Part D · Step 3 of 9View the steps
Know what you can deduct
An expense lowers your income tax when it is for your business and you record it in your books, with the invoice where there is one. In the simplified method (estimación directa simplificada) you subtract your real expenses, then a flat percentage for the wear on your equipment and for costs that are hard to prove.
Before you start
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Which method you use
There are two ways to work out your business income: the normal method (estimación directa normal) and the simplified method (estimación directa simplificada). You can use the simplified method if your turnover in the year before was €600,000 or less.
The simplified method is not automatic. You choose it on your census registration when you start. If you never chose it, you are in the normal method. To change for a new year, file a census change before your territory's deadline.
Araba / Álava
Choose the simplified method before 1 March of the year it applies to, or on your registration if you are starting.
Bizkaia
Choose the simplified method before 25 April of the year it applies to, or on your registration (modelo 036) if you are starting.
Gipuzkoa
Choose the simplified method before 1 March of the year it applies to, or on your registration if you are starting.
The flat deduction
In the simplified method you take your income, subtract your real expenses, and then take off a flat percentage. The percentage covers the depreciation (amortización) of your equipment and the expenses that are hard to prove (gastos de difícil justificación). You need no invoices for it.
Araba / Álava
Álava's Hacienda applies the percentage in bands, like tax brackets:
- 20% of the part up to €35,000
- 15% of the part between €35,000 and €85,000
- 10% of the part above €85,000
The percentages have changed often in recent years, and Álava's page does not say from which year these apply. Ask Hacienda Foral de Álava on 945 181 555 which ones apply to the year you are filing.
Bizkaia
From 2025 you use one percentage for the whole amount. It depends on your income minus expenses in the year before:
- €35,000 or less: 20%
- More than €35,000, up to €85,000: 15%
- More than €85,000: 10%
Gipuzkoa
For 2025 the percentage works in bands, like tax brackets:
- 20% of the part up to €35,000
- 15% of the part between €35,000 and €85,000
- 10% of the part above €85,000
Computers and other equipment
- In the simplified method you do not deduct the depreciation of a computer, a phone or furniture. The flat percentage covers it.
- Still record each one as an investment good (bien de inversión) in your records.
- Equipment you also use privately is not a business asset, unless the private use is small and only outside your working hours.
- In the normal method you deduct depreciation over several years instead. Ask your Hacienda for the rate for each type of equipment.
Working from home
Only the part of your home that you use for the business counts, and only if it can be used on its own. The usual example is a room used only as an office. A part you cannot separate, such as a living room you also use for the family, does not count.
Before you deduct part of your rent or your bills, call your Hacienda and ask: "How do I calculate the business share of my home costs and bills?" In Spanish: ¿Cómo calculo la parte de los gastos de mi vivienda y los suministros que corresponde a la actividad? See Contact your Hacienda Foral.
Your car
A car you also use privately is not treated like other equipment: even small private use matters, and car costs have their own limits.
Araba / Álava
Car costs have their own rules and limits in Álava's income tax law. Ask Hacienda before you deduct them.
Bizkaia
From 2025:
- A car that is important and regular for earning your income, but that you also use privately: the car itself (depreciation or renting) counts up to €3,000 a year, and its other costs, such as fuel and repairs, up to €3,600 a year.
- A car you can prove is used only for the business: up to €6,000 a year for the car itself, and €7,200 for its other costs.
- Electric and clean-technology cars have higher limits for the car itself. In the simplified method, depreciation is already in the flat percentage.
Gipuzkoa
According to Gipuzkoa's 2024 Renta manual, car costs are not deductible as a rule. The exception is a car you can prove is used only for the business: then its costs count up to yearly limits. A car you also use privately is not a business asset, even if the private use is small.
Meals and clients
Araba / Álava
Ask Hacienda before you deduct meals, client entertainment or gifts.
Bizkaia
Ask Hacienda before you deduct meals, client entertainment or gifts.
Gipuzkoa
These rules are from Gipuzkoa's 2024 Renta manual, the latest edition that could be read:
- Your own meals while working count if you eat at a restaurant or bar and pay by card or another electronic method, up to the daily amounts set for employees' meal allowances.
- Client entertainment (relaciones públicas), such as meals and travel with clients: 50% counts, up to 5% of the activity's income.
- Gifts: up to €300 per person and year, if you keep a record of who received them.
The LROE in Bizkaia
Bizkaia
- Batuz builds the business part of your Renta draft from your LROE, and you file the LROE before the Renta. An expense you do not enter there is not in your draft.
- Enter the invoices you receive, and also expenses without an invoice, such as your Social Security fee, insurance and taxes.
- Something you own counts as a business asset only if it is in your records, unless you can prove otherwise.
Common mistakes
- Following guides written for the rest of Spain. The Spanish tax agency's guides explain the State law. Each Basque territory has its own income tax law, with different rules.
- Thinking you are in the simplified method because your turnover is low. You must choose it.
- Deducting the depreciation of a computer in the simplified method. The flat percentage already covers it.
- Deducting a car you also use privately as if it were a business car.
- Deducting your whole home when you use one room.
Official sources
- Bizkaia: income tax regulation, Decreto Foral 47/2014 (PDF) (opens in a new tab), articles 18, 25 and 29
- Bizkaia Hacienda: Renta, business income (opens in a new tab) and changes from Norma Foral 2/2025 (opens in a new tab)
- Batuz: LROE app manual, modelo 140 (PDF) (opens in a new tab)
- Gipuzkoa: Renta 2025, business annex instructions (PDF) (opens in a new tab)
- Gipuzkoa: Renta 2024 manual, business income chapter (PDF) (opens in a new tab)
- Álava: Renta questions and answers (opens in a new tab)
- Álava: income tax regulation, Decreto Foral 40/2014 (PDF) (opens in a new tab), article 18
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