make it easy to download these from your account. Without a full invoice, you can’t claim the VAT.
• Public Transit (Metro, Bus): Deducting expenses for a monthly travel pass is generally not possible because it's hard to prove it was used exclusively for work. For single tickets, getting a full invoice is often impractical.

Long-distance travel

• Flights and Trains: A ticket alone is not sufficient for a tax deduction. You need to request a full invoice from the airline (except Ryanair: flight ticket and bank statement proving purchase is sufficient) or train company. This is a crucial step many people miss. The invoice proves the expense is tied to your professional identity.

Parking and tolls

Costs for parking and road tolls incurred while traveling for work are deductible. As with other expenses, you need a full invoice to claim both the VAT and the income tax deduction. Always ask for an invoice at the parking garage or toll booth.

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Meal and subsistence allowances

You can deduct expenses for meals eaten out during your workday, but there are strict conditions and limits. This deduction is designed to cover costs when you can't eat at home because you are working.

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To deduct meal expenses, you must meet all of the following criteria:

1. The expense must be for a meal at a restaurant or hotel. Groceries from a supermarket or food delivery services do not count.
2. You must pay electronically. Use a debit or credit card linked to your business. Cash payments are not eligible for this deduction.
3. The meal must take place on a workday. You can't deduct meals from weekends or holidays unless you can prove you were working.
4. The location must be in a different municipality than your registered business address. This is to show you had to eat out due to work-related travel.
5. You need a full invoice. A simple payment receipt is not enough.

There are also daily limits on how much you can deduct. In Spain, the standard daily limit is €26.67. This amount increases if your work requires you to stay overnight. Keeping clear records, including the invoice and proof of electronic payment, is essential to justify these deductions.