Deductible Expenses in Spain: What Your Spanish SL Can Deduct

In this guide by Accompany, we explain everything foreign companies operating in Spain need to know about deductible expenses: the three legal requirements an expense must meet to be accepted by the AEAT, the full list of deductible categories under Corporate Tax (Impuesto sobre Sociedades), and the specific areas that most frequently generate disputes with the tax authority — including vehicle use, director remuneration, and intra-group transactions with the foreign parent company.

Whether you have incorporated a Spanish SL and are setting up your accounting structure for the first time, or you are a director trying to understand what company expenses are properly deductible and how to document them — getting this right from the start protects your tax position and avoids the most common triggers for an AEAT inspection.

Requirements for an Expense to be Deductible

The criteria set by the tax office (Hacienda) for assuming that an economic expense can be considered as deductible are:

• It must be related to the economic activity and should contribute to the result
• It must be documented with the corresponding legal invoices
• It must be registered in the bookkeeping as an expense or an investment

Of these three criteria, the most important one is the first one, as it must be demonstrated that expenses correspond to your professional activity and are not private. It is useful to make notes explaining the detail of each invoice so that in the case of having an inspection you can defend yourself adequately. Do not include unjustifiable or undocumented expenses because if you get inspected you will not be able to defend yourself and you will be exposed to increased scrutiny.

There is a fourth, implicit condition that causes most disputes: the expense must not appear on the list of explicitly non-deductible items in Article 15 of the Corporate Income Tax Law (Ley 27/2014 del Impuesto sobre Sociedades). Even if an expense meets the first three criteria, if it falls under Article 15, it is not deductible. The most relevant Article 15 items for foreign companies are covered in the non-deductible section below.

As for the second requirement, it is the one inspiring the healthy habit of asking for an invoice for everything. Undocumented expenses will not be accepted, and the only documentation accepted is an invoice. Even if you have invoices, make sure that the description of the expenses in the invoice clearly links them to your activity and make sure all the needed elements are on the invoice (Name, address and tax number of both vendor and buyer, the title “Invoice” or “Factura”, invoice number, date, base amount and applied VAT and retentions both in percentage and amount. Pro Forma invoices, Packing Bills, Shipping Documents etc. are not accepted.

Tickets or simplified invoices are generally not deductible, as they do not allow identification of the buyer. So even if it is a bit cumbersome, get used to asking for an invoice at restaurants, gas stations, taxis or supermarkets (if what you are buying is business related, of course). If there is really no way to get an invoice, at least make sure that the expense is paid with an account or card that is registered on the name of the company or on your own name if you are a freelance professional. Cash payments are questioned and to be avoided.

One additional requirement that often surprises foreign companies: expenses must be recorded in the financial year to which they belong under the accrual principle (principio de devengo) — not in the year they were paid. An invoice received in December 2026 for services provided in December 2026 must be expensed in 2026, even if it is paid in January 2027. Recording expenses in the wrong period is a formal error that the AEAT corrects and that can shift your taxable base between years.

Relation of Deductible Expenses

These are the most common business expenses accepted by the Spanish Tax Agency as valid deductible expenses:

• Office or Warehouse Space: If you own or rent specific space for your business, you must register these to be able to deduct the related expenses. You may deduct all the expenses associated with each location: Rent, renovation, maintenance, electricity, water, telephone, expenses associated with the mortgage or insurance etc. You can also amortize the investment made if you had bought it.
• Operational Expenses: Purchase of merchandise, raw and auxiliary materials, fuels, components and assemblies, containers, packaging and office supplies. The consumption over the year is calculated according to the formula Consumption = Initial stock + Purchases – Final Stock.
• Wages and Salaries: Payments to employees in terms of salaries, extraordinary payments, fees y allowances for travel expenses, compensation in kind, premiums (bonuses) and other compensations.
• Social Security Payments: 100% of social security payments for Freelancers in the Special Regime for Autonomous Workers (RETA) and the company part of social security payments for employees in the General Regime. The social security payments in RETA by shareholders or administrators of companies is not deductible and must be payed by the person in question privately. Note: if the director is registered in RETA by virtue of being a company director and the company pays the contribution on their behalf, that payment is deductible for the SL but constitutes remuneration for the director, who must declare it in their personal IRPF return.
• Other Personnel Expenses: This includes training expenses, compensation for termination of contract, personal accident insurance, small gifts (Christmas gifts etc.) and contributions to pension plans or corporate Social Prevention Plans.
• Leases and Royalties: Includes rent, royalties, SaaS, technical assistance, leasing instalments that do not involve land, plots, or other non-depreciable assets.
• Reparations and Conservation: Maintenance expenses, spare parts and adaptation of material goods. Those that involve an extension or improvement are not included, since they are considered as depreciable investments over several years.
• Services of Independent Professionals: Fees of economists, lawyers, accountants, notaries, as well as the commissions of commercial agents or independent mediators.
• Other External Services: Expenses for research and development, transportation, insurance premiums, banking services, advertising, public relations, electricity, water and telephone supplies and other office expenses not included in the previous concepts.
• Deductible Taxes: The real estate tax (IBI), the economic activity tax (IAE) and other state and non-state taxes, surcharges and contributions are deductible. Company Tax and Personal Income Tax are not deductible nor is the balance of VAT paid. Fines and fees for enforcement or for submitting the tax declaration after the deadline are not deductible.
• Value Added Tax: Received VAT can be compensated by paid VAT except if the activity has no right to deduct VAT as happens with activities that are exempt from charging VAT (e.g. medicine) and with activities covered by some special regime (special regime of equivalence and special regime of agriculture, livestock and fishing).
• Financial Expenses: Interest on loans and credits, discounted bills of exchange, surcharges for deferral of debt payments, interest on late payments to the Tax Agency. Expenses derived from the use of own capital are not be included. Important limit for companies: net financial expenses are deductible up to a maximum of 30% of the operating profit (EBITDA) for the year. Any excess can be carried forward to future years. This cap is particularly relevant for Spanish SLs that receive intra-group financing from their foreign parent company.
• Amortization: Depreciation of investments considered as tangible or intangible fixed assets for the activity. Depreciation can be linear or not and accelerated amortization is available for businesses with a reduced dimension.
• Losses due to Deterioration of Credits: Bad debts (only if they are not covered by guarantees, insurance, etc.), deterioration of editorial, phonographic and audio visual rights and other intangible assets, with a maximum of 20% of acquisition value.
• Other Deductible Expenses: Acquisition of books, subscription to professional magazines, expenses to attend events related to the professional activity (courses, congresses, conferences), fees from business associations, corporations and chambers, as well as health insurance premiums paid by the self-employed persons for themselves, their spouse or children under 25 who live in the family home, with a maximum of 500 euros per person.

Key Deduction Areas for Spanish SLs with Foreign Shareholders

Director Remuneration

Salaries and remuneration paid to a director who also holds shares in the company are deductible for the SL — but only if the payment is established in the company’s estatutos (articles of association) and properly documented. If the estatutos do not mention director remuneration, the AEAT may treat it as a non-deductible distribution of profits rather than a deductible salary expense.

For foreign companies where the director and sole shareholder are the same person, this is one of the most common compliance gaps. Accompany reviews the estatutos of every new SL to ensure director remuneration is properly documented from incorporation.

Vehicles

Passenger cars are one of the most scrutinised expense categories for Spanish SLs. The default rule: VAT on passenger cars is 50% deductible; Corporate Tax deduction also requires demonstrating business use. Deducting 100% is possible but requires proving exclusive business use, which the AEAT accepts only in narrow cases (commercial vehicles, driving instructors, taxi services). For most SLs with a company car used by a director who also commutes in it, a 50% deduction is the defensible position.

