Which business expenses you can deduct

Key rules

• Three tests: An expense must be linked to your activity, backed by a proper document and entered in your books.
• Your quota: Your own autónomo Social Security quota is a deductible expense.
• Simplified allowance: In simplified direct estimation, a 5% allowance for hard-to-justify expenses applies, capped at 2,000 euros a year.
• Burden of proof: You must prove the link between an expense and your activity, not the tax office.
• Módulos: Expense-by-expense deductions do not apply if you are in módulos.

The three tests an expense must pass

An expense is deductible when it passes all three tests. Fail one and an inspector can reject it.

1. It is linked to your activity. The cost must be necessary to earn your business income. It must not be a personal expense, and the amount must be reasonable. You carry the burden of proving the link.
2. It is documented. You need a proper document, usually a full invoice (factura completa) in your name. A simplified ticket is accepted only in limited cases. The documents list below shows what to collect.
3. It is accounted for. It must be entered in your books, the libro registro de gastos, in the right period.

Your own autónomo quota is deductible

The monthly Social Security quota you pay as an autónomo counts as a business expense. You deduct it in the period you pay it or it accrues, following your accounting method. Contributions you pay for employees are deductible too. So are contributions for a spouse or child who works in the business, if the work is real and you can prove it.

The general allowance in the simplified regime

If you are in simplified direct estimation, you also get a flat allowance for hard-to-justify expenses. It is 5%, capped at 2,000 euros a year. It is calculated separately from your other expenses, so it does not replace them. You still deduct your quota and your documented costs as normal.

What is usually accepted

• Rent of your office or premises, and supplies.
• Professional services, such as a gestor or lawyer.
• Software and subscriptions.
• Advertising.
• Training linked to your activity.
• Tools and equipment, which you deduct gradually over their useful life (depreciation).
• Employee costs, bank fees and insurance.
• Vehicle costs, only when the vehicle is used exclusively for the business.
• A proportion of home utilities, if you work from home.

What is usually refused or restricted

• Personal meals, everyday clothing and other personal items.
• Fines and penalties.
• Gifts above the limits.
• Vehicle costs without proof of exclusive use.
• Any expense without a full invoice.
• Costs for a spouse who has no real job in the business.

Health insurance premiums are only partly deductible, up to a limit. The FAQ below covers this.

If you are in módulos

These rules are for direct estimation. In módulos, your costs are already built into the module calculation, so you do not deduct expenses one by one.

Documents you need

• A full invoice (factura completa) in your name for each expense, issued by the supplier. A simplified ticket is accepted only in limited cases.

• Your books: the libro registro de ingresos, gastos and bienes de inversión (income, expenses and investment goods), with each expense entered in the correct accrual period.

• Proof that an expense is linked to your activity, for example a vehicle's exclusive business use or the share of your home used for work. You carry the burden of proof.

Receipts and evidence to keep for each deduction

Evidence to keep for each deduction

• Ask the supplier for a full invoice (factura completa), not a simplified ticket.

• Check that the invoice carries your name and NIF (tax number), the correct date and an expense linked to your activity.

• Keep proof of payment, such as a bank transfer or card statement.

• Pay by bank or card, not cash: cash payments above 1,000 euros between businesses are not allowed.

• Enter the expense in your expense ledger (libro registro de gastos) so it is part of your accounting.

• Keep invoices, payment proof and ledger entries for at least 6 years, which also covers the 4-year tax limitation period.

• Keep records longer if an inspection is open, and up to 10 years for VAT records on real estate investment goods.

What to watch out for

• Personal expenses get rejected: Personal meals, everyday clothing, personal items and fines or penalties are commonly refused. Inspectors can reject the whole deduction. Deduct only costs necessary to earn your income, and keep proof of that link.

• Vehicle costs without proof of exclusive use: Car costs are refused if you cannot show the vehicle is used only for the activity. Keep records showing exclusive business use, or ask your gestor before deducting.

• Expenses without a full invoice: An expense without a full invoice in your name, or missing from your books, can be refused even if it was real. Ask for a full invoice every time and enter it in your ledger in the right period.

• Spouse costs without a real job: Costs for a spouse or family member are refused unless they really work in the business and it is justified. Keep a contract and proof of the work done.

• Gifts above the limits: Gifts beyond the allowed limits are not deductible. Ask your gestor for the limit before deducting gifts.

Frequently asked questions

Can I deduct my own autonomo Social Security quota?

Yes, your own RETA quota is a deductible expense if you are in direct estimation, in the period you pay it or it accrues. Contributions you pay for employees are deductible too. A spouse or child working in the business counts only if the work is properly justified.

Does the simplified regime allowance replace my other expenses?

No, the 5% allowance for hard-to-justify expenses is calculated separately from your other expenses.

Are my health insurance premiums deductible?

Yes, health insurance premiums are partly deductible, up to a limit. This is a separate rule from the quota. Ask your gestor for the current limit.

Do these expense rules apply if I am in the módulos regime?

No, expense deductions do not matter in módulos, because the module yield already accounts for your costs. These rules apply to direct estimation, normal or simplified.