How to submit your tax declaration as a freelancer

5 min read

Tax season is underway, and this means that all workers—whether freelancers or salaried employees—have to submit their 2020 tax declaration. To help unpack what that means, remember that the tax declaration, or declaration of personal income tax (Impuesto sobre la Renta de las Personas Físicas, IRPF), is a process through which you settle your tax situation for the previous year (in this case, you’d be settling for the year 2020) with the Tax Agency. 

All workers have to file their taxes, but the process is a little different depending if you’re a freelancer or a salaried employee. We’ve put together a short guide explaining how to submit your tax declaration if you’re a freelancer or self-employed. Read on to find out when freelancers have to submit their tax declaration for 2020, who is required to make a declaration, and which expenses and income you have to declare.

Who needs to submit a tax declaration for self-employment?

All freelancers have to submit a tax declaration, except for those making less than €1000 per year. However, anyone can submit a voluntary tax declaration if they want to take advantage of the available tax deductions. 

Income self-employed workers need to declare

In terms of taxation for freelancers, there are certain forms of income which need to be included in the annual personal income tax declaration. These make up your “total taxable income.” Here are some of the most common elements of this income:

  • Operating income—This is the income you earn from the professional activity you are registered to carry out under form 037. In other words, the income you make from the work you do. For example, if you’re a freelance graphic designer, you have to include all the income you earn from the services you offer. 

  • Other income—This refers to other income, such as grants you’ve received to grow your professional activity or purchase goods, or payouts you’ve received from insurance companies.

  • Goods and services obtained at no cost—This refers to goods you obtain for free and services given to you at no cost. In other words, products and services for which you give no compensation in return. For example, if you own a shop and obtain some of the goods you sell for free.

  • Asset transfers—Your tax declaration also has to include any earnings obtained from the sale of any assets linked to your self-employed activity.

Here’s a link to the complete list of total taxable income, provided by the Tax Agency. 

Tax-deductible expenses

As a freelancer, it’s important to keep track of your tax deductible expenses. That is, just any money you spend to maintain or improve your business. Make sure you carefully record and report any tax-deductible costs for self-employed workers.

Requirements for an expense to be deductible

  • It must be associated with your financial or professional activity as a self-employed worker.

  • You need to have an invoice to prove you incurred the expense.

  • You need to have recorded the expense in your ledger of self-employment expenses and income.

It’s important to bear in mind that although an expense might fulfil these criteria, the Tax Agency is very strict when it comes to accepting deductions on your tax declaration. It’s up to you to decide how to best demonstrate that the expense in question is related to your business.

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List of deductible expenses for self-employed workers

If you can satisfy the three requirements mentioned above, use this list as a guide to which expenses you can deduct in your next tax declaration:

  • Operating expenses—This includes the expenses you incur while carrying out your professional activity. For example, raw materials, office supplies, packaging, containers, and so on.

  • Utility expenses—If you work from home or in your own office, you can deduct expenses for lighting, water, electricity and internet connection.

  • Wages and salary—This includes both your own salary as well as those of any employees you have.

  • Social Security—Both your own contributions and those of your employees, including the self-employment contribution (cuota de autónomo). 

  • Other staff expenses—Such as employee training costs, compensation for damages, accident insurance for employees, gifts to employees, and pension plans.

  • Leases and fees—These are expenses for renting, leasing, co-working space, and so on.

  • Services provided by independent professionals—In this category, you can deduct expenses for services contracted from other professionals such as lawyers, auditors, notaries and digital marketing specialists, among others.

  • Deductible taxes—These include business activity tax (Impuesto sobre Actividades Económicas, IAE) and property tax (Impuesto sobre Bienes Inmuebles, IBI).

  • Financial expenses—Except for those incurred through equity capital

  • Expenses and accommodation—Provided these costs were incurred in restaurants and hotels during business operations, and were paid for with a debit or credit card.

Meals (within Spain) €26.67
Meals (abroad) €48.08
Accommodation (within Spain) €53.34
Accommodation (abroad) €91.35

Además, también podrás desgravar los gastos del mantenimiento de tu web profesional, las suscripciones a herramientas online o programas informáticos así como lo que gastes en campañas de marketing (como gestión de redes sociales) o publicidad.

Ten en cuenta que, como regla general, entre los gastos no debe incluirse el importe del IVA de las adquisiciones de bienes o servicios.

Estos son los gastos deducibles más comunes pero existen otros casos más específicos. Si quieres conocer en detalle la lista completa de los gastos fiscalmente deducibles, echa un vistazo a la web de la Agencia Tributaria.

Cuándo hay que hacer la declaración de la renta para autónomos

El plazo de declaración de la renta 2020 comienza el 7 de abril de 2021 y en la siguiente tabla tienes las fechas más importantes. Para que no se te olvide puedes hacerle un pantallazo o una foto para tenerlo guardado en tu carrete, y así después podrás añadirlo a tu calendario.

2020 Tax Declaration Dates
April 7, 2021 Start of 2020–2021 tax season, online submission opens
May 4, 2021 Start of the period to make an appointment to declare tax over the phone
May 6, 2021 Start of the period to submit declaration over the phone
May 27, 2021 Start of the perio to make an appointment to submit a declaration in person at one of the Tax Administration Agency offices
June 2, 2021 Start of the period to submit the 2020–2021 declaration in person
June 25, 2021 Deadline for declarations paid by direct debit
June 30, 2021 End of the 2020–2021 tax season

Self-employed tax declarations with N26

Don’t get intimidated by red tape this tax season. At N26, we want to do whatever we can to support your business, and that includes helping you manage your taxes and overall finances. That’s why we’ve created a range of accounts especially designed for the self-employed. If you’re just starting out, why not opt for the free N26 Business Standard, which comes with 0.5% cashback on every purchase? Or go for the premium N26 Business Smart, N26 Business You, or N26 Business Metal accounts, which come with even more benefits like sub-accounts, insurance, and even more cashback.

Not sure whether you can pay your taxes as a freelancer through an N26 account? Check out this article for more information.

By N26

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