Deductible Expenses in Your Commercial Premises: How to Optimize Your SME’s Taxation

Running a business means keeping an eye not only on sales and customers but also on taxation. One of the most common questions among business owners is which expenses related to their commercial premises can be deducted in the Personal Income Tax (IRPF) or Corporate Tax.

Knowing what can be deducted and how to justify it is key to optimizing taxes safely. In this article, we analyze the most common expenses that affect SMEs with physical premises —rent, utilities, insurance, maintenance, taxes— and the mistakes to avoid.

 

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General requirements set by the tax authorities

Before discussing specific invoices, it is important to remember that not all expenses are deductible. To be accepted by the tax authorities, they must meet the following conditions:

• Connection to the business activity: every expense must be directly related to generating income for your business.

Example: the electricity bill of a restaurant is deductible; the electricity bill for the owner’s home is not (unless part is officially allocated to the business activity).

• Documentary justification: the regulation requires a complete invoice, identifying both the issuer and the recipient, detailed description, taxable base, and VAT.
• Accounting record: the expense must appear in your accounting or record books.
• Correct timing: you can only deduct the expense in the fiscal year in which it is incurred, not whenever you want.
• Proportionality: the tax authorities consider whether the expense is consistent with the size and sector of the company.

Most common deductible expenses for commercial premises

Ownership and use of the property

• Rent of the premises: deductible as long as the contract is in the company’s name and invoices are available.
• Ownership: if you own the premises, you can apply property depreciation (usually 3% annually on the higher of acquisition cost paid or cadastral value, excluding the land value).
• Financial expenses: interest on loans taken to acquire or improve the premises is deductible, up to the limit of the total income obtained.
• Non-state taxes and fees: deductible taxes include property tax (IBI) or waste collection fees, provided they are not punitive.
• Homeowners’ association fees: fees paid to the property community are deductible.

Utilities and other recurring expenses

• Utilities (water, electricity, gas, internet, telephone): fully deductible if the premises are entirely dedicated to the business activity.

If you share the space with your home, you can only deduct a percentage (the tax authorities apply the 30% rule based on the square meters used for the business).

• Insurance premiums: premiums for insurance (liability, fire, theft, etc.) covering risks related to the premises and business activity are deductible.

Personnel and Social Security

Salaries and social security contributions for staff working on the premises are deductible to the extent that they are directly linked to the business activity.

Maintenance and renovations

• Repairs and upkeep (painting, fixture repairs, replacement of broken equipment): deductible in the fiscal year.
• Improvements or expansions (renovating the façade, adding usable space, installing new air conditioning): not immediate expenses; they are deducted through depreciation.

Common mistakes SMEs make when deducting expenses

• Keeping receipts instead of invoices.
• Being unable to demonstrate the link between expense and income.
• Using part of the home for business and deducting utilities without applying the 30% rule.
• Treating an improvement as a recurring expense when it should be depreciated.
• Confusing repairs with improvements.

✅ Why specialized advice is key

At Adlanter, we help SMEs optimize their tax expenses safely, reviewing each item with technical and practical criteria, and anticipating how the Tax Agency will interpret them.

Deducting expenses for your commercial premises is not complicated if you know the rules. The key is proper justification, accurate accounting, and distinguishing between recurring expenses and improvements.

If you have doubts about which expenses you can deduct in your SME or want to ensure tax compliance while optimizing your taxation, our tax advisory team at Adlanter is ready to assist you.