Today, at Xolo, we woke up feeling a little philosophical, reflective, metaphysical. Because, stop and think about it: what is the world if not an eternal opposition between two supreme, independent, irreducible, and antagonistic principles? What is the world if not the struggle between yin and yang, heaven and hell, good and evil? What is the world but the confrontation between deductible and non-deductible expenses?
There are many types of non-deductible expenses, and we may not be able to explain them all one by one. That would be a magnificent and endless work. But what we can do is explain trying to explain its nature, its most common types. Because, and here we end the philosophy, Sun Tzu already said: “If you know the enemy and know yourself, fear not the outcome of a hundred battles.”
Tipos de gastos no deducibles hay muchos y quizás no te los podemos explicar todos uno por uno. Eso sería una obra magna e infinita. Pero lo que sí podemos intentar explicarte es su naturaleza, sus tipos más habituales. Porque, y aquí ya acabamos con la filosofía, ya lo dijo Sun Tzu: “Si conoces al enemigo y te conoces a ti mismo, no temas el resultado de cien batallas”.
Non-deductible expenses: the definition
Let's start from the beginning by defining what the non-deductible expenses for the self-employed are. In short, these are all those expenses that are not linked to the economic activity that we carry out on our own account.
Let's give an example of a non-deductible expense for self-employed workers and another that is. Something very clear, very obvious:
- A deductible expense for a self-employed plumber, for example, is any type of tool needed for their business: pipes, wrenches, etc.
Non-deductible expenses – or partially deductible –
Let's now get down to business: Non-deductible expenses that usually generate the most doubts among the self-employed.
🏠Can utility bills be deducted when working from home?
Until not long ago, remote work from home was something of a rare find. A tiny percentage that also received little attention when it came to legislation. However, the pandemic and the acceleration of changes taking place in the world of work eventually made remote work a reality, no matter how much it pains some people.
So, a question arose: can housing expenses be deducted if they are working from home? The answer is yes, but only partially: The current law for self-employed allows for a 30% deduction on invoices based on the total space used for the activity.
📱 Mobile phone
Regarding the tax deduction for mobile phones, the law is clearer: This can only be done if you have two different lines, one for personal use and one for professional use..
🚙 Private vehicle and associated expenses
The issue of whether private vehicle expenses are deductible is similar to what happens with cell phones: It will only be possible to declare them as deductible expenses if the vehicle is used exclusively for work purposes..
That is to say, generally speaking, unless the vehicles are delivery vans, buses, taxis, or other vehicles with a clear and unequivocal work-related use, the vehicles and related expenses cannot be deducted.
If you use your vehicle for both personal and work purposes, you can only deduct 50% of the VAT on vehicle expenses.
🎫 Sanctions and fines
We're in the same boat: what devious and deceitful mind would think of declaring sanctions and fines as expenses, no matter how closely related they are to the activity? Obviously not: both are non-deductible expenses.
🏦 Tax payments
Quarterly and annual payments arising from the mandatory forms required by the economic activity cannot be considered deductible either.
Conclusion on non-deductible expenses
Here we come to the end of this fascinating philosophical digression transformed into an article on tax legislation in Spain. A fascinating journey from which, like any journey, one must learn something.
What is ours? That, in addition to paying so much attention to deductible expenses, we also must keep under control non-deductible personal expenses for self-employed workers. Because, you know, there is no yin without yang, heaven without hell, good without evil. And deductions without non-deductions.
About Xolo
Xolo is much more than a digital agency. We help freelancers with the paperwork so they can focus on growing their business. We offer solutions for billing, accounting and taxation to scale the freelance revolution and the future of work.