A Survival Guide To Deductible Expenses For Freelancers In Spain — 2025

Today, we're diving deep into the dreaded expenses for freelancers in Spain... cue the dramatic music! 💸💸💸

Yep, expenses are the bane of our existence, constantly draining our wallets and leaving us feeling like we're barely keeping our heads above water. But fear not, my friends, because we're about to talk about the one magical word that can turn this whole situation around: deductibles! 🎉

There are a ton of confusing, but necessary nuances to consider when it comes to deductible expenses, and we're going to go through them all step by step. So grab a cup of coffee, put on your thinking cap, and let's get down to business. 💪

Defining deductible expenses for freelancers

So, what the heck are deductible expenses, you ask? 

Basically, deductible expenses are the ones that the taxman allows us to subtract from our income when calculating our taxes. So instead of paying a buttload of money to the Agencia Tributaria (the tax authorities), we get to keep some of it for ourselves. 🤑

And you know that pesky VAT you hold from your clients? You can also keep a bit of that too. That's right, you can actually save some of your hard-earned cash instead of giving it all to the government. Yay!

Of course, there’s no such thing as a free lunch. The Agencia Tributaria will only let you deduct expenses they consider essential for your work. But don't worry, we'll go into more detail later on. 😉

And here's a little word to the wise. Deductible expenses can be make-or-break for freelancers financially. So trust me, you're gonna want to pay attention to this one!

Why are deductible expenses so important?

One figure can sum up the importance of deductible expenses for freelancers. If you don't deduct all the expenses you're eligible for, you could end up paying a whop more in taxes than you need to. That’s like fancy-new-laptop and trip-to-the-Caribbean kind of cash. 😎

So, yeah, you can see why deductible expenses are so crucial for us freelancers. Without them, many of us would be seriously struggling in our work. But here's the thing: you’ve got to be careful when you're deducting stuff. Try to cheat the taxman by deducting things you shouldn't, and you're gonna get hit with a penalty, interest — all that jazz. And trust us, it's not worth it. 🙅‍♀️

To avoid any headaches, you gotta be crystal clear on what you can and can't deduct. So let’s get started, and try to resist making any “unintended mistakes” along the way, mmmk? 😉

Requirements for freelancers to deduct deductible expenses

So there are a few things you need to know about deductible expenses, and the tax authorities have made it so fun and easy for us to understand... not! Here are the three requirements that they have established, and each one comes with its own twists and turns — just what we needed, more bureaucracy! 🙄

They must be linked to economic activity

First things first, the expenses you're trying to deduct must be linked to the economic activity you're carrying out as a freelancer. This is like rule number one — the golden rule, if you will. So, for instance, if you're a professional photographer and you need to buy a new camera, that's a no-brainer, it's definitely linked to your work. But if you're trying to deduct your Netflix subscription, that's not gonna fly. You might have to settle for a free trial. 

They must be properly justified

Okay, so once you've found an expense that's linked to your work, you need to make sure you can properly justify it. This means getting all the receipts, bills, and any other relevant information sorted out. If you’re new to the freelancing game, have you ever noticed how many times you’re offered a credit card payment receipt? Yep, that’s because all the solos are meticulously keeping records.

If you don't have a valid receipt with all the right information, then the tax authorities won't accept the deduction. And that's why freelancers are always begging for them! But seriously, folks, make sure you get all the deets you need: 

• in other words, your DNI/NIE
• your complete name and address in Spain
• The payment breakdown (amount, VAT, income tax, the whole shebang)

Keeping track of expenses in accounting books

Here's the easiest one: if you're a freelancer, make sure you keep records of all the expenses you want to deduct. You know, like how you write down all the people who owe you money so you can bug them later. Just us? 

But seriously, what expenses can you deduct as a freelancer?

Now, for the not-so-easy part. Here are some specific expenses you can deduct from your VAT and income tax payments. 

