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Practical Guide to Income Tax 2025. Part 1.

Performance of economic activities

Directly estimated economic activities

Determination of net income 

  • Deductible expenses

    a) Expenses of the holder of the activity in social security and for contributions to alternative mutual funds to Social Security

    With effect from 1 January 2025, the contribution based on the income from economic, business or professional activity established in article 308 of the consolidated text of the General Social Security Law, will not apply to members of cooperatives included in the Special Social Security Scheme for Self-Employed Workers or the Self-Employed who have an inter-cooperative system of social benefits, complementary to the public system. In any case, these partners will choose their monthly contribution base under the terms provided for in article 308.1 of the consolidated text of the General Social Security Law.

    For 2025, the maximum contribution for common contingencies, which operates as a limit for deductible expenses as an alternative mutual insurance scheme to the special Social Security scheme for self-employed workers (RETA), is 16,672.66 euros [0.283 x (4,909.50 x 12)].

    b) Expenses that are difficult to justify in simplified direct estimation during the tax period 2025

    In the 2025 tax period, the application of the 5 percent percentage on net income for all deductible provisions and expenses that are difficult to justify, as referred to in Article 30 of the Regulation, is maintained. IRPFABBR.

  • Repayments

    Freedom of amortization in investments that use energy from renewable sources.

    Article 17. One of the Royal Decree-Law 16/2025, of December 24, modified the Seventeenth Additional Provision of Law 27/2014, on Corporate Income Tax, extending this tax incentive for 2025. In this way, investments in facilities intended for the following purposes can be freely amortized in the 2025 tax period: 

    • Self-consumption of electrical energy using energy from renewable sources as defined in Royal Decree 244/2019, of April 5.

    • Thermal use for own consumption that uses energy from renewable sources, replacing installations that use energy from non-renewable fossil sources.

    This tax incentive, initially planned for investments made in 2023, will only apply to those investments whose entry into operation occurred in the fiscal years 2023, 2024 and 2025.

Determination of Total Reduced Net Return

Reduction for income from artistic activities obtained in an exceptional manner

From 1 January 2025, and as a result of the incorporation of the sixtieth Additional Provision to the Personal Income Tax Law by the seventh Final Provision of Law 7/2024, taxpayers who carry out certain artistic activities specified in the aforementioned provision may apply a reduction on the net income from economic activities derived from carrying out such activities, provided that the reduction for irregular income provided for in article 32.1 of the Personal Income Tax Law is not applicable.

Objectively estimated economic activities

  1. Resignation and consequences of resignation:

    For the 2025 tax year, a new deadline has been established to exercise the waiver or revocation of the waiver to the application of the objective estimation method, which runs from December 1 to 31, 2024.

    Exceptionally, personal income tax (IRPF) taxpayers who carry out economic activities in the municipalities mentioned in the annex of Royal Decree-Law 6/2024, of November 5, which adopts urgent measures to respond to the damage caused by the Isolated Depression at High Levels (DANA) in different municipalities between October 28 and November 4, 2024, and who had been determining their net income in the 2024 tax period using the objective estimation method, but had waived its application in said 2024 tax period during the month of December of that year or by submitting, within the regulatory period, the declaration corresponding to the installment payment for the fourth quarter of 2024 in the manner provided for the direct estimation method, may again apply said regime in the 2025 or 2026 tax years, provided that they meet the requirements for its application, revoking the previous waiver during the month of December 2024 or 2025. or by submitting within the deadline the declaration corresponding to the installment payment for the first quarter of the 2025 or 2026 fiscal year, as appropriate, in the manner provided for the objective estimation method. In other words, the mandatory three-year link for renouncing the objective estimation method is eliminated. 

    Regarding the waiver in the case of starting activity, from February 3, 2025, after the approval of Order HAC/1526/2024, of December 11, the simplified census declaration form 037 for registration, modification and deregistration in the Census of entrepreneurs, professionals and withholding agents is eliminated, so in that case the waiver will be made at the time of submitting the census declaration of start of activity using form 036 for registration, modification and deregistration in the Census of entrepreneurs, professionals and withholding agents.

    Furthermore, as a consequence of the publication of Royal Decree-Law 16/2025, of December 23, a new deadline is established to waive or revoke the waiver of the objective estimation regime from the day after the date of publication of this Royal Decree-Law (BOE of December 24) until January 31, 2026.

    Resignations and revocations submitted for the year 2026 during the month of December 2025, prior to the new deadline, will be considered submitted within the working period.

    However, the taxpayers affected by the provisions of the preceding paragraph may change their choice within the period provided for in the first paragraph.

  2. Exclusionary limits:

    Royal Decree-Law 16/2025, of December 23, has modified, with effect from January 1, 2025, the thirty-second transitional provision of the Personal Income Tax Law, to extend to the 2025 and 2026 tax periods the application of the same exclusionary quantitative limits set for the 2016 to 2024 tax years: both those relating to the volume of gross income in the immediately preceding year derived from the exercise of economic activities (250,000 euros for all economic activities, except for agricultural, livestock and forestry activities and 125,000 euros for operations for which there is an obligation to issue an invoice when the recipient is a businessman) and to the volume of purchases of goods and services (250,000 euros, excluding the acquisition of fixed assets, for all activities in objective estimation - also including agricultural, livestock and forestry activities).

    Determination of prior net performance:

    The OrderHFP/1347/2024, of November 28, which develops the objective estimation method for the year 2025 in the IRPFABBR In general, for the 2025 financial year, it maintains the amount of the signs, indices or modules applicable in 2024 to the following products derived from agricultural activities: 

    • table grapes: at 0.32

    • flowers and ornamental plants: at 0.32, and

    • tobacco: at 0.26

     Likewise, for the year 2025, the treatment of direct aid decoupled from the Common Agricultural Policy, which was reviewed in the 2023 Module Order, is also applicable, so that its taxation in proportion to the income from its crops or farms is conditional upon obtaining a minimum income in the activity other than that of the direct aid itself.

  3. Determination of reduced net income:

    The following reductions will be eliminated by 2025:

    • 35% reduction in the purchase price of agricultural diesel.

    • 15% reduction in the purchase price of fertilizers.

    Freedom of amortization on certain vehicles and new charging infrastructures

    For the 2025 financial year, the system of freedom of depreciation for certain vehicles and new charging infrastructure provided for in the Eighteenth Additional Provision of Law 27/2014, of November 27, on Corporate Income Tax, regulated in the Fifty-Ninth Additional Provision to the Law of IRPFABBRfor taxpayers of IRPFABBR that carry out their economic activity using the objective estimation method. 

  4. Determination of net module yield:

    The following correction indices applicable to reduced net income, which were already modified for 2023 and 2024, remain in effect for 2025:

    • The correction index for feed purchased from third parties is set at 0.50 per 100, and

    • The rate for crops grown on irrigated land using electricity for this purpose is set at 0.75% of the yield from crops grown on irrigated land using electricity.

  5. Determination of the net income of the activity: applicable reductions:

    General reduction: The general reduction of 5 percent applicable to the net income of modules obtained in the tax period 2025 by taxpayers in objective estimation is maintained, both with agricultural, livestock and forestry activities and with activities other than these.