One of the most common questions for freelancers and SMEs is which expenses they can deduct to reduce their tax burden. Meals with clients, business trips, and corporate gifts are common, but their deductibility is subject to very specific rules that are crucial to know to avoid problems with the Spanish Tax Agency (Hacienda).
Below, we analyze the current requirements and limits in 2026 for deducting these expenses for Personal Income Tax (IRPF) and Corporate Tax, and we clarify the controversial issue of VAT.
General Requirements for Deducting an Expense
For the Tax Agency (AEAT) to accept an expense as deductible, it must always meet three fundamental conditions:
1. Correlation with income: The expense must be directly related to your economic activity. That is, it must be necessary to generate income.
2. Documentary proof: You must have a full invoice issued to your business. A simple receipt or ticket is not always sufficient, especially for deducting VAT.
3. Accounting record: The expense must be properly recorded in your accounting books or expense records.
Entertainment Expenses: The 1% Limit
Entertainment expenses for clients or suppliers are deductible for both SMEs under Corporate Tax and freelancers under the direct estimation method for Personal Income Tax.
These expenses include inviting a client to a meal, giving a promotional gift, or paying for event tickets. However, the law establishes a clear quantitative limit: they cannot exceed 1% of the net turnover for the tax period. If your annual turnover was €100,000, you can only deduct up to €1,000 for this category.
Business Meals and Allowances: Limits for Freelancers
This is where the most confusion arises. Meals a freelancer has for themselves while working are not entertainment expenses but subsistence expenses (dietas). To deduct them from Personal Income Tax, very strict requirements must be met:
* The expense must be incurred in a municipality different from your tax domicile and workplace.
* It must be paid for by electronic means (credit card, bank transfer, etc.).
* The meal must be at a restaurant or hospitality establishment.
* You must keep the full invoice.
The daily limits are:
* Without an overnight stay: €26.67 in Spain / €48.08 abroad.
* With an overnight stay: €53.34 in Spain / €91.35 abroad.
What About the VAT on These Meals?
Be careful: as a general rule, the VAT on meals and entertainment expenses is not deductible. Article 96 of the VAT Act explicitly excludes the right to deduct input VAT on hospitality and restaurant services, as well as on entertainment for clients, with very few specific exceptions. Deducting it is a common mistake that can lead to penalties.
Stricter Proof with the Arrival of VeriFactu
Correctly justifying every expense is more important than ever. With the implementation of verifiable invoicing systems (VeriFactu) and electronic invoicing, the AEAT will have much more thorough control over accounting records.
Remember the deadlines: the obligation to use VeriFactu-compliant software begins on January 1, 2027, for companies and on July 1, 2027, for freelancers and micro-enterprises. It is essential that your invoicing system allows you to record and justify these expenses correctly. To stay up-to-date with the deadlines and requirements, you can consult our complete guide on VeriFactu 2027: Deadlines for Freelancers in Spain.