How self-employed people in Spain can deduct holiday costs

If you're self-employed, you probably know that maintaining a healthy work-life balance can be a struggle sometimes.

This is even more true with the rise of remote working (teletrabajo in Spanish) and the ongoing cost of living crisis making many of us feel like we aren't working enough.

For many self-employed with job contracts and organised annual leave, finding time (and money) to take a well deserved holiday can be tough.

Fortunately, in Spain there is a way to both enjoy a holiday and deduct some of your work expenses from your tax return if it meets certain requirements and you combine the two.

In short, this is to take a working holiday: a trip where you combine business and pleasure. If you do it right you can claim certain expenses on your VAT deduction and make savings on your tax return.

READ ALSO: How self-employed workers in Spain should invoice clients abroad

 

What can I deduct?

In Spain, self-employed people can deduct certain expenses, provided that they arise from their professional activity.

This could be a daily food allowance, for example, or transport costs, or accommodation expenses if you have travelled to meet with a client or for a specific job and need to stay overnight.

READ ALSO: What items can you deduct on your Spanish tax return?

Working holiday

In order to be able to deduct these sorts of things, you'll need to be able to demonstrate that they were for work purposes. Obviously, you can't claim a tax deduction on a meal you had in a Michelin star restaurant while on holiday with your friends.

But, if you justifiably combine business and pleasure and have a working holiday, you can do it. Say for example you're a graphic designer living in Madrid with a client who lives in Valencia. The client would like to meet in person to finalise a design you've been commissioned to do for their business.

In that case, you would be travelling for work purposes and the journey would be deductible. If you go out for a meal that day, it could plausibly be deductible too.

You have the meeting on a Friday, let’s say. Now, if you want to take a few days after your business meeting to enjoy a short city break in Valencia over the weekend, well that's your business.

So, what do you actually need to do to deduct these expenses?

How to deduct expenses

If you want to deduct some holiday expenses, you'll need to do three things:

Keep the original receipts or invoices for expenses you want to deduct VAT purposes.

Any expenses you want to deduct must be directly linked to the 'economic activity' carried out by the self-employed person, which means it needs to be work related.

In addition, and this is important because not doing so can lead to a fine from La Hacienda (Spain's treasury), all these transactions must be recorded in your accounts and all the necessary documentation must be available to prove it, not just the receipt. Clearly, you'll need to pay by card or another electronic form in order to prove this, not cash.

What about mileage expenses?

On the other hand, expenses related to mileage would not be deductible because only corporate self-employed (sometimes referred to as self-employed entrepreneurs) can claim mileage expenses in Spain.

If you are registered as a corporate self-employed person, however, you can deduct €0.26 per kilometre.

It is always recommended to consult a professional accountant or gestor, as they are known in Spain, in order you make sure you file your taxes and expenses correctly.

READ ALSO: What does a 'gestor' do in Spain and why you'll need one