Main Changes To Accounting Procedures for Self Employed from Jan 2018

Working From Home

From 1 January 2018 those declaring their taxes using the direct estimation method are able to deduct part of the utilities expenses of a property partially used for their economic activity and also living expenses that directly relate to the economic activity.
Article 11 of Law 6/2017 adds letters b) and c), with effect from January 1, 2018, to rule 5 of section 2 of article 30 of Law 35/2006, of November 28, of the Income Tax for Individuals and states the following:
I. Contributors whose economic activity is conducted in their habitual residence In these cases, 30 percent of the pro-rata calaculation of square metres of the property used for business can be deducted in respect of utility expenses of said dwelling such as water, gas, electricity, telephony and Internet will be deductible e.g.

The habitual residence of a taxpayer is 100 m² in total. The taxpayer uses an area of  40 m² for their economic activity. The annual expenses for utilities etc.  amount to 5,000 euros.

Proportion of the habitual residence affected: 40 m² / 100 m² = 40%
Deduction percentage = 30% x 40% = 12%
Deductible expenses: € 5,000 x 12% = € 600

-in the event of a co-owned or co-rented property the expenses calculated shall be divided by 2

II. Living expenses of the taxpayer incurred in the development of their economic activity.
Taxpayers may deduct as a business expense living expenses that meet the following requirements:

  • They must be the taxpayer’s own expenses 
  • They must be incurred in catering and hospitality establishments
  • The expense MUST be paid by electronic means ie card or transfer
  • These expenses will have as a maximum limit the amounts established by regulation for the allowances for normal expenses of living expenses of workers that are contained in article 9.A.3.a) of Royal Decree 439/2007, of March 30,regarding the Regulation of Tax on the Income of the Physical Persons