The income tax return is a fiscal process in which citizens inform the Tax Agency about their annual economic situation, detailing income, expenses, deductions, and other aspects that influence the amount of taxes to be paid or refunded.
The Personal Income Tax IRPF (Impuesto sobre la Renta de las Personas Físicas) is the most important tax. Depending on annual income, the amount to be paid to the state is higher or lower, and this is calculated through this tax.
The goal of all workers is to pay as little tax as possible. However, achieving this requires being meticulous throughout the year. Although you may not enjoy thinking about taxes all the time, it is essential to stay organized and consider the fiscal requirements that will allow you to apply the corresponding deductions when the time comes to file the return.
What are deductions?
Deductions reduce the tax base, meaning that thanks to certain expenses incurred during the year, you have to pay less tax. For the self-employed, these expenses may be necessary to carry out their professional activities.
For example, a self-employed lawyer in Valencia may need to buy a computer, rent an office, contract an additional phone line, or even buy a car to travel to meetings and court cases. All these expenses are directly related to his or her professional activity. The Tax Agency classifies these expenses as “expenses related to professional activity,” meaning necessary and unavoidable costs for being able to work. Consequently, there are deductions in the IRPF to compensate for these expenses.
However, to apply these deductions, it is essential to demonstrate that the expenses are exclusively professional. If it is determined that the expenses are also enjoyed personally, these cannot be deducted. This is a recurring issue in complaints received by the Tax Agency regarding the incorrect application of deductions.
Deduction of meal expenses for the self-employed
One type of deductible expense we will analyze here is meal expenses. Let’s suppose a self-employed lawyer in Valencia has a court case in Alicante that will take the entire day. In this case, he or she decides to eat at a nearby restaurant. According to case law, this bill will be deductible, but under certain conditions:
- Payment method: Payment must be made using electronic means (bank cards, transfers, etc.) to verify that it was the lawyer who made the payment. If payment is made in cash, it cannot be justified as a deductible expense;
- Non-personal expenses: If the lawyer invites others to the meal, only the portion corresponding to his or her own meal will be deductible. The expense of the other individuals cannot be included in the deduction.
Conclusion
If you need to have meals away from home due to work, make sure to pay by electronic means that can prove the transaction. Moreover, keep in mind that the amount should be reasonable and clearly related to your professional activity.
Elena Sanchez