It is not always straightforward, and there are specific requirements to qualify for deductions. In this section, we will outline the documentation you need to deduct classic freelance expenses. 

 🍽 Meals with clients or providers

A receipt from a casual dinner out with your cousin Billy is out of the question. To deduct expenses from meals with clients, it has to be a work-related expense. 

To justify this expense, provide a simplified receipt with your information, along with a bank receipt proving payment. Some places will give you a full invoice with all the details, but it’s not common. You should also include supporting documents such as emails or notes discussing the meeting and why you’re having it.

These expenses are not fully deductible; at the end of the year, the total amount of these expenses cannot exceed 1% of your net income (income minus expenses).

⛽️ Vehicle and fuel expenses

Vehicle and fuel expenses are closely monitored and require special attention. To qualify for deductions, it must be in relation to a vehicle that is exclusively used for work. You can prove this by showing a list of clients and their locations, emails with agreed visits, invoices issued, the vehicle's technical data sheet, and other documentation that proves that the vehicle is used solely for business purposes. Your vehicle can not be considered on top of the range, and you’ll also need to prove you have a second vehicle for private use.

In addition, this total deduction of both personal income tax and VAT is only applicable to the following jobs:

• Transporting goods or passengers
• Training drivers or pilots
• Traveling sales
• Surveillance services
• Test vehicles used by manufacturers

if the vehicle is not used under one of these activities, then only 50% of the VAT can be deducted, with no deductions in personal income tax. It’s better than nothing. You’ll have to show a full receipt in your name for the purchase and a complete gas invoice should be from a working day.

If your job is VAT-exempt, you can’t qualify for these expenses. Sorry!

🖥️Tangible assets

This next group of expenses includes all those depreciable assets costing more than €300, and that will last more than one year. Think computers, office equipment, and machinery. 

When it comes to deducting these expenses, the VAT is deducted in the same quarter as the purchase was made. Personal income tax is recouped according to the tables published by the Hacienda every year. 

To justify these expenses, you will need to provide an invoice that includes all necessary data, such as the date, the amount, the supplier's and also your details, and how the expenses are linked to your work.

Discover how Xolo can simplify your tax planning and maximize your deductions. Explore Xolo today and take the first step towards smarter financial management!

🩺Health insurance, social security payments, and membership in professional associations

In the case of health insurance, social security contributions, or membership payments to professional associations, since we can’t provide an invoice, we have to use a bank statement with details of the transaction.

Make sure your health insurance policy is in your name.

Health insurance deductions are capped at €500 in your activity as autonómo and an additional €500 for each family member which can be applied in renta (model 100) (spouses or children under 25 living at home with incomes under the minimum wage. However, for people with disabilities, the limit can rise to €1500.

💡Utilities bills

You can save on electricity, gas, water, phone, and internet, but not all of them are fully deductible. As a freelancer, you can only deduct 30% of the percentage of your home that you have specified in form 036. These expenses are only deductible in personal income tax, not in VAT.

That’s a bit complex, so let’s take an example:

My internet bill is €20.00 + VAT = €24.20.
I told the Agencia Tributaria in form 036 that I use 10% of my home for work.
(€24.20 x 10% x 30%) = €0.73 deductible from my income tax.

These bills must always be in your name and you must include the invoice from the provider.

📞 Telephone bills

Phone and internet bills that include a TV package aren’t deductible. But if you have a mobile line exclusively for business and can get a bill that isolates this cost, then it’s 100% deductible. Usually, this means having a breakdown of your bill, including all your phone lines. It should be easy to spot which parts are deductible as utilities, which aren’t deductible, and which you can get a 100% deduction on.

🏠Housing (rent or mortgage)

The deduction of rental expenses is a complex matter. Sometimes you can, sometimes you can’t, depending on the terms of your rental contract. 

At Xolo, we carefully review each case individually. We look over your rental contract to see if there are any clauses that make you eligible for deductions. 

If you are eligible, you’ve got to get those details down in form 036, just like your utilities, and you’ll get the same 30% of the percentage of your house you use for work.

