3.4.1 Calculation of net return
In general, net income is calculated by the difference between eligible income and deductible expenses, applying, with nuances, the regulations of IS (the incentives and incentives for investment of IS are applied).
The following are eligible income: income derived from sales, provision of services, self-consumption and subsidies, among others.
Deductible expenses are those that, duly justified and recorded in the accounting or in the mandatory registration books, occur in the course of the activity and are necessary to obtain income: supplies, stock consumption, staff expenses, repairs and maintenance, leasing and amortization for the effective depreciation of assets in operation.
As of January 1, 2018, the taxpayer's own subsistence expenses incurred in the development of economic activity are considered deductible expenses for the determination of net income, provided that they occur in catering and hospitality establishments and are paid using any electronic means of payment, with the quantitative limits established for allowances and allowances for normal subsistence expenses of workers. Any excess over these amounts may not be deducted.
Likewise, as of January 1, 2018, when the taxpayer partially uses his or her habitual residence for the development of economic activity, the costs of supplies for said residence, such as water, gas, electricity, telephone and Internet, will be deductible in the percentage resulting from applying 30% to the proportion between the square meters of the residence used for the activity and its total surface area, unless a higher or lower percentage is proven.
The calculated net income will be reduced by 30% on the following net incomes - the maximum amount to which the aforementioned reduction is applied is €300,000/year - when they are imputed in a single tax period:
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Those with a generation period greater than two years.
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Those obtained in a notoriously irregular manner over time, among others, by:
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Capital grants for the acquisition of non-depreciable fixed assets (land or plot of land).
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Compensation and aid for cessation of economic activities.
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Literary, artistic or scientific prizes that do not benefit from exemption from this tax.
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Compensation received in lieu of economic rights of indefinite duration.
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In addition, for taxpayers who meet certain requirements (self-employed workers who are economically dependent or have a single unrelated client), a reduction in the net income from economic activities covered by the direct estimation method - normal and simplified - is established for an amount of €2,000. Additionally, an increase in said reduction is established provided that certain requirements are met:
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€6,498 per year for self-employed persons with net income equal to or less than €14,047.5, provided that they do not have other income (excluding exempt income) greater than €6,500, and for those whose net income is between €14,047.5 and €19,747.5, the reduction will be €6,498 less the result of multiplying by 1.14 the difference between the income and €14,047.5 per year.
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€3,500 per year for people with disabilities who obtain net income from the effective exercise of these economic activities, increasing to €7,750 per year if they prove that they need help from third parties or have reduced mobility, or a degree of disability equal to or greater than 65%.
If the requirements for the above reduction are not met, taxpayers with non-exempt income of less than €12,000, including income from economic activity, may reduce the net income from economic activities by the following amounts:
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€1,620 per year, with net income equal to or less than €8,000 per year. If the returns are between €8,000.01 and €12,000 per year: 1,620 euros less the result of multiplying the difference between the aforementioned incomes by 0.405 and €8,000 per year.
This reduction has two limits:
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If you also receive employment income, this reduction together with the reduction for employment income cannot exceed €3,700.
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The amount of net income cannot be negative as a result of the application of this reduction.
Taxpayers who start carrying out an economic activity may reduce the positive net income declared by 20% according to the direct estimation method in its two modalities, reduced where applicable by any of the previous reductions, in the first tax period in which the net income is positive and in the following tax period, provided that the amount of net income to which the aforementioned reduction is applied does not exceed €100,000/year.
When, after the start of the activity, a new activity is started without having ceased the exercise of the first, the reduction is applied to the net income obtained in the first tax period in which it is positive and in the following tax period, counting from the start of the first activity.
The reduction does not apply in the tax period in which more than 50% of the income comes from a person or entity from which the taxpayer obtained employment income in the year prior to the start date of the activity.