The deductions you can make when you file your income tax return

[jrineakter]

As every year, one of the most recurring doubts is what to do to get a refund... or, at least, to have to pay as little as possible. Here we have compiled a list with a series of concepts, guidelines and advice that will help you with Income Tax deductions when filing the 2022 Income Tax return.

Housing, pension plans, donations… there are many different tax breaks and you need to read carefully all the conditions set by the AEAT (State Tax Administration Agency) to avoid unpleasant surprises when reviewing your tax return.

Basic concepts
But, before talking about deductions, we need to be clear about some concepts. If you have these clear, you can go directly to the deductions section :

Personal Income Tax
In Spain, personal income tax is the tax on the profits of individuals and must be paid by all those who reside in the country – or have their main economic activities there. It is levied on the profits obtained during a year and is progressive , that is, the more money someone has earned in that period, the higher the income tax will be.

Personal income tax is charged in 'brackets' and is applied depending on a person's earnings. The minimum rate charged is 19% of an income of up to €12,450 and the iran number data maximum is 47% for people who earn more than €300,000 in a year.


In 2020, there was talk of a reform to the Personal Income Tax to which two more brackets would be added: from €130,000.00 a tax rate of 47% would be charged and then one of €300,000.00 to which a 49% rate would be applied, but finally a single further bracket of €300,000.00 was approved, to which a tax rate of 47% would be imposed.

The IRPF is the most important tax of the Tax Agency and is used to finance the state. It is collected on four different types of income obtained:

Employment income. This is what most of the population pays and is done through an employment contract. It is paid monthly from the salary and appears on the pay slip.
Income from movable capital. Shares in a company. Participation in the profits of an entity. Loans.
Real estate capital gains . Rental and sale of real estate, for example.
Income from economic activities. Profits generated by own economic activities (self-employed and entrepreneurs).
It is worth noting that personal income tax, and the deductions that can be made from it, differ between autonomous communities .

Tax deduction
According to the Royal Spanish Academy (RAE), tax relief means the following:

Partial or total deduction [by a public or private entity] of the tax, fee or other charge that weighs on certain things, as established by the Administration.
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VAT
VAT or Value Added Tax is an indirect tax related to consumption, whether of goods or services. Its cost will be borne by the consumer who purchases the same product or service.

Here, the entrepreneurs and professionals involved in the tax generation chain act as intermediaries who are responsible for passing on this tax to the consumer of the product or service in question, collecting it and depositing it with the tax authorities on a regular basis.

VAT paid and VAT accrued
The VAT paid or deductible , which is derived from your purchases of goods or services; and the VAT accrued or passed on , which is the VAT you charge your customers. In other words: the difference between the two depends on who is the seller and who is the recipient of the product.

Self-employed workers who file their annual VAT return are required to reflect the difference between the tax charged and the tax incurred in their declaration.

Let's put all this into a concrete case: if you want to deduct 21% of the tax on a laptop you bought for your graphic design work, you can do so without any problem. However, if you try to do the same with a trip to the Caribbean, then you run the risk of being audited by the Treasury.

Understanding then that, as a self-employed person, you can only deduct expenses directly related to your activity, let's see which ones are eligible to be included in the declaration.

Taxable base and liquidable base
The tax base is the amount on which taxes are calculated . The taxable base is the result of having applied the deductions to the taxable base . The lower it is, the less we will have to pay to the Treasury. If no deductions are made, the taxable base and the taxable base will be equal.

A self-employed person works with his computer
Self-employed workers will be able to deduct expenses related to their work, such as the purchase of a computer.
Deductions for self-employed workers
In this case, self-employed workers can enjoy some tax benefits by opting for non-monetary remuneration, such as restaurant vouchers, health insurance, transport passes, etc. To qualify for the best tax treatment, it is necessary to reflect this in the contractual conditions to highlight the forms of remuneration.

Work and office supplies
This is the most obvious part: a computer can be considered a work tool – depending on your sector. The same goes for stationery or office supplies, business cards, promotional material, etc. All of this is clearly tax deductible.

The computer programs you use are also eligible. In the aforementioned case of a graphic designer, the purchase of Photoshop could be deductible. In general, Holded is also eligible for tax deductions , as it helps with the billing of any business.
Gasoline can be deducted by 50% if the consumption occurs in a vehicle used to travel to work or to visit clients. If it is a goods vehicle, then it can be deducted by 100%.
Exemption from paying taxes up to 60,100 euros for those who work abroad
Work carried out for companies located abroad is exempt from tax up to a maximum limit of 60,100 euros per year. However, there are some conditions:

A tax similar to personal income tax has been applied in the country where this work is carried out.
Don't be a tax haven.