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Practical Income Manual 2021.

Requirements to be entitled to this reduction

Taxpayers who meet each and every one of the following requirements are entitled to this reduction:

a) That the net performance of the economic activity is determined according to the direct estimation method.

However, if the net return is determined in accordance with the simplified modality of the direct estimation method, the reduction will be incompatible with the application of the 5% deductible percentage (with a maximum amount of 2,000 euros) for all the provisions. deductibles and difficult-to-justify expenses referred to in article 30.2.4 of the Personal Income Tax Law.


In joint taxation, if only one of the spouses meets the requirements to apply the reduction, the fact that he or she opts for its application does not prevent the other spouse from applying the 5 percent deduction for deductible provisions and expenses that are difficult to justify ( with the limit of 2,000 euros).

If both spouses meet the requirements to apply the reduction, the fact that one of them chooses to apply it does not prevent the other spouse from applying the 5% deduction for all deductible provisions and expenses that are difficult to justify (with the limit of 2,000 euros). However, in this case the amount of the reduction may not be higher than the net income from the activities of the spouse who has opted for the application of the reduction.

b) That all deliveries of goods or services are made to a single person , physical or legal, not linked in the terms of article 18 of Law 27/2014, of November 27, on Corporate Tax, or that the taxpayer is considered a self-employed worker economically dependent in accordance with the provisions of Law 20/2007, of July 11, of the Statute of Self-Employment (BOE of 12) and the client on whom you depend financially is not a related entity in the terms previously discussed.

Related persons or entities:

To determine when there is a link, the provisions of article 18.2 of the LIS must be followed, in which linked persons or entities are considered:

  • An entity and its partners or participants.
  • An entity and its directors or administrators, except as regards remuneration for the exercise of their functions.
  • An entity and the spouses or people united by family relations, in a direct or collateral line, by consanguinity or affinity up to the third degree of partners or participants, directors or administrators.
  • An entity and the directors or administrators of another entity, when both entities belong to a group.

In cases in which the relationship is defined based on the relationship of the partners or participants with the entity, the participation must be equal to or greater than 25 percent. The mention of administrators will include those in law and those in fact. In cases in which the relationship is not defined based on the partner or participant-entity relationship, the percentage of participation to be considered will be 25 percent.

In these cases, the taxpayer of Personal Income Tax must comply with the documentation obligations of the related-party transactions in the terms and conditions established in Chapter V (articles 13 to 16) of the Corporate Tax Regulations. , approved by Royal Decree 634/2015, of July 10 ( BOE of 11).

c) That the set of deductible expenses corresponding to all the economic activities carried out by the taxpayer does not exceed 30 percent of the total income declared .

d) That, during the tax period, all formal obligations provided for in article 68 of the Personal Income Tax Regulations are met.

The formal accounting and registration obligations of taxpayers who carry out economic activities are discussed in Chapter 6.

e) That no income from work is received in the tax period.

However, it will not be understood that this requirement is not met when unemployment benefits or any of the benefits derived from the social security systems referred to in article 17.2 of the Personal Income Tax Law are received during the tax period, provided that their amount does not exceed 4,000 euros per year.

In these cases and provided that all the established requirements are met, both the reduction for obtaining income from work and the reduction for the exercise of certain economic activities will apply.

f) That at least 70 percent of the income of the tax period is subject to withholding or payment on account.

g) That no economic activity is carried out through entities under the income attribution regime.

Note: When the taxpayer opts for joint taxation, they will be entitled to the reduction for economically dependent self-employed workers or with a single unrelated client when they individually meet the requirements indicated above to be entitled to its application and the amount may not exceed the net income of the economic activities of the members of the family unit that generate the right to its application.