Per Diems (Dietas) for Directors and Employees

Daily subsistence allowances (dietas) for directors and employees travelling on company business are deductible for the SL within the statutory tax-exempt limits: €26.67 per day in Spain (without overnight stay), €53.34 per day in Spain (with overnight stay), €48.08 abroad (without overnight stay), €91.35 abroad (with overnight stay). Amounts above these limits are treated as remuneration and subject to withholding. The expense must be business-related, paid electronically, and supported by invoices.

Related-Party Transactions (Operaciones Vinculadas): The Most Critical Area for Foreign Companies

For foreign companies with a Spanish SL, the most important — and most frequently audited — area of deductibility is related-party transactions (operaciones vinculadas). These are any transactions between the Spanish SL and entities or individuals that are considered “related parties” under Article 18 of the Corporate Income Tax Law (LIS).

Who counts as a related party?

The most common related-party relationships for the Accompany client profile:

• The Spanish SL and its foreign parent company (Dutch BV, German GmbH, French SAS, etc.).
• The Spanish SL and a director or shareholder who holds 25% or more of the capital.
• The Spanish SL and another company where the same person holds 25% or more in both entities.
• The Spanish SL and family members of a director or shareholder (spouse, ascendants, descendants).

The arm’s length principle

All transactions between related parties must be priced as if they were carried out between independent parties under comparable market conditions — the “arm’s length principle” (principio de plena competencia), enshrined in Article 18 LIS and aligned with OECD guidelines. In practice, this means:

• Management fees charged by the Dutch parent to the Spanish SL for services (accounting, IT, HR, strategic oversight) must reflect market rates. The AEAT requires documentation proving the services were actually rendered and that the price charged is consistent with what an independent provider would charge. Typical market mark-up for management services: 5%–10% over cost.
• Intra-group loans between parent and subsidiary must carry a market-rate interest. Loans at 0% or below-market rates are adjusted by the AEAT and may be reclassified as deemed dividends (with withholding tax consequences).
• Royalties or licence fees paid by the SL to the parent for use of intellectual property, brand, or software must be at market rates and supported by a written agreement.

Documentation and reporting obligations

Two formal obligations apply to Spanish SLs with related-party transactions:

• Modelo 232: an informative annual declaration disclosing all related-party transactions. It must be filed within 11 months of the fiscal year end (i.e., by 30 November for calendar-year companies). Filing is mandatory when a specific transaction with the same related party exceeds €250,000, or when any individual transaction type (e.g., management services) exceeds €100,000. Even below these thresholds, the AEAT may scrutinise the overall intercompany relationship.
• Transfer pricing documentation (expediente de precios de transferencia): companies belonging to groups with consolidated revenue above €45 million must prepare a Master File and Local File. Below this threshold, a simplified local file is available. All documentation must be ready by the date the Corporate Tax return is filed (25 July for calendar-year companies) — not after an inspection is opened.

A common and costly mistake: foreign parent companies charge a management fee to their Spanish SL without any written agreement, time sheets, or evidence that the services were provided. If the AEAT challenges the deduction, the burden of proof lies entirely with the Spanish company. Without documentation, the expense is disallowed and the adjustment can trigger secondary corrections — treating the disallowed amount as a deemed dividend subject to withholding tax.

Self-Employed Professionals: Special Deductions

Note: this section covers self-employed professionals (autónomos) subject to IRPF, not Spanish SLs. If your company is an SL, the rules above apply instead. The following applies to directors or individuals who operate as freelancers alongside their SL, or to employees who have a separate freelance activity.