If you own a home, you can deduct the interest paid on your mortgage in the same way.

💰 Professional expenses

Professional expenses cover activity expenses that do not fall under any specific category or group. These may include management fees, purchase of materials, and other similar expenses. For these expenses, there are two important details to remember:

• If you receive an invoice for services from other professionals with an income tax retention, you have to submit and pay the retained amount quarterly through form 111, then submit it in the form 190 summary.
• For invoices on a rented workplace, you submit and pay the retained amount every quarter using form 115, and annually, through form 180.

🚅 Transportation and acommodation

You always need to back up work-related travel expenses with a document. But the type of transportation will determine the documents you need:

• Flights: the ticket alone isn’t valid without an invoice from the airline, except for Ryanair, which does not issue invoices.
• Long-distance trains: you always need an invoice — the ticket isn’t deductible.
• Travel pass: not deductible because you can’t prove you only use it for work 😢.
• Public transportation: with no full invoice (which is hard to get), you can only deduct it from your income tax return.
• Taxis and ridesharing companies: you need a full invoice to deduct it for both VAT and personal income tax. (Remember that these expenses have to be completely related with your activity)
• Parking and tolls: deductible for income tax and VAT — provided that you have a full invoice. (Remember that these expenses have to be completely related with your activity)
  
  

  Cheat sheet for transport-based tax deductions
  Flights (except Ryanair)	Company invoice with all data included
  Ryanair flights	Flight ticket and bank statement proving purchase
  Trains	Full invoice
  Travel pass	Not deductible
  Public transport	Only deductible for personal income tax unless a full invoice is obtained (usually complicated)
  Taxis	A full invoice deducts VAT and personal income tax. No full invoice, no VAT deduction, but you still get the PIT deduction.
  Ridesharing (Uber, Cabify, etc)	The apps normally provide invoices to deduct both VAT and personal income tax
  Parking and tolls	Parking lots, paid street parking, and tolls can only be deducted from your income tax unless a full invoice is available, then you can claim back the VAT too.

As for accommodation, you will always have to include the bill from the hotel, hostel, or apartment where you stay during your trip.

🍜 Meals

Like we said before, there are daily limits on your eating out expenses. For purchases in Spain, the limit is €26.67, or €53.34 if you’re staying overnight. If you’re abroad, the limit is €48.08, or €91.35 with an overnight stay. But, there are other conditions to qualify for these deductibles, such as:

• The expenses are only for restaurants or hotels. Supermarket receipts and home delivery services aren’t accepted.
• You can only pay electronically (card, to you and me), and you need to keep the card receipt.
• You can only deduct meals eaten during work hours and while you’re at work.
• To be deductible you need proof that you were working, such as an invoice you send to the customer.

Summary of deductible expenses for freelancers in Spain 

I am included in the Beckham Law Regime, what can I deduct?

If you have applied for and been included in this scheme, the rules on deducting expenses are slightly different. This is because the scheme is governed by the regulations for non-residents, which state that you can deduct expenses that are necessary for carrying out your activity in Spain, but you cannot include expenses regulated by personal income tax regulations, such as health insurance or utilities.

🙋 Any Questions?

Still not sure if your receipt qualifies as a deductible? Xolo users can upload it to the platform and leave us a comment. Our team will review it and let you know if it can be deducted or not!

Take the hassle out of tax season with Xolo

At this point, you have a couple of options: 

1. Memorize all the information we've provided and file your tax return on your own, hoping everything goes smoothly. 
2. Gather your invoices for all of your deductible expenses as a freelancer, upload them to Xolo, and let our team of experts handle your VAT and income tax returns like the pros we are. 

Now I know you’re ambitious, but let’s get serious here. Spending hours of your valuable time and brain power on confusing tax returns? Really? You could be at the beach instead (sorry, Madrid). 

Sign up to Xolo and let us help take the hassle out of tax season.