We inform you of the TEAC Resolution that states this
We want to inform you of some good news that will benefit many self-employed people who work from their main residence, since the TEAC in a Resolution of September 10, contrary to the criteria that the Tax Agency had until now, has indicated that from now on, and with a binding character for all Tax Administrations, the self-employed have the right to deduct their expenses of telephone, water, electricity, gas and other supplies, shared with the rest of the main residence.
There had recently been rulings in this regard, however, this only had effects on the case judged and the Tax Office continued to deny the deduction and launch parallel investigations and checks on taxpayers who dared to deduct those supplies.
The argument used so far by the Administration is that these self-employed workers had to prove that the expense was related to their business activity, even going so far as to demand a separate invoice from the one issued by the home service companies.
This restrictive attitude has been appealed to the TEAC, which on September 10th established in this important resolution the binding criterion that workers who carry out their professional activity in their home will have the right to deduct expenses for water, electricity, receipts and taxes such as the IBI.
The TEAC's response determines that in the case of expenses related to supplies, their deduction is not allowed solely based on a proportion between the square meters used for the economic activity and the total area of the property. Instead, the general rule should be to allow the deduction of those supply expenses for which the taxpayer proves their contribution to the economic activity carried out. Furthermore, following the rule of correlation between income and expenses for determining the net income of the economic activity, the deduction of expenses can only be allowed if their connection to obtaining income is proven by the taxpayer.
The Court notes that "the proportion based solely on the square meters of the dwelling used for the activity would not suffice, but a combined criterion of square meters with the working days of the activity and the hours in which the activity is carried out in the property could, in this case, be used."
Business owners and professionals who declare their income under the Direct Estimation method for Personal Income Tax (IRPF) and who share a main residence and business center, are also entitled to deduct community fees, property tax (IBI) or amortizations.
In these cases, a distinction must be made between the expenses derived from the ownership of the property and those corresponding to the utilities of the property.
The regulations governing Personal Income Tax (IRPF) allow the partial allocation of divisible assets, provided that the allocated part is susceptible to separate and independent use from the rest, which may occur in the case of a home that is partially used for the exercise of an economic activity.
The Spanish Tax Agency's position, upheld in several rulings by the Directorate General of Taxes, allows self-employed individuals working from home to deduct expenses related to home ownership, such as property tax (IBI), garbage collection fees, and homeowners' association dues, from their personal income tax (IRPF). The deduction amount is determined based on the square footage of the home used for business purposes. This remains unchanged. However, the Tax Agency had previously prohibited this same rule for utilities like electricity and gas, arguing that there was no rational method to determine what portion of these services was used for personal purposes and what portion for business.
Given the doubts that may still arise regarding the determination of the proportional amount deductible for these expenses, we recommend that you seek advice from our tax department.
You can contact this professional office for any questions or clarifications you may have.
Warm regards,
Alicia Conesa – Tax and Accounting Department
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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