BackThe deadline for filing the Income Tax Return for the 2023 fiscal year – the annual declaration of the Personal Income Tax (IRPF) – ends on July 1, 2024. Therefore, in order to optimize the tax result and minimize the tax burden, it is essential to become familiar with the deductions to which one is entitled.
Deductions in the IRPF cover various categories, including both state and regional ones, encompassing both generic aspects applicable to all taxpayers and specific aspects aimed at self-employed workers.
This article outlines the main deductions present in the Income Tax Return for the 2023 tax year:
Concept of tax deductions
As stipulated in the General Tax Law, tax deductions imply a partial or total reduction in the tax rate of a tax.
Law 35/2006, of November 28, on Personal Income Tax, constitutes the regulatory framework governing deductions in the Income Tax Return at the state level, while regional deductions are regulated by provisions specific to each autonomous community.
Main deductions in the 2023 Income Tax Return
The number of deductions available in the Income Tax Return is significant and extends beyond self employed taxpayers, also covering other sectors of the population.
Below are the main deductions applicable in the Income Tax Return for the 2023 tax year, with the purpose of optimizing the tax result:
- Maternity deduction: This deduction allows working mothers with children under three years old born in Spanish territory to claim a deduction of up to 1,200 euros in the IRPF, provided they are affiliated with one of the Social Security regimes. Additionally, this deduction can be extended up to an additional 1,000 euros for nursery expenses.
- Deduction for pension plans: A maximum contribution of 1,500 euros to individual pension plans is maintained, with the possibility of increasing this amount up to 8,500 euros through contributions to corporate pension plans.
- Deduction for investment in newly established or recently created companies: Those who acquire shares or stakes in recently established companies can apply a 50% deduction, with an annual limit of 100,000 euros.
- Deduction for performing work for foreign companies: Those who carry out work for foreign companies are exempt from taxation, with a maximum limit of 60,100 euros per year. This deduction is conditioned on the existence of a tax similar to the IRPF in the country where the work is carried out and must not be a tax haven.
- Deduction for acquisition of electric vehicles and installation of recharging infrastructure: A 15% deduction is granted if both the purchase and installation are made after June 30, 2023. It is important to note that neither the purchase nor the installation can be used for business purposes to apply this deduction.
- Deduction for donations: Donations to NGOs and religious entities can be deducted up to 80% of the first 150 euros, and between 35% and 50% for additional amounts. Additionally, it is allowed to deduct 20% of donations to political parties (up to 600 euros) and to unions or professional associations (up to 500 euros).
- Deduction for housing rehabilitation: A deduction of up to 60% is established for housing rehabilitation works.
New deductions in the 2023 Income Tax Return for self-employed workers
In addition to the deductions applicable to all taxpayers, new specific deductions aimed exclusively at self-employed workers have been introduced in the 2023 Income Tax Return:
- Deduction for expenses of difficult justification: This deduction, automatically applied by the tax administration during the Income Tax Return, increases from 5% to 7% starting from the 2023 tax year. However, limits are established, such as it only applies to self-employed taxpayers who pay IRPF by simplified direct estimation, excluding those who pay by modules or engage in business activities, and it cannot exceed 2,000 euros annually.
- Deduction for pension plans: Self-employed workers can deduct up to a maximum of 4,250 euros for contracting an employment pension plan for self-employed workers in the year.
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