The Tax Agency has been increasingly demanding in terms of the requirements to justify this aspect. To address this issue, freelancers can deduct an annual amount of 7% of net income for expenses that are not documented or difficult to justify. Still, there are several items worth clarifying:

• Home Office: In this case, you can deduct 30% of utilities, but only the part that is proportional to the square meters dedicated to your economic activity as declared in the census of the Tax Office. If you want to deduct rent, you must get two separate invoices, since the rental of the professional part must include VAT. If you own your house, you can deduct the proportional part of insurance, IBI and community costs.
• Mobile Phone: Hacienda will allow you the deduction if you have two different telephone lines, one for personal use and one for professional use. Only then you can justify that the expense is related to the business activity and avoid surprises when inspected.
• Car and Associated Expenses: These expenses are only admitted for businesses dedicated to transporting passengers and goods or visiting clients like driving instructors, taxi drivers, transporters, delivery men, carriers, sales agents and representatives. The rest of freelance activities cannot deduct these expenses for personal income tax and only up to 50% in the case of VAT. Leasing expenses are subject to the same limitations in relation to the deduction of fees and VAT.
• Travel and Representation Expenses: You can deduct both travel expenses by public transport (plane and train, but also taxis) as well as those of stay in hotels and expenses for meals. The professional character of these expenses must always be proven, so daily, weekend or holiday expenses are unlikely to get accepted by the Tax Agency. Meals is one of the most controversial items, so it is convenient to limit it to the logic of your activity and write down who you had the meal with.
• Subsistence Allowances: Freelancers may deduct €26,67 per day (€48,00 abroad) when not staying overnight and €53,34 per day when staying overnight in Spain and €91,35 abroad. Expenses must be related to the economic activity, paid electronically and for which the corresponding invoice is available. This deduction is not admitted as an allowance if the expense has been made in the municipality where the self-employed person develops his professional activity.
• Clothing Expenses: Only expenses for professional clothing such as protective clothing, uniforms, or other items of clothing with the company logo are allowed. In the case of artists there is a more flexible interpretation.

Deductible Expenses without Invoice

There is a series of costs that do not require an invoice to deduct them as expenses:

• Insurance policies
• Salaries and social security payments
• Bank charges
• Expenses of commercial contracts
• Municipal taxes and fees (IBI, garbage fee, license fees)

Non-Deductible Expenses

The following expense items are never considered as deductible expenses:

• Fines and penalties
• Donations
• Gambling losses
• Expenses made In tax havens.
• VAT already deducted in a VAT declaration
• Gifts and gratuities: amounts paid as gifts or gratuities to clients or suppliers are generally non-deductible, with limited exceptions for advertising expenses below certain thresholds.
• Remuneration of equity: dividends and profit distributions paid to shareholders are not deductible expenses. They are a distribution of after-tax profit, not a business expense.
• Related-party transactions at non-market prices: where the AEAT adjusts a related-party transaction to arm’s length value, the excess above the adjusted price is treated as non-deductible. In cases where the excess is deemed a distribution of profits, withholding tax may apply (Article 18 LIS secondary adjustment).
• Expenses not properly documented or recorded in the correct accounting period: formally correct expenses that are recorded in the wrong fiscal year (e.g., accrued in 2025 but booked in 2026) may be adjusted by the AEAT, shifting the taxable base accordingly.

How Accompany Manages Deductibility for Foreign Companies

For foreign companies operating through a Spanish SL, deductibility is not just about keeping receipts — it requires a correctly structured accounting system, properly drafted estatutos, documented intra-group agreements, and timely Modelo 232 filings. These are areas where gaps are common and where the cost of errors (disallowed deductions, secondary adjustments, withholding tax consequences) significantly exceeds the cost of getting it right from the start.

At Accompany, we manage the full accounting and Corporate Tax compliance cycle for the foreign companies we work with:

• Accounting setup aligned with Spanish Corporate Tax deductibility requirements.
• Quarterly review of expenses to identify documentation gaps before the annual filing.
• Director remuneration structuring: salary vs. dividend, estatutos review, and withholding obligations.
• Related-party transaction review: intra-group service agreements, management fee pricing, and Modelo 232 filing.
• Annual Corporate Tax return (Modelo 200) and advance payment filings (Modelo 202).

To discuss your company’s deductibility position in Spain, contact Accompany. We work exclusively with international companies and their teams.