The big tax declaration change Spain's self-employed need to know
If you're self-employed in Spain there are a few new changes you need to be aware of when it comes to submitting your income tax return this year.
As if being self-employed in Spain wasn't complicated enough, there are several new changes you should know about for 2024.
The Personal Income Tax (IRPF) campaign for 2023 campaign runs from April 3rd to July 1st this year. This means you must submit your annual Declaración de Renta for the money you earned last year between these dates.
This year is different for autónomos because you'll be required to present your tax return whether you had losses or profits in 2023. In previous years, it was only necessary if you had profits over a certain threshold or if it was your first year filing it.
READ ALSO: Everything that changes for self-employed workers in Spain in 2024
But this year, even if your business has not performed as expected and you actually incurred a loss, it will still be mandatory to present these to the Tax Agency.
According to experts from the financial comparison site Banqmi, “The Tax Agency does not have complete information on the activity of each self-employed person and that is why an adequate check and verification must always be carried out".
The second change that's new for this year is that the percentage of expenses you are allowed to deduct has been raised from 5 to 7 percent.
READ ALSO - La Renta: What items can you deduct on your Spanish tax return?
Banqmi expert Antonio Gallardo, states: "It is important to note that only the self-employed who carry out professional activities who are not an actual business, and who do so through the direct estimation regime, are entitled to this right, therefore, those who do it by modules are excluded".
The direct estimation regime is when taxes are calculated based on the actual income and expenses of the business during the fiscal year. This means that net profit or loss is calculated by subtracting the deductible expenses of the activity.
READ ALSO: Nine mistakes to avoid when filing your Spanish tax return
The types of tax deductions those on this type of regime can apply include:
- Monthly Social Security contributions
- Deductions for the vehicle usage (if it applies to your business)
- Deductions for business-related training expenses
- Special deductions, such as research and development expenses
- Tax relief at a regional level
When it comes to regional tax deductions, self-employed workers have access to special rates depending on the region they live and work in. For example, Madrid, Asturias and the Canary Islands offer these types of tax reliefs.
READ ALSO - Q&A: What is Spain's flat fee for new self-employed workers?
Additionally, during the first year of being registered as self-employed, 20 percent of your profits can be deducted. If this is the case, you have the right to apply the same deductions as a company registered for Corporate Tax (25 percent of research and development expenses for example).
One of the main obstacles for self-employed workers when filing their annual personal income tax return is that the Tax Agency does not have complete information on all transactions carried out.
"Although they receive information about part of your expenses and income, this is incomplete, so you must always carry out adequate verification to avoid errors and the hassle of making rectifications or complementary statements," Banqmi experts conclude.
If you're unsure about any of your tax returns this year, whether you have to file, and exactly what you can deduct, it's important to contact your gestor or a tax advisor. Remember that everyone's situation is slightly different.
Comments
See Also
As if being self-employed in Spain wasn't complicated enough, there are several new changes you should know about for 2024.
The Personal Income Tax (IRPF) campaign for 2023 campaign runs from April 3rd to July 1st this year. This means you must submit your annual Declaración de Renta for the money you earned last year between these dates.
This year is different for autónomos because you'll be required to present your tax return whether you had losses or profits in 2023. In previous years, it was only necessary if you had profits over a certain threshold or if it was your first year filing it.
READ ALSO: Everything that changes for self-employed workers in Spain in 2024
But this year, even if your business has not performed as expected and you actually incurred a loss, it will still be mandatory to present these to the Tax Agency.
According to experts from the financial comparison site Banqmi, “The Tax Agency does not have complete information on the activity of each self-employed person and that is why an adequate check and verification must always be carried out".
The second change that's new for this year is that the percentage of expenses you are allowed to deduct has been raised from 5 to 7 percent.
READ ALSO - La Renta: What items can you deduct on your Spanish tax return?
Banqmi expert Antonio Gallardo, states: "It is important to note that only the self-employed who carry out professional activities who are not an actual business, and who do so through the direct estimation regime, are entitled to this right, therefore, those who do it by modules are excluded".
The direct estimation regime is when taxes are calculated based on the actual income and expenses of the business during the fiscal year. This means that net profit or loss is calculated by subtracting the deductible expenses of the activity.
READ ALSO: Nine mistakes to avoid when filing your Spanish tax return
The types of tax deductions those on this type of regime can apply include:
- Monthly Social Security contributions
- Deductions for the vehicle usage (if it applies to your business)
- Deductions for business-related training expenses
- Special deductions, such as research and development expenses
- Tax relief at a regional level
When it comes to regional tax deductions, self-employed workers have access to special rates depending on the region they live and work in. For example, Madrid, Asturias and the Canary Islands offer these types of tax reliefs.
READ ALSO - Q&A: What is Spain's flat fee for new self-employed workers?
Additionally, during the first year of being registered as self-employed, 20 percent of your profits can be deducted. If this is the case, you have the right to apply the same deductions as a company registered for Corporate Tax (25 percent of research and development expenses for example).
One of the main obstacles for self-employed workers when filing their annual personal income tax return is that the Tax Agency does not have complete information on all transactions carried out.
"Although they receive information about part of your expenses and income, this is incomplete, so you must always carry out adequate verification to avoid errors and the hassle of making rectifications or complementary statements," Banqmi experts conclude.
If you're unsure about any of your tax returns this year, whether you have to file, and exactly what you can deduct, it's important to contact your gestor or a tax advisor. Remember that everyone's situation is slightly different.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.