The proposal for the new Self-Employed Law is published

It has just been made public proposed law on Urgent Self-Employment Reforms.
The regulations hardly offer anything new to the more than three million people who already work in this way

New deductions for expenses: know what percentage of electricity, gas or internet can be applied

The new self-employed law approved by Congress establishes an objective rule so that professionals who work at home can deduct supplies such as electricity, gas, water or internet in personal income tax. Specifically, the legislation establishes that "the result of applying 30% to the proportion between the square meters of the home used for the activity with respect to its total surface area will be deductible, unless a higher or lower percentage is proven."

At first, the new self-employed law contemplated that the self-employed worker who uses part of his house as an office or workshop could deduct the 20% from the bill for supplies such as water, electricity or internet. This sought to resolve various rulings and a binding resolution of the Central Economic-Administrative Court (TEAC) which, contravening the criteria followed by the Tax Agency, established that the worker who uses part of his habitual residence as an office or workshop has the right to deduct part of the supplies.

After the reduction made by the Government of the initial Citizens proposal, the reduction will hardly exceed 10%.

During the processing in Congress, in which the Ministry of Finance directly intervened, the initial draft that contained conceptual errors was polished and it was also detailed that the deduction of supplies would be due to “the result of applying the 30% to the existing proportion between "the square meters of the home intended for the activity with respect to its total surface area, unless a higher or lower percentage is proven."

At first, the political groups ensured that the percentage of deduction of supplies thus increased from 20% to 30%. However, the standard does not say that. In fact, the change agreed with the Treasury is restrictive and limits the deduction of supplies.

For example, a computer scientist who has a house of 100 square meters and uses 30 square meters as an office will be able to deduct 30% from that proportion. This results in a deduction from 9%. In the hypothetical case that half of a habitual residence was used for economic purposes, the deduction percentage will be 15%. And this is an unusual assumption. With the objective rule, it is simply impossible to deduct 30% from supplies as initially stated.
In this way, the majority of self-employed workers who work at home will be entitled to a reduction in taxes lower than 10% on supplies.

Even so, the regulations open the door for the self-employed to deduct a higher percentage than what the objective rule reflects, but to do so they must demonstrate that they have such a right and this is not always easy. You must look for evidence that justifies that, due to the nature of the profession or the hours dedicated or for any other reason, the deduction percentage is higher than what appears when applying the formula.

Despite the limitations, the objective rule established in the self-employed law that Ciudadanos presented in Congress and that was negotiated with organizations such as the Association of Self-Employed Workers (ATA) clarifies the situation in an area in which everything was uncertain and in which the Tax Agency has until now maintained a calculated ambiguity.

Until 2015, the Treasury's criterion was that the self-employed person who works in case could deduct the expenses linked to the ownership of the home, such as the mortgage payment, the IBI or the garbage rate in the same percentage as the portion of his home. dedicated to a professional activity. This proration, however, was not contemplated in the case of supplies, where the Tax Agency indicated that it was not feasible to determine which part was intended for a private purpose and which part for a professional purpose.

A ruling by the Superior Court of Justice of Madrid rejected this thesis of the Treasury and, shortly after, in October 2015, the TEAC issued a binding resolution that obliged the Administration to allow part of the supplies to be deductible. However, it did not clarify how to do it. “A combined criterion of square meters with the working days of the activity and the hours in which said activity is carried out in the property could serve,” says the TEAC. Although the resolution was mandatory for the Administration, the Tax Agency did not clarify what calculation formula or means of proof the self-employed worker could use to deduct taxes on supplies. It left all responsibility to the taxpayer.

The new self-employed law, which after its approval in Congress will be processed in the Senate, has the virtue of clarifying the situation. You may like it more or less, but now self-employed workers already have a formula to which they can apply. Although the new law is not in force, the right to deduct supplies has been applied since 2015 and, therefore, the self-employed can deduct electricity, water or internet taxes. In the absence of any other calculation formula, it seems reasonable for the self-employed person who has doubts to begin applying the objective rule included in the new legislation.

The weight of the self-employed in the Spanish economy

Self-employed workers are more than three million people in Spain, and in the first half of 2016 they generated 107,248 net jobs, 40% are self-employed and 60% are employed. This means that 27.6% of all employment generated last year corresponded to self-employment and that currently one in four jobs in our country is attributable to it.